UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                    FORM 10-K
                  ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
                     OF THE SECURITIES EXCHANGE ACT OF 1934

                     For the fiscal year ended July 25, 1999

                         Commission file number 1-13507

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

      Delaware                                                       7990
      (State or other jurisdiction of        (Primary Standard Industrial
      incorporation or organization)         Classification Code Number)

                                   04-3373730
                                (I.R.S. Employer
                             Identification Number)

                            Sunday River Access Road
                               Bethel, Maine 04217
                                 (207) 824-8100
               (Address, including zip code, and telephone number,
        including area code, of registrant's principal executive offices)

               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-X 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  20,1999,  determined using the per
share closing price thereof on the New York Stock Exchange  Composite  tape, was
approximately $62.3 million. As of October 20, 1999, 30,286,773 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 25, 1999

              American Skiing Company and Consolidated Subsidiaries

                                Table of Contents

                                     Part I
                                                                            Page

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

Item 2   Properties ..........................................................14

Item 3   Legal Proceedings....................................................15

Item 4   Submission of Matters to a Vote of Security Holders .................15

                                     Part II

Item 5   Market for Registrant's Common Equity and Related
         Stockholder Matters .................................................16

Item 6   Selected Financial Data .............................................17

Item 7   Management's Discussion and Analysis of Financial
         Condition and Results of Operations..................................19

Item 7A  Quantitative and Qualitative Disclosures about
         Market Risk .........................................................30

Item 8   Financial Statements and Supplementary Data .........................31

Item 9   Changes in and Disagreements with Accountants on
         Accounting and Financial Disclosure..................................32

                                    Part III

Item 10  Directors and Executive Officers of the Registrant...................33

Item 11  Executive Compensation...............................................33

Item 12  Security Ownership of Certain Beneficial Owners and
         Management...........................................................33

Item 13  Certain Relationships and Related Transactions.......................33

                                     Part IV

Item 14  Exhibits, Financial Statement Schedules and
         Reports on Form 8-K..................................................33

Signatures....................................................................38

                                       (i)


<PAGE>






                                     PART I
                                 Item 1 Business
The Company


         American  Skiing  Company  (the  "Parent")  is  organized  as a holding
company  and  operates  through  various   subsidiaries.   The  Parent  and  its
subsidiaries (collectively, the "Company") is the largest operator of alpine ski
and  snowboard  resorts in the United  States.  In the 1998-99  ski season,  the
Company's resorts generated  approximately 5.1 million skier visits representing
approximately  9.8% of total skier visits in the United  States.  The  Company's
business  includes  nine ski resorts,  several of which are among the largest in
the United States including: (i) Steamboat, the fourth largest ski resort in the
United  States with over 1.0 million skier visits during the 1998-99 ski season,
(ii)   Killington,   the  fifth  largest   resort  in  the  United  States  with
approximately  978,000 skier visits during the 1998-99  season,  (iii) Heavenly,
which  ranked as the second  largest  resort in the Pacific  West region and the
eighth  largest  resort in the United  States with  approximately  932,000 skier
visits during the 1998-99 ski season; and (iv) three of the four largest resorts
in the Northeast  (Killington,  Sunday River, and Mount Snow/Haystack) where THE
COMPANY  enjoys a 24% market share.  In addition,  management  believes that its
portfolio of resorts includes one of the most significant  growth  opportunities
in North American skiing at The Canyons in Utah. The Canyons'  dramatic  terrain
is favorably located,  with direct highway access to the Salt Lake International
Airport,  and is in close  proximity  to most  alpine  venues of the 2002 Winter
Olympic Games.


         In  addition  to  operating   alpine  resorts,   the  Company  develops
mountainside  real estate which  complements  the  expansion of its  on-mountain
operations.  The Company has created a unique interval  ownership  product,  the
Grand  Summit  Hotel,  in  which  individuals  purchase   quartershare  interval
interests  while the  Company  retains  ownership  of core hotel and  commercial
properties.  The initial sale of quartershare  units typically  generates a high
profit  margin,  and the  Company  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.  The
Company is developing  alpine resort villages at prime locations  within five of
its  resorts  designed  to fit that  resort's  individual  characteristics.  The
Company currently operates six Grand Summit Hotels -- two hotels at Sunday River
and one hotel each at  Attitash,  Mount  Snow,  Sugarloaf  and  Killington.  Two
additional  Grand  Summit  Hotels  are under  construction  at The  Canyons  and
Steamboat.  The Company also  operates  golf courses at its resorts and conducts
other  off-season  activities,  which  accounted  for  approximately  12% of the
Company's resort revenues for fiscal 1999.

         The Company's revenues, earnings before interest expense, income taxes,
depreciation  and  amortization  ("EBITDA")  and net loss  available  to  common
shareholders  for its 1999 fiscal year were $317.1 million,  $40.6 million,  and
$32.3 million,  respectively.  Resort revenues and resort EBITDA for fiscal 1999
were $292.6 million and $42.9 million,  respectively . Real estate  revenues and
real estate  earnings  before interest and income taxes ("EBIT") for fiscal 1999
were $24.5 million and a loss of $2.3 million, respectively

Resorts

         The Canyons.  When acquired in July, 1997, The Canyons,  located in the
Wasatch Range of the Rocky Mountains  adjacent to Park City, Utah, 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. In its first season of operation under the Company's management (1997-98),
the resort  generated  over 167,000 skier visits,  increasing to over 220,000 in
1998-99. Currently, the resort has approximately 3,300 acres of skiable terrain,
serviced by 13 lifts,  with an elevation of 9,990 feet and a 3,190 foot vertical
drop.  The  area  has  two  new  base  lodges  and  two  additional  on-mountain
restaurants.

         Since  its  acquisition  in  July,   1997,  the  Company  has  invested
approximately  $40  million to develop  and  construct:  (i) an eight  passenger
high-speed gondola, (ii) seven new quad lifts (including five high-speed quads),
(iii) an increase in skiable terrain to approximately  3,300 acres, and (iv) two
on-mountain  lodges.  The  resort's  new  Red  Pine  lodge  will  serve  as  the
cornerstone  of  the  Company's   planned  High  Mountain  Meadows  real  estate
development located on a plateau at an elevation of 8,000 feet.

         Management  believes that The Canyons has significant  growth potential
due to its  proximity  to Salt  Lake City and Park  City,  its  undeveloped  ski


                                       1
<PAGE>

terrain and its real  estate  development  opportunities.  The resort is located
approximately  25 miles  from Salt Lake City and is  accessed  by a major  state
highway.  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.

         The Company has invested  significant capital and created a substantial
on-mountain  skiing  infrastructure  which  management  believes  is  capable of
supporting substantial skier visit growth at The Canyons. The Company intends to
gradually invest additional capital to improve and expand on-mountain facilities
and  skiable  terrain  as skier  visits  grow.  The  Company  currently  has two
significant  real estate  projects under  construction  at The Canyons,  a Grand
Summit  Hotel and the  Sundial  Lodge.  Both are  expected  to open  during  the
upcoming ski season. Additional real estate projects at The Canyons are expected
to be launched and begin construction during the 2000 and 2001 fiscal years. The
Company is in the final stages of approval of a master  development plan for the
resort  which is  expected  to entitle  approximately  5 million  square feet of
development.

         Steamboat.  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. The trail network  consists of 141 trails  covering
2,939 permit acres that are serviced by 20 ski lifts.  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.

         Restaurant  facilities  are  currently  located in the base area and at
three  other  points  throughout  the resort.  Within the ski area,  the Company
operates food and beverage outlets at ten restaurants,  bars and outdoor serving
facilities with total indoor seating capacity of approximately 1,944 and outdoor
seating  capacity  of 790.  These  facilities  are  complemented  by a number of
independently  operated  bars and  restaurants  in the base area and in downtown
Steamboat  Springs and are considered  adequate to meet current skier needs. The
Company is currently  constructing  a 300 room Grand Summit Hotel at  Steamboat,
which will bring both  additional  beds and enhanced  levels of 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, and a 3,500 foot vertical drop with  approximately  4,800 acres of skiable
terrain  and 82 trails  serviced  by 27 lifts.  Heavenly  is the second  largest
resort in the  Pacific  West  Region  with about  932,000  skier  visits for the
1998-99 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.  There are three base lodges and four on-mountain lodge
restaurants.  Heavenly has a well  developed  bed base in the greater South Lake
Tahoe, Stateline area.

         The Company's  strategy at Heavenly is to add new  accommodations and a
gondola  lift  system  in the South  Lake  Tahoe  commercial  area  through  the
acquisition  or control of development  rights in the Park Avenue  Redevelopment
area.  That  development  is expected to create express  gondola  service to the
resort from the center of South Lake Tahoe and allow  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.  In  addition,
existing development rights may be exploited at Heavenly's  Stagecoach base area
with the sale and construction of a mixed use condominium  project over the same
period.

         Killington.  Killington, located in central Vermont, is the largest ski
resort in the northeast and the fifth  largest in the United  States,  with over
978,000  skier  visits  in  1998-99.  Killington  is  a  seven  mountain  resort
consisting of  approximately  1,200 acres with 200 trails  serviced by 33 lifts.
The resort has a 4,241 foot summit and a 3,150 foot vertical  drop. The resort's
base facilities include eight full-service ski lodges,  including one located at
the top of Killington  Peak.  In December  1996,  the Company  acquired the Pico
Mountain  ski resort  located  adjacent to  Killington  and  integrated  the two
resorts.  Management  believes  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 the Company's  resorts with regional,  national and  international
clientele.  The  Company's  real estate  strategy at Killington is to expand the
existing Grand Summit Hotel, begin the first phases of a new destination resort


                                       2
<PAGE>

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 encompassed 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 526,000 skier visits during the 1998/1999 season. Extending
across eight interconnected  mountains,  its facilities consist of approximately
654 acres of  skiable  terrain  and 126  trails  serviced  by 18 lifts,  with an
additional  7,000  acres of  undeveloped  terrain.  The  resort has a 3,140 foot
summit, a 2,340 foot vertical drop and four lodges. Sunday River is planning and
developing a Resort  Village at the Jordan Bowl Area (the most  westerly  peak).
Plans for the resort  village  include  over 1,350 units and 1.1 million  square
feet of total development

         Mount Snow/Haystack. Mount Snow, located in West Dover, Vermont, is the
fourth largest ski resort in the Northeast United States with over 513,000 skier
visits in 1998/99,  and is the southernmost of the Company's eastern resorts.  A
large  percentage  of the skier base for Mount Snow derives from  Massachusetts,
Connecticut  and New York. The resort  consists of two mountains  separated by a
three-mile  ridge. Its facilities  consist of 133 trails and  approximately  631
acres of developed  skiable terrain serviced by 25 lifts. The resort has a 3,600
foot summit and a 1,700 foot  vertical  drop.  The resort has five  full-service
base lodges.

         Sugarloaf.  Sugarloaf is located in the  Carrabassett  Valley of Maine.
Sugarloaf is a single mountain with approximately 1,400 acres of terrain and 126
trails  and glades  covering  approximately  530 acres,  of which 490 acres have
snowmaking  coverage  serviced by 14 lifts. The mountain has 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 East,  containing  numerous  restaurants,
retail shops and an abundance of lodging. Sugarloaf is widely recognized for its
challenging  terrain,  including  its  snow  fields,  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 and Canada.


         Sugarbush.  Sugarbush,  located in Vermont's Mad River Valley, features
the three highest  mountain  peaks of any single  resort in the East.  Extending
over six mountain peaks, its facilities  consist of 439 acres of skiable terrain
and 115 trails  serviced by 18 lifts.  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 resort has a 4,135 foot summit and a 2,650 foot  vertical
drop.  The  mountains  are  serviced by three base  lodges and two  mid-mountain
lodges.  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.   The  Company  also  owns  and  operates  the  Sugarbush   Inn,  a
championship  golf course,  a sports center and a conference  center and manages
185 condominium units.

         Attitash  Bear  Peak.  Attitash  Bear  Peak  is one of New  Hampshire's
premier family  vacation  resorts.  Attitash Bear Peak offers 68 trails covering
280 skiable  acres on two  interconnected  mountain  peaks.  Attitash's 12 lifts
(including  three  quad  chairs)  make up one of New  Hampshire's  largest  lift
networks.  The summit  elevation  of 2,350 feet and a base of 600 feet gives the
resort a vertical drop of 1,750 feet. Attitash Bear Peak is located in the heart
of the Mount  Washington  Valley  which boasts over 200 factory  outlet  stores,
hundreds  of  bars  and  restaurants  and a large  variety  of  lodging  options
including  Attitash Bear Peak's own 143 room slopeside Grand Summit Resort Hotel
and Conference Center.


Alpine Resort Industry

         There are approximately  750 ski areas in North America.  In the United
States,  approximately  509 ski areas generated  approximately  52 million skier
visits during the 1998-99 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  509 in 1999,  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. The Company believes
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


                                       3
<PAGE>

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 the Company's  skier visits in the U.S.  regional ski markets
during the 1998-99 ski season:
<TABLE>
<CAPTION>

--------------------- ----------------- ------------------ ----------------- ---------------- ------------------------
 Geographic Region        1998-99         Percentage of    Skier Visits at       Company          Company Resorts
                        Total Skier        Total Skier     Company Resorts      Regional
                         Visits (in          Visits         (in millions)     Market Share
                         millions)
--------------------- ----------------- ------------------ ----------------- ---------------- ------------------------
<S>                         <C>               <C>                <C>              <C>         <C>
Northeast                   12.3              23.7%              2.9              23.8%       Killington, Sugarbush,
                                                                                              Mount Snow/Haystack,
                                                                                              Attitash/Bear Peak,
                                                                                              Sunday River,
                                                                                              Sugarloaf USA
Southeast                    4.3               8.2%              ---               ---
Midwest                      6.0              11.6%              ---               ---
Rocky Mountain              18.3              35.2%              1.3              6.7%        The Canyons, Steamboat
Pacific West                11.1              21.3%              0.9              8.4%        Heavenly
--------------------- ----------------- ------------------ ----------------- ---------------- ------------------------
U.S. Overall                52.0             100.0%              5.1              9.8%
--------------------- ----------------- ------------------ ----------------- ---------------- ------------------------

 (*) Source:  Kottke National End of Season Survey 1998/99 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.  Management believes 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  6.4  million  in  the  1994-95  ski  season  to
approximately  12.3 million in the 1998-99 ski season,  a compound annual growth
rate of approximately 17.8%. Management believes that snowboarding will continue
to be an important source of lift ticket,  skier development,  retail and rental
revenue growth for the Company.

         The  Company  believes  that it is well  positioned  to  capitalize  on
certain  favorable trends and developments  affecting the alpine resort industry
in the United States, including: (i) the 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);
(ii) the "echo  boom"  generation  (children  of baby  boomers) is emerging as a
significant  economic  force as they  begin to enter  the  prime  entry  age for
skiing, snowboarding and other "on-snow" sports; (iii) advances in ski equipment
technology such as development of parabolic skis which  facilitate  learning and
make the sport easier to enjoy;  (iv) the continued  growth of snowboarding as a
significant  and enduring  segment of the industry,  which is  increasing  youth
participation in alpine sports;  and (v) a greater focus on leisure and fitness.
There can be no assurance,  however, that such trends and developments will have
a favorable impact on the ski industry.

Operating Strategy

         The Company  believes that the following key operating  strategies will
allow it to increase  revenues and profitability by capitalizing on its position
as a leading mountain resort operator and real estate developer.

          Capitalize on Recent  Facilities  Expansion and Upgrades.  The Company
has invested  over $145 million in expansion  and  upgrading of its  on-mountain
facilities  over the past 2 fiscal  years.  This  investment  has  substantially
re-tooled the physical plant at all of the Company's  recently acquired resorts.
Following this investment,  management  believes that the Company now offers the
most   state-of-the-art   on-mountain   facilities   in  each  of  its  markets.
Capitalizing  on this  investment is one of the primary focuses of the Company's
fiscal 2000 strategic plan.



                                       4
<PAGE>

          Multi-Resort  Network.  The Company's network of resorts provides both
geographic  diversity and significant  operating benefits.  The Company believes
its geographic  diversity:  (i) reduces the risks  associated  with  unfavorable
weather  conditions,  (ii) insulates the Company from economic  slowdowns in any
particular  region,  (iii)  increases the  accessibility  and  visibility of the
Company's network of resorts to the overall North American skier population, and
(iv)   enables  the  Company  to  offer  a  wide  range  of  mountain   vacation
alternatives.

         The  Company  believes  that its  ownership  of multiple  resorts  also
provides the  opportunity to (i) create the industry's  largest  cross-marketing
program,  (ii) achieve  efficiencies  and economies of scale in purchasing goods
and services,  (iii)  strengthen the  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,  (iv)
establish  performance  benchmarks  for  operations  across all of the Company's
resorts,  (v) utilize  specialized  individuals  and  cross-resort  teams at the
corporate  level as  resources  for the entire  Company,  and (vi)  develop  and
implement consumer information and technology systems for application across all
of the Company's resorts.

         Increase Revenues Per Skier. The Company seeks to increase revenues per
skier by managing  ticket yields and expanding  revenue  sources at each resort.
Management  seeks 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,  management believes that aggressive  cross-selling of
products and programs  (such as the Company's  frequent  skier and  multi-resort
programs) to resort guests  increases  resort  revenues and  profitability.  The
Company  believes it 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 which include tickets with lodging and other services  available at its
resorts.  During the 1998-99 ski season, the Company increased its average yield
per skier  visit by  approximately  10% as  compared  to the 1997-98 ski season.
Season pass revenue for the 1998-99 ski season at the resorts  increased by 8.5%
as compared to the 1997-98 ski season.

         Innovative  Marketing  Programs.  The Company's  marketing programs are
designed to: (i) establish a nationally recognized  high-quality name and image,
while  promoting the unique  characteristics  of its  individual  resorts,  (ii)
capitalize on cross-selling  opportunities,  and (iii) enhance customer loyalty.
The company utilizes a number of innovative techniques to achieve those goals.

                  Partnership   Marketing:   Management   believes   that  joint
         marketing  programs create a quality image and a strong market presence
         on  a  regional  and  national  basis.  The  Company,  because  of  the
         demographics  of its  customers and its high profile  image,  is a very
         attractive  asset to major  marketers.  The company  has  entered  into
         promotional  agreements,  some of which include  television,  radio and
         special events  programs,  with major  corporations  including  Sprint,
         Mobil, Budweiser, Pepsi/Mountain Dew, Motorola, Vermont Pure, Veryfine,
         Kodak, Swatch, and Green Mountain Coffee Roasters.

                  Loyalty programs: The Company created the first frequent skier
         program in the world,  and that  program has evolved  into The Edge,  a
         private-label  program in which  participants  receive  credits towards
         lift  tickets  across the United  States.  The  Company's  new mEticket
         program is believed  to be the first  nation-wide  program  targeted at
         retaining skiers who ski three to fourteen days each season,  which the
         Company's  research  indicates  represents  the  majority  of  the  ski
         population.  By giving guests an incentive to purchase their skiing for
         the year up front with the  special  values  offered by  mEticket,  the
         Company  believes it can encourage  guests to ski more often and do the
         majority of their skiing at the Company's resorts.

                  Broadcast:  The Company  utilizes a variety of marketing media
         including direct mail, radio,  television and the Internet.  Television
         and  radio  marketing  efforts  include  both  strategic  and  tactical
         messaging;  the  strategic  advertising  promotes  the  sports  and the
         resorts  themselves,   and  the  tactical  messaging  provides  current
         information  related to ski conditions as a means of promoting  visits.
         In addition,  each resort utilizes local cable  television  networks to
         provide  current   information  and  cross-sell   resort  products  and
         services.



                                       5
<PAGE>

                  Internet:  The  Company's  resorts were among the first in the
         industry  to  embrace  Internet  marketing,  and  among  the  first  to
         successfully  engage in  on-line  sales.  Internet  activities  include
         individual  resort  websites  which  provide  current snow  conditions,
         special  deals and  interactive  programs,  a real estate sales website
         promoting the Company's Grand Summit Hotels and Resort Villages, a site
         promoting  summer vacation  activities,  a dedicated site for mEticket,
         on-line  retail sales and a special site  promoting  learning to ski or
         snowboard.  All  sites  are  linked  through  the  Company's  own  site
         (www.peaks.com).

                  Increasing  the  skier  and  rider  market:  The  Company  has
         developed a new and proprietary skier  development  system. It combines
         the unique  learning method of the Company's  trademarked  Perfect Turn
         instructional  method with  graduated  length skis, a new sales process
         and specially designed Sprint Discovery Centers, which are specifically
         designed for first time skiers and riders. Management believes this new
         system will  significantly  increase the  retention  rate of first time
         skiers and riders.

                  Develop new  programs  to serve and  attract  new guests:  The
         Company has created new  programs  to augment  winter  programming  and
         increase summer visits.  Winter activities at Company resorts have been
         greatly expanded with the addition of new Fun Centers. These Fun Center
         programs are designed to reflect the needs of each  individual  resort.
         Activities  offered  at the  Company's  resorts  include  ice  skating,
         snowmobiling,  snow tubing,  snowshoeing,  snowcat  rides,  arcades and
         other indoor and outdoor  activities.  As part of an ongoing  effort to
         expand summer revenues, the Company has created Grand Summer Vacations,
         which package the many summer  activities  available at Company resorts
         including  water slides,  canoeing,  mountain  biking,  climbing walls,
         chairlift rides, golf, tennis, hay rides, alpine slides, BMX parks, and
         swimming.

         Mountainside  Real  Estate  Development.   The  Company's  real  estate
development  strategy is designed to capitalize  on and support its  substantial
investment  in its  on-mountain  facilities  over the last  several  years.  The
Company's  resort  real  estate  development  strategy  is  centered  around the
creation  of  alpine  resort  villages  at five  of its  resorts,  The  Canyons,
Heavenly,  Killington,  Steamboat  and Sunday  River.  Each village  consists of
carefully planned communities  integrated with condominiums,  luxury townhouses,
single family luxury dwellings or lots and commercial  properties.  Each village
is  anchored  by a Grand  Summit  Hotel,  a full  service  hotel  operated  in a
quarter-ownership  format.  Residential units in Grand Summit Hotels are sold in
quartershare interval interests that allow each of four quartershare unit owners
to use the unit for 13 weeks divided evenly over the year. The Company's primary
focus  over the next  several  years is  expected  to be  capitalizing  upon its
opportunities  at The Canyons and  Heavenly.  Development  at other  villages is
expected to continue, albeit at a slower pace than these two resorts.

         Expand Golf and Convention Business.  The Company is one of the largest
owners  and  operators  of  resort  golf  courses  in New  England  and seeks to
capitalize  on  this  status  to  increase   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.  The Company also operates  eight golf schools at
locations along the East Coast from Florida to Maine. The Company's golf program
and other  recreational  activities  draw  off-season  visitors to the Company's
resorts and support the Company's growing  off-season  convention  business,  as
well as its real estate development operations.

Resort Operations

         The  Company's  resort  revenues  are  derived  from a wide  variety of
sources including lift ticket sales,  food and beverage,  retail sales including
rental and repair,  skier development,  lodging and property  management,  golf,
other summer  activities and  miscellaneous  revenue sources.  Lift ticket sales
represent   the  single   largest   source  of  resort   revenues  and  produced
approximately 46% of total resort operations revenue for fiscal 1999.



                                       6
<PAGE>

         The following  chart reflects the Company's  sources of resort revenues
across certain  revenue  categories as well as the percentage of resort revenues
contributed by each category for the fiscal year ended July 25, 1999.

     ---------------------------------------------------------------------------
                                              Fiscal Year Ended July 25, 1999
                                              Resort Revenues      Percentage of
                                               (in thousands)    Resort Revenues
     ---------------------------------------------------------------------------
          Revenue Category:
           Lift Tickets                             $ 134,504              46.0%
           Food and beverage                                               13.1%
                                                       38,259
           Retail sales                                                    14.2%
                                                       41,463
           Lodging and property                                            10.8%
                                                       31,672
           Skier development                                                8.3%
                                                       24,159
           Golf, summer activities and                                      7.6%
          miscellaneous                                22,501
     ---------------------------------------------------------------------------
          Total Resort Revenues                    $  292,558             100.0%
     ---------------------------------------------------------------------------

         Lift Ticket  Sales.  The Company  manages its lift ticket  programs and
products so as to increase the Company's ticket yields. Lift tickets are sold to
customers in packages including  accommodations in order to maximize  occupancy.
In order to  maximize  skier  visits  during  non-peak  periods  and to  attract
specific market segments,  the Company offers a wide variety of  incentive-based
lift ticket programs.  The Company manages its ticket yields during peak periods
so as to maximize aggregate lift ticket revenues.

         Food and Beverage. Food and beverage sales provide significant revenues
for the Company.  The Company owns and operates the food and beverage facilities
at its resorts,  with the  exception of the Sugarloaf  resort,  which is under a
long-term  concession  contract that  pre-existed the Company's  ownership.  The
Company's  food  and  beverage   strategy  is  to  provide  a  wide  variety  of
restaurants,  bars, cafes,  cafeterias and other food and beverage outlets.  The
Company's control of its on-mountain and base area food and beverage  facilities
allows it to capture a larger  proportion of guest spending as well as to ensure
product and service  quality.  The Company  currently  owns and operates over 40
different food and beverage outlets.

         Retail  Sales.  Across all of its  resorts,  the  Company  owns over 80
retail and ski rental shops.  The large number of retail  locations  operated by
the  Company  allows it to  improve  margins  through  large  quantity  purchase
agreements and sponsorship relationships. On-mountain shops sell ski accessories
such as goggles,  sunglasses,  hats, gloves, skis, snowboards,  boots and larger
soft goods such as jackets and snowsuits.  In addition,  all locations offer the
Company's own logo-wear  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, in 1997,
the Company expanded its retail operations by expanding and opening new off-site
retail facilities in high traffic areas, such as stores on the Killington Access
Road, in downtown South Lake Tahoe, and in the Freeport, Maine and North Conway,
New Hampshire retail districts.

         Lodging and Property  Management.  The  Company's  lodging and property
management  departments  manage their own properties as well as properties owned
by  third  parties.   Currently,   the  Company's  lodging   departments  manage
approximately  1,750  lodging  units  at  the  Company's  resorts.  The  lodging
departments perform a full complement of guest services including  reservations,
property management,  housekeeping and brokerage operations. Most 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.  The Company's property  management  operation seeks to
maximize the synergies that exist between lodging and lift ticket promotions.

         Skier  Development.  The  Company  has been an  industry  leader in the
development of learn to ski programs.  Its  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  management   believes  was  the  first  combined  skier
development  and  marketing  program  in the  ski  industry.  Perfect  Turn  ski
professionals  receive specialized training in coaching,  communication,  skiing
and both  selling  related  products  and  cross-selling  other resort goods and
services.  The Company  operates a hard goods  marketing  program at each of its
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.  During the
1998-99 season the Company  embarked upon a new skier  development  program that
focused on the marketing  and sales of the entire  mountain  resort  experience,
rather than simply  traditional  learn-to-ski  concepts,  the Company intends to
continue this plan for the 1999-2000 season.



                                       7
<PAGE>

Real Estate Development

         In the spring of 1998,  the  Company  formed  American  Skiing  Company
Resort  Properties,  Inc.  ("Resort  Properties")  as a real estate  development
holding  company  through which  substantially  all of the Company's real estate
activities  are  conducted.  As of October 7, 1999,  Resort  Properties has been
capitalized  with  $31.2  million  in cash and land  from the  Company,  and the
Company currently plans to contribute up to an additional $26 million during the
remainder of Fiscal 2000.

         With  the ski  industry  in a  period  of  consolidation  as  costs  of
infrastructure  required  to  maintain   competitiveness  have  increased,   the
Company's  acquisitions of large,  well-known ski resorts in need of lodging and
after-ski  activities is expected to provide a foundation  for creating a highly
attractive supply of vacation home products.

         The  Company's  real estate  development  strategy is centered upon the
creation  of  "resort  villages"  at  five  of the  Company's  largest  resorts.
Development  within  these  resort  villages  is  focused  upon  projects  which
management believes will generate the highest returns to the Company.  While the
business  plan  contemplates  the  completion  of  projects  at  several  of the
Company's  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
the last  several  years.  The Park City area is growing even more  rapidly,  at
twice the State average  according to State of Utah  authorities.  The effect of
this rapid  expansion on the real estate  market is  dramatically  compounded by
this area hosting the 2002 Winter Olympic Games.  Management  believes that this
combination  provides a unique  real  estate  development  opportunity,  and has
adjusted the Resort Properties business plan to account for these factors.

         The Resort  Properties  business  plan also requires  certain  pre-sale
levels  to be  satisfied  for  projects  prior to the  commencement  of  project
construction,  which  management  believes  helps to ensure that projects with a
higher  projected  return and lower risk level will be  developed.  Projects are
developed  through a combination  of equity  proceeds,  proceeds from the Resort
Properties Term Facility (discussed below) and secured project financing,  which
is  generally   without   recourse  to  the  Parent  and  its  resort  operating
subsidiaries.  See "Management's  Discussion and Analysis of Financial Condition
and Results of Operations - Liquidity and Capital Resources."

         Resort Villages.  The Company's  strategy is to respond to the expected
increase in demand for vacation home  products with a variety of product  types,
from timeshare to  whole-ownership,  emphasizing  the  development of slopeside,
ski-in/ski-out  real estate that complements the Company's mountain  operations.
Key  components  of the strategy  are the  creation of "resort  villages" at the
following  resorts:  The  Canyons,  Heavenly,   Killington,   Sunday  River  and
Steamboat. Each resort village is expected to consist of the following products:

o    Quartershare  hotels: The Company's  quartershare  hotels,  known as "Grand
     Summit Hotels", are the anchors of the pedestrian villages.
o    Whole  and  fractional   ownership   condominium  hotels:   Whole-ownership
     condominiums  such as the Sundial Lodge at The Canyons and other fractional
     ownership  condominiums are expected to fill out the accommodation  base in
     the pedestrian villages.
o    Townhouses  and Single Family Homes:  Expansion of the breadth and depth of
     the real estate product  available for purchase or rent through selling and
     building stacked  townhouses,  townhouses,  and single family homes at each
     resort where market demand presents opportunities.
o    Retail. The Company's retail leasing business is expected to directly lease
     or sell to third parties for re-leasing all retail space created within the
     resort villages.  Management believes that retail opportunities  present an
     essential ingredient that enhances the after-ski experience.

         The master plans for each resort village core consist of  approximately
1,200 units of accommodation supported by 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, and will generally include ground floor retail and three to
five  stories of  residential  units.  In some cases  (such as the Grand  Summit
Hotels at The Canyons and  Steamboat)  heights of  buildings  will range to nine
stories utilizing steel and concrete construction. As building progresses to the
village periphery,  residential  density,  parking and retail are intended to be
reduced.



                                       8
<PAGE>

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

o    The  Canyons:  The first  phase of the resort  village is fully  vested and
     approved, and the remainder is expected to be approved in the Fall of 1999.

o    Heavenly:  The redevelopment  area of Park Avenue has already been approved
     and the Company  expects to sign a development  agreement  with the City of
     South Lake Tahoe and commerce development in fiscal 2000.

o    Killington:  The master plan has received its initial Act 250 approval, but
     must make its way through the appeal process.  A re-zoning vote for a major
     portion of the village is scheduled  for November  1999.  Entitlements  for
     individual  projects may be obtained prior to final determination in master
     plan approvals.

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 mountain-town planning process will continue through a major
     portion of fiscal 2000. No specific  schedule has been  established for its
     conclusion.

         The villages are designed to be the focal point of the guest experience
at each  resort.  Convenient  access to the  village on  arrival,  a stress free
walking  experience while staying in the village,  direct ski and lift access to
the  mountains  and  easy  access  to golf are  expected  to  characterize  each
location.

         The  villages  are each  organized  around a  central  plaza,  forum or
activity  center,  with a strongly defined  pedestrian  retail spine anchored at
each end by either  mountain  lifts,  large  hotels or parking and people  mover
systems.  Pedestrian  side  streets  from the central  spine lead to  additional
retail and  accommodations.  Ultimate  ownership  of  infrastructure  and public
facilities is expected to be transferred to a resort management company owned or
controlled by the Company.

         Grand  Summit  Hotels.  The  Grand  Summit  Hotel is a unique  interval
ownership  product  originated  by the  Company.  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,  and the balance of the hotel is  typically  retained by the Company.
Ground  level hotel  street  frontage  will be utilized as retail  space  taking
advantage of pedestrian traffic in the village core.

         Each quartershare  hotel unit consists of a 13-week ownership  interest
spread  evenly  throughout  the  year.  Weeks  that are not used by an owner are
typically  dedicated  to the  Company's  optional  rental  program  managed on a
traditional hotel format,  which allows Resort Properties to retain a portion of
gross rental revenue.  Consequently, the Company expects to benefit from revenue
generated by (i) the sale of units,  (ii) the  recurring  revenues  from lodging
rental, (iii) other hotel and commercial operations, and (iv) enhanced length of
stay by the ski visitor at the resort.




                                       9
<PAGE>



         The  following  table  summarizes  Grand  Summit  pre-sales  and  sales
activity through October 3, 1999:

  ------------------    ---------------      ------------------   --------------
  Projects              Pre-Sale              Pre-Sales / Sales   %  of Total
                        Commencement               ($000s)        Project
                                                                  Sell-Out(4)
  ------------------    ---------------      ------------------   --------------
  GSRCC (1)             Dec. 1991             $   24,451           100%
  Attitash              Nov. 1995                 10,417            49%
  Jordan Bowl           Nov. 1996                 23,795            72%
  Mount Snow            Nov. 1996                 19,345            55%
  Killington            Nov. 1996                 27,473            77%
  Steamboat (2)         Jan. 1998                 30,855            29%
  Canyons (2)           Feb. 1998                 61,781            50%
  Heavenly(3)           Feb. 1999                 34,618            28%
  ------------------    --------------------- ------------------- --------------

(1) Grand Summit Resort and Conference Center at Sunday River

(2) Projects currently under construction

(3) Represents non-binding reservations, not binding pre-sales.

(4)Percentage  of Total Project Sell-Out is an estimate based upon current sales
prices for remaining Project inventory, and actual results may differ based upon
adjustments in sales price of that inventory.


         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  this  traditional  concept with both  hotel-type
amenities  and easy access to rental income  generated  through the hotel rental
management  program.  The Company retains  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 its central reservation
system,  the Company is enhancing its revenue  opportunities  through vertically
integrated resort operations, simplicity for 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 the  pedestrian  village.  The ground floor of
this building  houses 31,800 square feet of retail and  commercial  space.  This
space rests at the heart of the resort's retail center.

         The condo/hotel product is marketed and sold using an "event marketing"
methodology that results in substantial sales from two marketing  "events".  The
first  event  is a  reservation  day,  preceded  by  several  weeks  of  intense
marketing.  In the case of the Sundial Lodge at The Canyons, this event produced
over 225 reservations, each accompanied by a $5,000 deposit, for what was then a
75 unit project. Each reservation holder has the right to purchase two units. At
the second event held in August 1998, a fulfillment weekend, these Sundial Lodge
reservations  were converted  into sales  contracts for 150 units in an expanded
project.  For this type of  product,  the  Company  generally  expects the event
marketing  process to result in pre-sales  of 80% to 100% of the project  before
construction  commences.  In the case of Sundial  Lodge,  the marketing  process
resulted in the project being 100% sold-out prior to construction.

         Retail. The Company has completed retail needs programming  studies for
each of the five  resort  village  locations.  Each  study  was  conducted  by a
consortium  of some of the  leading  experts  in  retail in North  America.  The
Company is in the  process  of  lease-up  at The  Canyons.  While  there is high
interest in the Company's  retail  program,  identifying the timing of permanent
lease-up is challenging  due to the high level of  construction  expected in the
village  core over the next two years  and the fact that the  village's  central
forum will not be completed until fall 2000.


         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 of 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.


                                       10
<PAGE>

         Development Program

         The  Company's  five year real  estate  business  plan  consists of the
development of up to 17 projects at its various resorts.  This model anticipates
continuing  sell-out and development of the Company's 7 existing projects.  Four
projects  (Grand  Summit  Hotels  at  Attitash,  Jordan  Bowl at  Sunday  River,
Killington and Mt. Snow) are fully constructed and operational. Three additional
projects are currently  under  construction:  Grand Summit Hotels at The Canyons
and  Steamboat,  and the  Sundial  Lodge at The  Canyons.  An  additional  seven
projects are expected to commence  pre-sales  and planning  during the Company's
current  fiscal  year.  The  remaining  projects  are expected to be launched in
fiscal 2001 or 2002.

         Four Existing Grand Summit  Hotels.  The Company opened its first Grand
Summit Hotel known as the Grand Summit  Resort and  Conference  Center at Sunday
River in December  1993.  The Grand Summit Hotel at Attitash was opened in March
1997.  During  Fiscal 1998,  the Company  opened three  additional  Grand Summit
Hotels (at Jordan Bowl at Sunday River, Mount Snow and Killington).  The Company
is currently  selling  quartershare  units at the Attitash  Grand Summit and the
three Grand Summits that opened during Fiscal 1998.

         Three   Projects   Under   Construction.   The  Company  has  commenced
construction of the following three hotels at its western resorts:

         o 182 room Grand Summit quartershare (728 quartershares)  hotel located
         at the Steamboat resort in Steamboat Springs, Colorado;

         o 213 room Grand Summit quartershare (852 quartershares)  hotel located
         at The Canyons resort in Utah;

         o 150 unit whole-ownership Sundial Lodge condominium hotel also located
         at The Canyons resort.

The conceptual  framework for the Company's  western Grand Summit Hotel projects
is the existing  Grand Summit Hotels at eastern  resorts.  However,  the western
prototype has a more upscale design,  taking  advantage of the perceived  strong
demand for the product and complementing the destination nature of the Company's
western resorts. The Sundial Lodge condo hotel project at The Canyons is further
scaled to account for the expected  strong  demand  surrounding  the 2002 Winter
Olympics in Salt Lake City.  Management  expects that the upscale  design at the
western locations will command higher price points, with a significant  increase
in the average price per quartershare over eastern property pricing levels.

         Multiple Projects  Starting in Fiscal 2000. The projects  commencing in
fiscal 2000 represent a clear focus on the Company's most substantial  immediate
development  opportunities  at The Canyons and  Heavenly,  while  simultaneously
generating a diversification of real estate product at a broader spectrum of The
Company's resorts.  The new fiscal 2000 projects are expected to include several
projects at The  Canyons,  a Grand Summit  Hotel at  Heavenly,  introduction  of
Killington  Grand  Summit Hotel Phase II to the market in the latter part of the
upcoming ski season and the  introduction to the market in the Spring of 2000 of
the Jordan Pond Townhome project at the Company's Sunday River resort.

Leased Properties

         The Company's  operations  are wholly  dependent  upon its ownership or
control over the real estate constituting each resort. The following  summarizes
certain  non-owned  real estate  critical to operations at each of the Company's
resorts. Management believes each of the following leases, permits or agreements
is in full force and effect and that the  Company is  entitled to the benefit of
such agreements.

         The  Sunday  River  resort  leases  approximately  1,500  acres,  which
constitute 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, the Company  acquired an undivided  one-half  interest in
the fee title to the leased parcel.



                                       11
<PAGE>

         The  Sugarbush  resort uses  approximately  1,915  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 which constitute
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,
which is subject  to  renewal  at the  option of Mount  Snow if certain  renewal
conditions are satisfied.  Mount Snow also leases 252 acres,  which constitute a
portion of its skiable terrain, from the Town of Wilmington,  Vermont. The lease
expires November 15, 2030. There are no renewal options. In addition, Mount Snow
leases approximately 169 acres from Sargent Inc. pursuant to 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 a bona fide 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
dated.  The permit has a 40-year term expiring July 18, 2034, which 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.  The lease  contains nine
10-year renewal options.  Killington  exercised the renewal option in 1970, 1980
and  1990.  Assuming  continued  exercise  of  Killington's  option,  the  lease
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
depreciate at 2% per annum. This buy-out option will next become  exercisable in
the year 2000.  Although the Company has not had confirmation from Vermont State
officials,  it has no reason to believe  that the State  intends to exercise the
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 the 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 "Wolf Lease"). The lease provides an option to purchase (subject to certain
reconveyance rights) those portions of the leased property that are intended for
residential or commercial  development at a cost of 5.5% of the full capitalized
cost of such development in the case of property retained by the Company, or 11%
of such cost in the case of  property  intended  for resale.  The  Canyons  also
leases  approximately  807  acres,  which  constitute  the area for the  planned
mid-mountain  village and a  substantial  portion of skiable  terrain,  from the
State of Utah School and Institutional Trust Land Administration. The 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.  The Wolf Lease
also  includes a sublease of certain  skiable  terrain  owned by the  Osguthorpe
family.  The Company has 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 targeted for development by the
Company 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.

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


                                       12
<PAGE>

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 the knowledge of the Company, 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.

Systems and Technology

         Information Systems. The Company's  information systems are designed to
improve the ski  experience  through the  development  of more  efficient  guest
service  products and  programs.  The Company has  substantially  implemented  a
comprehensive  system and technology plan including:  (i) an integrated customer
database  that  tracks  information  regarding  guest  preferences  and  product
purchasing patterns,  (ii) an extensive data communications network linking most
point-of-sale locations through a central database, (iii) a central reservations
system  for use in the  resort's  rental  management  business  and (iv) a skier
development  reservation  and instructor  scheduling  system that simplifies the
booking process and allows for optimal utilization of instructors.

         Snowmaking Systems and Technology. The Company believes it operates the
largest consolidated snowmaking operation in existence, with approximately 3,000
acres of snowmaking  coverage.  The Company's  proprietary  snowmaking  software
program  enables it to produce what  management  believes is the highest quality
man-made snow in the industry.  The Company refers to this ideal quality product
as "Retail  Snow," a high  quality,  durable  skiing  surface with top to bottom
consistency.   All  of  the  Company's   snowmaking  systems  are  operated  via
computer-based  control using  industrial  automation  software and a variety of
state of the art hardware and instrumentation. The Company utilizes an efficient
ground based,  tower based and fully automated snowgun nozzle technology and has
developed  software for  determining  the optimal  snowmaking  nozzle setting at
multiple locations on the mountain.  This system monitors the weather conditions
and system  capacities and determines  the proper  operating  water pressure for
each nozzle,  eliminating  guesswork and ensuring the ideal snow quality. All of
the snowmaking  systems are networked to provide the ability to view information
from multiple locations within its resort network. Another unique feature of the
Company's  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 World Wide Web at the
Company's and its individual resorts' web sites.

Competition

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

         The Company's resorts also face strong competition on a regional basis.
With  approximately  three  million skier visits  generated by its  northeastern
resorts, competition in that region is an important consideration. The Company's
northeastern  markets  are  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 ski markets are also highly competitive.



                                       13
<PAGE>

Employees and Labor Relations

         The Company employs  approximately  12,140 employees at peak season and
approximately  1,700  persons full time.  None of the  Company's  employees  are
covered by any collective  bargaining  agreements.  The Company  believes it has
good relations with its employees.

Government Regulation

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

         The Company  believes it has all permits,  licenses and approvals  from
governmental authorities material to its operations as currently configured. The
Company has not received  any notice of material  non-compliance  with  permits,
licenses or approvals necessary for the operation of any of its properties.

         The Company's  resort and real estate capital  programs require permits
and approvals from certain federal,  state, regional and local authorities.  The
Company's  operations are heavily  dependent upon its continued  ability,  under
applicable  laws,  regulations,   policies,  permits,  licenses  or  contractual
arrangements,  to have access to  adequate  supplies of water with which to make
snow and service the other needs of its facilities, and otherwise to conduct its
operations.  There can be no assurance that new  applications  of existing laws,
regulations and policies, or changes in such laws, regulations and policies will
not occur in a manner that would have a material  adverse effect on the Company,
or that  important  permits,  licenses or agreements  will not be canceled,  not
renewed, or renewed on terms no less favorable to the Company.  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/or local approvals. Although the
Company has consistently  been successful in implementing its capital  expansion
plans,  no assurance can be given that  necessary  permits and approvals will be
obtained.

                                     Item 2
                                   Properties

         The Company's  resorts include several of the top resorts in the United
States,  including:  (i) Steamboat,  the fourth largest ski resort in the United
States with over 1.0  million  skier  visits in the  1998-99  ski  season;  (ii)
Killington,   the  fifth   largest   resort  in  the  United  States  with  over
approximately 978,000 skier visits in the 1998-99 ski season; (iii) three of the
four  largest  resorts  in the  Northeast  (Killington,  Sunday  River and Mount
Snow/Haystack) in the 1998-99 ski season; and (iv) Heavenly, which ranked as the
second  largest  resort in the Pacific West region for the 1998-99 season with a
resort record 932,000 skier visits.  The following table summarizes  certain key
statistics of the Company's resorts:


                                       14
<PAGE>

<TABLE>
<CAPTION>

  ----------------------------- ------------- --------- -------- ------------ -------------- --------- ------------
                                  Skiable     Vertical                         Snowmaking                1998-99
                                  Terrain       Drop                Total       Coverage       Ski        Skier
  Resort                          (acres)      (feet)   Trails      Lifts     (% of acres)    Lodges     Visits
                                                                 (high-speed)                            (000s)
  ----------------------------- ------------- --------- -------- ------------ -------------- --------- ------------
  <S>                              <C>         <C>        <C>       <C>           <C>           <C>       <C>

  Killington                       1,200       3,150      200       33(6)         70.0%         8           978
  Sunday River                       654       2,340      126       18(4)         93.3          4           526
  Mount Snow/Haystack                631       1,700      133       25(3)         79.0          5           513
  Sugarloaf                        1,400       2,820      126       14(2)         35.0          1           329
  Sugarbush                          439       2,650      115       18(4)         66.1          5           368
  Attitash Bear Peak                 280       1,750       68       12(2)         89.7          2           210
  The Canyons                      3,300       3,190       63       13(9)          4.5          2           220
  Steamboat                        2,939       3,668      141       20(4)         14.9          4         1,013
  Heavenly                         4,800       3,500       82       27(6)          5.7          7           932
  ----------------------------- ------------- --------- -------- ------------ -------------- --------- ------------
       Total                      15,643                1,054      180(40)                     38         5,089
  ----------------------------- ------------- --------- -------- ------------ -------------- --------- ------------

</TABLE>
         See  the  Item 1  Section  entitled  "Business  -  Resorts"  for a more
detailed description of the Company's resorts.


                                     Item 3
                                Legal Proceedings

         The Company  currently  and from time to time is involved in litigation
arising in the  ordinary  course of its  business.  The Company does not believe
that  it is  involved  in  any  litigation  that  will,  individually  or in the
aggregate,  have a material adverse effect on its financial condition or results
of operations or cash flows.

         Each of the Company's  subsidiaries  which operate  resorts has pending
claims and is regularly  subject to suits with respect to personal injury claims
related principally to skiing activities at such resort. Each of these operating
companies  maintains  liability insurance that the Company considers adequate to
insure claims related to usual and customary risks associated with the operation
of a ski resort.  The Company operates 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 its resorts located in Vermont.
The Company currently does not use the captive  insurance  subsidiary to provide
liability  and  workers'  compensation  insurance  coverage,  but  it  is  still
responsible  for any future claims arising from insurable  events which may have
occurred  while  this  coverage  was being  provided  by the  captive  insurance
subsidiary.  The captive insurance subsidiary maintains cash reserves in amounts
recommended by an independent  actuarial firm, which  management  believes to be
adequate to cover any such claims.

         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 recently  received  notification that its Heavenly resort is expected to
be designated as a PRP at a Superfund site in Patterson, CA. The Company has yet
to be officially designated with respect to this 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.

                                     Item 4
               Submission of Matters to a Vote of Security Holders

          Not applicable.

                                       15
<PAGE>



                                     PART II

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

         The  Company's  Common  Stock is traded on the New York Stock  Exchange
under the symbol "SKI".  The Company's Class A Common Stock is not listed on any
exchange and is not publicly traded, but is convertable into Common Stock of the
Company.  As of October 20, 1999,  30,286,773 shares of common stock were issued
and outstanding,  of which  14,760,530  shares were Class A Common Stock held by
one holder and  15,526,243  shares of Common Stock held by  approximately  5,000
holders.

         The following table sets forth, for the fiscal quarters indicated,  the
range of high and low sale prices of the  Company's  Common Stock as reported on
the NYSE Composite Tape.

                      American Skiing Company Common Stock

                                Fiscal 1999                 Fiscal 1998
                            High            Low        High             Low

       1st Quarter          $12.50       $  5.19       -----            -----
       2nd Quarter          $10.25       $  4.75      $17.00            $13.00
       3rd Quarter         $  5.75       $  3.06      $16.88            $12.94
       4th Quarter         $  5.50       $  2.38      $14.13            $12.13

Market Information

         The Company has not declared or paid any cash  dividends on its capital
stock. The Company currently intends to retain earnings,  if any, to support its
capital  improvement and growth  strategies and does not anticipate  paying cash
dividends  on its  Common  Stock in the  foreseeable  future.  Payment of future
dividends, if any, will be at the discretion of the Company's Board of Directors
after taking into account  various  factors,  including the Company's  financial
condition,  operating results,  current and anticipated cash needs and plans for
capital  improvements  and  expansion.  Each of (i) the Indenture  governing the
Company's  12%  Senior  Subordinated  Notes due 2006,  (ii) the  Company's  $165
million Senior Credit Facility with BankBoston,  N.A. (as described below),  and
(iii) the terms of the Company's 10.5%  Mandatorily  Redeemable  Preferred Stock
contains  certain  restrictive  covenants  that,  among other things,  limit the
payment of dividends or the making of  distributions  on equity interests of the
Company.  See  Part  II,  Item 7 -  "Management's  Discussion  and  Analysis  of
Financial Condition and Results of Operations--Liquidity and Capital Resources."






                                       16
<PAGE>



                                     Item 6
                             Selected Financial Data

         The following  selected  historical  financial data of the Company have
been  derived from the  financial  statements  of the Company  audited by Arthur
Andersen LLP,  independent  accountants as of and for the fiscal year ended July
25, 1999;  and for the years ended July 30, 1995,  July 28, 1996,  July 27, 1997
and July 26, 1998 have been derived from the financial statements of the Company
audited by PricewaterhouseCoopers LLP, independent accountants.
<TABLE>


                                                              Historical Year Ended (1)
<CAPTION>

                                           July 30, 1995 July 28, 1996 July 27, 1997 July 26, 1998  July 25, 1999
                                                     (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)                                  $46,794       $63,489      $163,310      $277,574      $292,558
   Real estate                                   7,953         9,933        10,721        60,992        24,492
                                           ------------  ------------  ------------  ------------  ------------
        Total net revenues
                                                54,747        73,422       174,031       338,566       317,050

Operating expenses:
   Resort                                       29,725        41,799       107,230       171,246       198,231
   Real estate                                   3,994         5,844         8,950        43,554        26,808
   Marketing, general and administrative         9,394        11,289        25,173        40,058        51,434
   Stock compensation charge (3)                     -             -             -        14,254             -
   Depreciation and amortization                 3,910         6,783        18,293        37,965        44,202
                                           ------------  ------------  ------------  ------------  ------------
        Total operating expenses                47,023        65,715       159,646       307,077       320,675
                                           ------------  ------------  ------------  ------------  ------------

Income (loss) from operations                    7,724         7,707        14,385        31,489       (3,625)
Other expenses:
   Commitment fee                                    -         1,447             -             -             -
   Interest expense                              2,205         4,699        23,730        34,575        39,382
                                           ------------  ------------  ------------  ------------  ------------

Income (loss) before provision (benefit)
for income taxes and minority interest in
loss of subsidiary                               5,519         1,561       (9,345)       (3,086)      (43,007)
Provision (benefit) for income taxes               400         3,906       (3,613)         (774)      (15,057)
Minority interest in loss of subsidiary              -         (108)         (250)         (445)             -
                                           ------------  ------------  ------------  ------------  ------------

Income (loss) before extraordinary items         5,119       (2,237)       (5,482)       (1,867)      (27,950)
Extraordinary loss, net of income tax
benefit                                              -             -             -         5,081             -
                                           ------------  ------------  ------------  ------------  ------------

Income (loss) before preferred stock
dividends                                        5,119       (2,237)       (5,482)       (6,948)      (27,950)

Accretion of discount and issuance costs
and dividends accrued on mandatorily
redeemable preferred stock                           -             -           444         5,346         4,372
                                           ------------  ------------  ------------  ------------  ------------

Net income (loss) available to common
    shareholders                                $5,119      ($2,237)      ($5,926)     ($12,294)     ($32,322)
                                           ============  ============  ============  ============  ============


Basic and fully diluted loss per share:
Loss before extraordinary items                      -       ($2.37)       ($6.06)       ($0.28)       ($1.07)
Extraordinary loss                                   -             -             -        (0.20)             -
                                           ------------  ------------  ------------  ------------  ------------
Net loss available to common shareholders            -       ($2.37)       ($6.06)       ($0.48)       ($1.07)
                                           ============  ============  ============  ============  ============
Weighted average shares outstanding                  -           942           978        25,809        30,286
                                           ============  ============  ============  ============  ============

                                       17
<PAGE>

Other Data:
Resort:
Skier visits (000's)(4)                          1,060         1,290         3,025         5,319         5,089
Season pass holders (000's)                       11.2          13.2          30.9          44.1          44.2
Resort revenues per skier visit                 $44.15        $49.22        $53.99        $52.19        $57.48
Resort EBITDA(5)(6)                             $7,675       $10,401       $30,907       $66,270       $42,893

Real estate:
Number of units sold                               163           177           123         1,009         1,290
Number of units pre-sold(7)                          -           109           605           861         1,151
Real estate EBIT(6)(8)                          $3,959        $4,089        $1,771       $17,438      ($2,316)

Statement of Cash Flows Data:
Cash flows from (used in) operations           $12,593        $7,465        $6,788        $8,708     ($77,235)
Cash flows used in investing activities       (13,843)     (122,583)      (14,070)     (384,303)      (37,486)
Cash flows from financing activities             2,399       116,941        19,655       375,407       108,354

Balance Sheet Data:
Total assets                                   $72,434      $298,732      $337,340      $780,899      $907,502
Mandatorily redeemable preferred stock               -             -        16,821        39,464        43,836
Long term debt, including current
    maturities                                       -       210,720       236,330       383,220       502,461
Common shareholders' equity                     30,502        21,903        15,101       268,204       236,655

<FN>
(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 1999 and the  results  of
operations  of the Steamboat and Heavenly  resorts  since their  acquisition  in
November 1997.

(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  EBITDA  and Real  Estate  EBIT  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 EBITDA and/or Real Estate EBIT, 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  EBITDA and Real  Estate EBIT
differently,  and as a  result,  such  measures  may  not be  comparable  to the
Company's  Resort  EBITDA  and  Real  Estate  EBIT.  The  Company  has  included
information  concerning  Resort  EBITDA and Real Estate EBIT 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 EBIT 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.
</FN>
</TABLE>

                                       18
<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 25, 1999.
As you  read  the  material  below,  we  urge  you  to  carefully  consider  our
Consolidated  Financial Statements and related notes contained elsewhere in this
report.

         The Oak Hill  Transaction.  On August 9, 1999, the Company  consummated
the sale of 150,000  shares of its Series B Convertible  Exchangeable  Preferred
Stock (the "Series B Preferred  Stock") to Oak Hill Capital  Partners,  L.P. and
certain related  entities ("Oak Hill").  The Company  realized gross proceeds of
$150  million on the Series B  Preferred  Stock sale.  The  Company  used $128.6
million of the proceeds to reduce  indebtedness under its Senior Credit Facility
(as described below),  approximately $30 million of which will be reborrowed and
invested in the Company's principal real estate development subsidiary, American
Skiing Company Resort Properties, Inc., ("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 and related  transactions,
and (2) acquire  from the  Company's  principal  shareholder  certain  strategic
assets and to repay a demand note issued by a  subsidiary  of the Company to the
Company's principal  shareholder,  in the aggregate amount of $5.4 million. As a
result of these  transactions,  management  believes  that its  current  capital
resources are sufficient  both to fund operations at its resorts and to complete
those real estate projects which are currently under construction. As more fully
discussed below, the Company's  ability to commence and complete new real estate
development  projects  will be  dependent  upon the  Company's  ability to raise
additional  capital  and  Resort   Properties'   ability  to  obtain  additional
non-recourse financing.

         In  connection  with the Series B  Preferred  Stock  sale,  the Company
obtained consents (1) from lenders and creditors of the Company stating that the
Series B Preferred  Stock sale would not  constitute a "change of control" under
the relevant loan agreements, (2) from the holders of the 10.5% Senior Preferred
Stock of the Company  approving the issuance of the Series B Preferred Stock and
the terms of such stock and (3) from noteholders under the Indenture relating to
the 12% Senior Subordinated Notes due 2006 of the Company's subsidiary, ASC East
(the "Indenture"), approving the merger of ASC East into the Company and certain
other amendments to the Indenture.

         In  connection  with the Series B  Preferred  Stock  sale,  the Company
simplified its capital structure by merging its two principal subsidiaries,  ASC
East and ASC West, with and into the Parent. In connection with the merger,  the
Parent  assumed all  liabilities of ASC East and ASC West and became the primary
obligor under certain credit  facilities  and under the Indenture.  In addition,
the then current  subsidiaries  of the Parent and ASC West, as well as ASC Utah,
also  became  additional  guarantors  under  the  Indenture.  As a result of the
merger: (a) ASC East is no longer required to file annual reports and make other
filings under the  regulations of the  Securities  Exchange Act of 1934; (b) the
Company's  capital  structure has been simplified,  which is expected to make it
easier to raise  capital in the  future and  administer  the  operations  of the
Company;  (c) the  capital  and  assets  of ASC  East and its  subsidiaries  are
available to satisfy the obligations of ASC West and its subsidiaries  under the
Company's Senior Credit Facility  (described  below); and (d) the Parent and its
subsidiaries are now subject to the covenants and other  restrictions  contained
in 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.

Liquidity and Capital Resources

         Short-Term.  The  Company's  primary  short-term  liquidity  needs  are
funding  seasonal working capital  requirements,  continuing and completing real
estate  development  projects presently under  construction,  funding its fiscal
2000 capital improvement program and servicing  indebtedness.  Cash requirements
for ski-related and real estate development  activities are provided by separate
sources.  The Company's  primary  sources of liquidity for  ski-related  working
capital and ski-related  capital  improvements  are cash flow from operations of
its non-real estate subsidiaries and borrowings under the Senior Credit Facility
(as  hereinafter  defined).  Real estate  development  and real  estate  working
capital  is funded  primarily  through  (i)  construction  financing  facilities
established for major real estate  development  projects,  (ii) the expected $30
million  equity  contribution  made  available from the proceeds of the Series B
Preferred  Stock  sale and  (iii)  through  a $58  million  term  loan  facility
established  through Resort Properties (the "Resort  Properties Term Facility").
These  construction  financing  facilities and Resort  Properties  Term Facility
(collectively, the "Real Estate Facilities") are without recourse to the Company
and  its  resort  operating   subsidiaries.   The  Real  Estate  Facilities  are
collateralized  by significant  real estate assets of Resort  Properties and its
subsidiaries,  including,  without  limitation,  the  assets  and stock of Grand
Summit Resort Properties, Inc. ("GSRP"), the Company's primary hotel development
subsidiary.  As of July 25,  1999,  the  book  value of the  total  assets  that
collateralized the Real Estate Facilities,  and are included in the accompanying
consolidated balance sheet, were approximately $247.3 million.

         Resort Liquidity.  The Company  established a senior credit facility on
November 12, 1997. On October 7, 1999,  this senior credit facility was amended,
restated and  consolidated  from two  sub-facilities  totaling $215 million to a
single facility  totaling $165 million ($74.1 million of which was available for
borrowings at October 7, 1999, which includes $25 million the Company intends to


                                       19
<PAGE>

transfer to Resort  Properties in fiscal 2000) (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 30,  2004,  and the term
portion matures on May 31, 2006.

         The Senior  Credit  Facility  contains  restrictions  on the payment of
dividends by the Company on its common stock.  Those  restrictions  prohibit the
payment of dividends in excess of 50% of the Company's  consolidated  net income
after July 31, 1997,  and further  prohibit  the payment of dividends  under any
circumstances  when the effect of such payment  would be to cause the  Company's
debt to EBITDA ratio (as defined  within the credit  agreement) to exceed 4.0 to
1. Based upon these restrictions (as well as additional  restrictions  discussed
below),  the Company does not expect that it will be able to pay cash  dividends
on its common stock,  10.5% Senior  Preferred Stock or Series B Senior Preferred
Stock in the foreseeable future.

        The maximum  availability  under the revolving facility will reduce over
the term of the Senior Credit Facility by certain prescribed  amounts.  The term
facility  amortizes  at an annual rate of  approximately  1.0% of the  principal
amount for the first four years with the remaining  portion of the principal due
in two substantially equal installments in years five and six. The Senior Credit
Facility requires mandatory prepayment of 50% of the Company's excess cash flows
during  any  period in which the ratio of the  Company's  total  senior  debt to
EBITDA exceeds 3.50 to 1. In no event,  however, will such mandatory prepayments
reduce the revolving  facility  commitment below $74.8 million.  Management does
not  presently  expect to generate  excess cash flows,  as defined in the Senior
Credit Facility, during fiscal 2000 or fiscal 2001.

        The Senior Credit Facility contains affirmative,  negative and financial
covenants customary for this type of credit facility,  including  maintenance of
certain  financial  ratios.  The Senior  Credit  Facility is  collateralized  by
substantially all the assets of the Company,  except its real estate development
subsidiaries  (consisting of Resort Properties and its subsidiaries),  which are
not  borrowers  under the Senior  Credit  Facility.  The  revolving  facility is
subject to an annual 30-day clean down requirement to an outstanding  balance of
not more than $35 million, which clean down period must include April 30 of each
fiscal year.

         Based upon historical operations, management presently anticipates that
the Company will be able to meet the  financial  covenants of the 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, such default would also constitute defaults under one or
more of the Textron  Facility,  the Key Facility (each as hereinafter  defined),
the Resort Properties Term Facility and the Indenture, the consequences of which
would likely be material and adverse to the Company.

         The Senior  Credit  Facility  also  places a maximum  level of non-real
estate  capital  expenditures  for fiscal 2000 of $23.1  million  (exclusive  of
certain  capital  expenditures  in  connection  with  the  sale of the  Series B
Preferred  Stock).  Following  fiscal 2000,  annual resort capital  expenditures
(exclusive of real estate capital  expenditures) are capped at the lesser of (i)
$35 million or (ii) the total of  consolidated  EBITDA (as defined  therein) for
the  four  fiscal  quarters  ended in April of the  previous  fiscal  year  less
consolidated  debt  service for the same  period.  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,  which the Company  currently  plans to
construct during the 2000 and 2001 fiscal years.

                                       20
<PAGE>

        The Company  intends to use borrowings  under the Senior Credit Facility
for seasonal  working capital needs,  certain capital  improvements and to build
retail and other inventories prior to the start of the 1999-2000 ski season. The
Company expects to maximize borrowings under the Senior Credit Facility sometime
between  October  and  November  of  1999.  During  this  period,   the  Company
historically has had little,  if any,  borrowing  availability  under the Senior
Credit  Facility.  However,  as a result of the sale of the  Series B  Preferred
Stock and the resulting  paydown in the balance of the revolving  portion of the
Senior Credit Facility,  in Fiscal 2000 management expects that the Company will
have  significant  additional  borrowing  availability  under the Senior  Credit
Facility during this period.

        The Company's liquidity is significantly  affected by its high leverage.
As a result of its leveraged  position,  the Company will have  significant cash
requirements   to  service   interest  and  principal   payments  on  its  debt.
Consequently,  cash availability for working capital needs, capital expenditures
and acquisitions is very limited,  outside of the availability  under the Senior
Credit Facility.  Furthermore, the Senior Credit Facility and the Indenture each
contain  significant  restrictions  on  the  ability  of  the  Company  and  its
subsidiaries  to  obtain  additional  sources  of  capital  and may  affect  the
Company's  liquidity.  These  restrictions  include  restrictions on the sale of
assets,   restrictions  on  the  incurrence  of  additional   indebtedness   and
restrictions on the issuance of preferred stock.

        On October 6, 1999, the Parent merged with two of its subsidiaries,  ASC
East, Inc. and ASC West, Inc. In connection with this merger, the Parent assumed
the obligations of ASC East, Inc. under the Indenture,  and each of the material
subsidiaries of ASC West, Inc.  granted  guarantees to secure the obligations of
the Parent under the Indenture.  Each of the material  subsidiaries of ASC East,
Inc. had  previously  granted  guarantees  to secure the  obligations  under the
Indenture.  By assuming the  obligations  of ASC East under the  Indenture,  the
Company  removed a  significant  impediment  to the free flow of cash  among its
subsidiaries  and allowed for the  consolidation  of the Senior Credit Facility.
The assumption also subjects the Parent and its  subsidiaries,  ASC Utah and the
subsidiaries of ASC West, Inc. to the  restrictions on dividends,  indebtedness,
and other  covenants  contained in the Indenture.  Management  believes that the
simplified  capital  structure which resulted from the merger and the assumption
of the Indenture  obligations will benefit the Company as it pursues  additional
financing or other capital sources.

        Under  the  Indenture,  the  Company  is  prohibited  from  paying  cash
dividends  or making  other  distributions  to its  shareholders,  except  under
certain   circumstances   (which  are  not  currently  applicable  and  are  not
anticipated to be applicable in the foreseeable future).

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

         Real Estate  Liquidity:  Interim  funding of working capital for Resort
Properties  and its fiscal 1999 real  estate  development  program was  obtained
through a loan from BankBoston, N.A. in the maximum amount of $30 million, which
closed on September 4, 1998 (the "Bridge Loan").  On January 8, 1999, the Bridge
Loan was repaid with proceeds from a term loan facility  between  BankBoston and
Resort  Properties in the maximum  principal  amount of $58 million (the "Resort
Properties Term Facility").  The Resort  Properties Term Facility bears interest
at a variable rate equal to BankBoston's base rate plus 8.25%, or a current rate
of 16.5% per annum (payable  monthly in arrears),  and matures on June 30, 2001.
As of October 1, 1999, $52.8 million was outstanding under the Resort Properties
Term Facility. The Resort Properties Term Facility is collateralized by security
interests in, and mortgages on,  substantially all of Resort Properties' assets,
which primarily  consist of undeveloped  real property and the stock of its real
estate development  subsidiaries (including GSRP). As of July 25, 1999, the book
value of the  total  assets  that  collateralized  the  Resort  Properties  Term
Facility,  and are included in the accompanying  consolidated balance sheet, was
approximately   $247.3   million.   The  Resort   Properties  Term  Facility  is
non-recourse to the Company and its resort operating subsidiaries.

         In  conjunction  with  the  Resort  Properties  Term  Facility,  Resort
Properties  entered into a syndication  letter with BankBoston (the "Syndication
Letter")  pursuant to which BankBoston  agreed to syndicate up to $43 million of
the Resort Properties Term Facility.  Under the terms of the Syndication Letter,
one or more of the  terms of the  Resort  Properties  Term  Facility  (excepting
certain  terms  such as the  maturity  date and  commitment  fee) may be altered
depending on the  requirements  for  syndication  of the facility.  However,  no
alteration  of the terms of the facility may occur without the consent of Resort
Properties.   Although  Resort  Properties  expects  the  terms  of  the  Resort
Properties  Term  Facility to remain  substantially  similar to those  discussed


                                       21
<PAGE>

above,  one or more of such terms  could be altered  in order to  syndicate  the
facility,  and such alterations could be material and adverse to the Company. As
of October 1, 1999,  BankBoston was actively  engaged in syndicating  the Resort
Properties Term Facility, however, no syndication participants were committed as
of that date.  The  Syndication  Letter also  provides  that,  in the event that
BankBoston is unable to syndicate at least $33 million of the Resort  Properties
Term  Facility,  then  BankBoston  may at its option,  require  repayment of the
outstanding balance of the facility within 120 days of its request for repayment
by Resort  Properties If the syndication is unsuccessful  and BankBoston were to
require  repayment,  there can be no  assurance  that the Company  could  secure
replacement  financing for the Resort  Properties Term Facility.  The failure to
secure replacement financing on terms similar to those existing under the Resort
Properties  Term  Facility  could  result in a  material  adverse  effect on the
liquidity of Resort Properties and its  subsidiaries,  including GSRP, and could
also result in a default under the Indenture and the Senior Credit Facility.

         The  Company  runs  substantially  all of its real  estate  development
through single purpose subsidiaries,  each of which is a wholly-owned subsidiary
of  Resort  Properties.  In its  fourth  fiscal  quarter  of 1998,  the  Company
commenced  construction  on three new hotel projects (two at The Canyons in Utah
and one at Steamboat  in  Colorado).  Two of these new hotel  projects are Grand
Summit Hotels which are being  constructed  by GSRP.  The Grand Summit Hotels at
The  Canyons  and  Steamboat  are being  financed  through a  construction  loan
facility among GSRP and various lenders,  including TFC Textron  Financial,  the
syndication agent and  administrative  agent, which closed on September 25, 1998
(the "Textron Facility").

         As of  October  1,  1999,  the  amount  outstanding  under the  Textron
Facility was $75.2 million.  The Textron  Facility matures on September 24, 2002
and bears  interest at the rate of prime plus 2.5% per annum.  The  principal of
the Textron Facility is payable  incrementally as quartershare  sales are closed
based on a  predetermined  per unit amount,  which  approximates  80% of the net
proceeds of each closing.  The Textron Facility is  collateralized  by mortgages
against the project  sites  (including  the  completed  Grand  Summit  Hotels at
Killington,  Mt. Snow,  Sunday River and Attitash Bear Peak),  and is subject to
covenants,   representations   and   warranties   customary  for  this  type  of
construction  facility.  The Textron Facility is non-recourse to the Company and
its resort operating  subsidiaries (although it is collateralized by substantial
assets of GSRP,  $165.7 million as of July 25, 1999) which comprise  substantial
assets of the Company.

         The  remaining  hotel  project  commenced  by the Company in 1998,  the
Sundial Lodge project at The Canyons,  is being financed  through a construction
loan  facility  between  Canyons  Resort   Properties,   Inc.,  (a  wholly-owned
subsidiary of Resort Properties) and KeyBank, N.A. (the "Key Facility"). The Key
Facility has a maximum principal amount of $29 million, bears interest at a rate
of prime plus 1/4% per annum (payable  monthly in arrears),  and matures on June
30, 2000.  Additional  costs  (approximately  $8 million) for the Sundial  Lodge
project  have been  financed  through  proceeds  of the Resort  Properties  Term
Facility,  which have been loaned on an intercompany  basis by Resort Properties
to Canyons Resort Properties, Inc. The Key Facility closed on December 19, 1998.
The  Company  began  drawing  under  the Key  Facility  in late  April  of 1999,
following  completion  of the required  equity  contribution  (approximately  $8
million)  of the  Company in the Sundial  Lodge  project.  The Company had $12.3
million in advances  outstanding  under the Key  Facility as of October 1, 1999.
The Key Facility is  collateralized  by a mortgage and security  interest in the
Sundial Lodge project, a $5.8 million payment guaranty of Resort Properties, and
a  full  completion   guaranty  of  Resort  Properties.   The  Key  Facility  is
non-recourse to the Company and its resort operating  subsidiaries  (although it
is   collateralized   by  substantial   assets  of  Resort  Properties  and  its
subsidiaries).  As of July 25,  1999,  the book value of the total  assets  that
collateralized the Real Estate Facilities,  and are included in the accompanying
consolidated balance sheet, were approximately $247.3 million.

         Long-Term.  The Company's primary long-term liquidity needs are to fund
skiing related capital improvements at certain of its resorts and development of
its slope side real  estate.  The Company has  invested  over $145.5  million in
skiing related  facilities in fiscal years 1998 and 1999 combined.  As a result,
the Company  expects its resort  capital  programs for the next  several  fiscal
years will be more limited in size.  The  Company's  fiscal 2000 resort  capital
program is estimated at approximately $23 million,  plus such additional amounts
as are expended on the Heavenly Gondola project.

         The Company's  largest long-term capital needs relate to certain resort
capital expenditure  projects and the Company's real estate development program.
For the next two fiscal years,  the Company  anticipates its annual  maintenance
capital needs to be approximately $12 million. There is a considerable degree of
flexibility in the timing and, to a lesser degree, scope of the Company's growth
capital  program.  Although  specific  capital  expenditures can be deferred for
extended periods,  continued growth of skier visits,  revenues and profitability
will require  continued  capital  investment in  on-mountain  improvements.  The


                                       22
<PAGE>

Company's practice is to finance on-mountain capital improvements through resort
cash flow and its  Senior  Credit  Facility.  The size and scope of the  capital
improvement  program will generally be determined annually depending upon future
availability  of cash flow from  each  season's  resort  operations  and  future
borrowing  availability  and  covenant  restrictions  under  the  Senior  Credit
Facility.  The Senior Credit  Facility places a maximum level of non-real estate
capital expenditures for fiscal 2001 and beyond at the lesser of (i) $35 million
or (ii) the total of (a)  consolidated  EBITDA (as defined therein) for the four
fiscal quarters ended in April of the previous fiscal year less (b) consolidated
debt  service  for the same  period.  Management  believes  that  these  capital
expenditure  amounts will be sufficient to meet the Company's needs for non-real
estate capital expenditures for the near future.

         The Company's  business plan  anticipates the development of both Grand
Summit  hotels  and  condominium  hotels at several  resorts,  as well as resort
villages at Sunday River, Killington,  The Canyons,  Steamboat and Heavenly. The
timing and extent of these  projects  are subject to local and state  permitting
requirements  which  may be  beyond  the  Company's  control,  as well as to the
Company's  cash  flow   requirements  and  availability  of  external   capital.
Substantially all of the Company's real estate development is undertaken through
the Company's real estate development subsidiary, Resort Properties. Recourse on
indebtedness  incurred  to finance  this real estate  development  is limited to
Resort Properties and/or its subsidiaries (including GSRP). Such indebtedness is
generally   collateralized   by  the  projects  financed  under  the  particular
indebtedness  which,  in some cases,  constitutes a  significant  portion of the
assets of the Company. As of July 25, 1999, the total assets that collateralized
the Real Estate  Facilities,  and are included in the accompanying  consolidated
balance sheet, totaled  approximately  $247.3 million.  Resort Properties' seven
existing   development  projects  are  currently  being  funded  by  the  Resort
Properties Term Facility, the Textron Facility and the Key Facility.

         The  Company  expects  to  undertake  future  real  estate  development
projects   through  special  purpose   subsidiaries   with  financing   provided
principally  on a  non-recourse  basis to the Company  and its resort  operating
subsidiaries.  Although  this  financing is expected to be  non-recourse  to the
Company  and its  resort  subsidiaries,  it will  likely  be  collateralized  by
existing  and future real estate  projects of the Company  which may  constitute
significant  assets of the  Company.  Required  equity  contributions  for these
projects  must be generated  before those  projects can be  undertaken,  and the
projects  are  subject  to  mandatory  pre-sale  requirements  under the  Resort
Properties  Term 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  potential  sales  of  equity
interests in Resort Properties and/or its real estate development  subsidiaries.
Financing commitments for future real estate development do not currently exist,
and no assurance can be given that they will be available on satisfactory terms.
The Company will be required to establish both equity  sources and  construction
facilities or other financing arrangements for these projects before undertaking
each development.

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



                                       23
<PAGE>


Results of Operations of the Company

     The  following  table  sets  forth,  for  the  periods  indicated,  certain
operating data of the Company as a percentage of revenues.
<TABLE>

                                          Fiscal Year Ended
<CAPTION>

                                                July 27,1997      July 26,1998      July 25,1999
<S>                                                    <C>               <C>               <C>
Net revenues:
Resort                                                 93.8%             82.0%             92.3%
Real estate                                             6.2%             18.0%              7.7%
                                              ---------------    --------------    --------------
Total net revenues                                    100.0%            100.0%            100.0%
                                              ---------------    --------------    --------------

Operating expenses:
Resort                                                 61.6%             50.6%             62.5%
Real estate                                             5.1%             12.9%              8.5%
Marketing, general and administrative                  14.5%             11.8%             16.2%
Stock compensation charge                               0.0%              4.2%              0.0%
Depreciation and amortization                          10.5%             11.2%             13.9%
                                              ---------------    --------------    --------------
Total operating expenses                               91.7%             90.7%            101.1%
                                              ---------------    --------------    --------------

Income (loss) from operations                           8.3%              9.3%            (1.1%)

Interest expense                                       13.6%             10.2%             12.4%
                                              ---------------    --------------    --------------

Loss before benefit from income taxes
 And minority interest in loss of subsidiary          (5.4%)            (0.9%)           (13.5%)

Benefit from income taxes                             (2.1%)            (0.2%)            (4.7%)
Minority interest in loss of subsidiary               (0.1%)            (0.1%)              0.0%
                                              ---------------    --------------    --------------

Loss before extraordinary items                       (3.2%)            (0.6%)            (8.8%)

Extraordinary loss                                      0.0%              1.5%              0.0%
                                              ---------------    --------------    --------------

Net loss                                              (3.2%)            (2.1%)            (8.8%)

Accretion of discount and dividends accrued
on mandatorily redeemable preferred stock               0.3%              1.6%              1.4%
                                              ---------------    --------------    --------------

Net loss available to common shareholders             (3.4%)            (3.6%)           (10.2%)
                                              ===============    ==============    ==============

</TABLE>
                                       24
<PAGE>

                 Fiscal Year Ended July 25, 1999 ("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>
<CAPTION>

-----------------------------------------------------------------------------------------------------------------
                                   Actual Year    Pro Forma     Pro Forma       Actual      Pro Forma Increase/
                                      Ended       Effect on     Year Ended    Year Ended         (Decrease)
                                                  Year Ended
                                  July 26,1998   July 26,1998  July 26,1998  July 25,1999      Dollar    Percent

-----------------------------------------------------------------------------------------------------------------

Revenue category:
 <S>                                  <C>           <C>  <C>      <C>            <C>         <C>          <C>

 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 amortizaiton              38.0          1.6           39.6          44.2         4.6      11.6%
-----------------------------------------------------------------------------------------------------------------
</TABLE>

                                       25
<PAGE>

         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 two
factors:  1) 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 2) 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 the
Company's  eastern resorts.  The increase in lodging revenue is primarily due to
the full year of  operations  in Fiscal  1999 of three new 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
at the Company's  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 the Company  realized $55.4 million in
sales  revenue from these  projects in Fiscal 1998.  For Fiscal 1999 the Company
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 the following:  a) $4.8 million in lodging costs associated with
a full  year  of  operation  of  three  new  hotels;  b) $1.2  million  increase
associated with a new skier development  program which included the operation of
four new Sprint  Discovery  Centers;  c) $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; d)
$1.1  million  increase  in  snowmaking  due to the lack of natural  snow at the
Company's  eastern  resorts;  e) $1.5 million  increase in property taxes due to
increased tax rates in Vermont and an increased  asset base at The Canyons;  and
f) $1.0 million increase in event costs associated with marketing sponsorship.

         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 the Company's  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 the following: a) $3.5 million of cost recognized
relating  to the  sale of land  which  was not of  strategic  importance  to the
Company's real estate development plan or resort operations; b) the write-off of
$0.7  million  in  prepaid   advertising  and  commission  charges  incurred  in
generating pre-sale contracts,  some of which have subsequently  expired,  for a
Grand Summit Hotel at the Company's  Sugarbush resort (the timing of development
for the Sugarbush  project is expected to be  re-evaluated by the Company during
next year's skiing season); and c) $0.8 million of expenses were incurred during
the second  quarter of Fiscal 1999 relating to the Company's  unsuccessful  $300
million bond offering which was undertaken to provide  additional  financing for
the Company's real estate projects.

         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 the following: a) a planned increase in marketing expense at all
the resorts of $2.9  million;  b) a stock  compensation  charge of $0.8  million
relating to the vesting of additional  management stock options; c) $0.6 million
of additional  expenses  resulting from the expansion of management  information
services;  d) $2.0 million of severance payments and restructuring of management
compensation; and e) 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


                                       26
<PAGE>

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 the
Company's  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 the Company's 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
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 the Company's Series A 14%  Exchangeable  Preferred Stock
that allowed  holders of these  securities to convert to shares of the Company's
Common Stock at a 5% discount to the Company's initial public offering price. An
additional $0.9 million of the decrease is due to amortization of issuance costs
recognized  in Fiscal 1998 related to the  Company's  Series A 14%  Exchangeable
Preferred  Stock  upon  its  conversion  into  10 1/2 %  Mandatorily  Redeemable
Preferred Stock.  These decreases were offset by an increase  resulting from the
full twelve months accretion for Fiscal 1999 related to the 10 1/2 % Mandatorily
Redeemable Preferred Stock (as compared to only nine months in Fiscal 1998), and
the compounding effect of the dividend accrual.

                 Fiscal Year Ended July 26, 1998 ("Fiscal 1998")
             Versus Fiscal Year Ended July 27, 1997 ("Fiscal 1997")

         The actual  results of Fiscal 1998 versus the actual  results of Fiscal
1997 discussed  below are not comparable due to the acquisition of the Steamboat
and Heavenly  resorts on November 12, 1997,  and the  acquisition of The Canyons
resort in July 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 1997 results do not
include  any results  for  Steamboat  and  Heavenly.  Likewise,  the Fiscal 1998
results  include the results of The Canyons for the entire year while the Fiscal
1997 results do not include any results for The Canyons.

         Resort revenues  increased  $114.3 million or 70.0% from $163.3 million
for Fiscal 1997 to $277.6  million for Fiscal 1998.  The  Steamboat and Heavenly
resorts  acquired on November 12, 1997, and The Canyons resort  acquired in July
1997,  accounted for $88.6 million of the increase.  The remaining $25.7 million
represents an increase of 15.7% and is principally  attributable to increases in
skier visits,  the acquisition of new retail and food and beverage outlets,  the
opening  of three new  hotels,  and  increased  yields  per  skier  visit at the
Company's pre-acquisition group of resorts.

         Real  estate  revenues  increased  $50.3  million  for  Fiscal  1998 as
compared to Fiscal  1997.  The increase is  attributable  to  completion  of the
Company's new  quartershare  condominium  hotels at  Killington,  Mount Snow and
Sunday River and closings of quartershare sales at those projects.

         Cost of resort operations  increased $64.0 million or 59.7% from $107.2
million to $171.2  million.  The  acquisition  of Steamboat,  Heavenly,  and The
Canyons resorts accounted for $53.9 million of the increase. The remaining $10.1
million  represents an increase of 9.4% and is principally  attributable  to the
increases in skier visits,  business volume, and new operations at the Company's
pre-acquisition resorts.

         Cost of real  estate  sold  increased  $34.6  million  in  Fiscal  1998
compared to Fiscal 1997. The increase is  attributable  principally to increased
sales, as outlined above,  and to  non-capitalizeable  costs associated with new
projects under development at Killington, The Canyons and Steamboat.

         Marketing,  general and  administrative  expenses  increased 59.1% from
$25.2 million to $40.1  million.  The  inclusion of Steamboat,  Heavenly and The
Canyons  accounted  for  approximately  $11.9  million  of  this  increase.  The
remaining $3.0 million represents a 11.9% increase attributable to increased


                                       27
<PAGE>

costs  associated with the  establishment  of public holding  company  corporate
functions,   including  legal,  accounting,   shareholder  relations,  financial
analysis,  management information system support functions,  corporate marketing
initiatives   involving  the  Edge  card  direct  to  lift  and  corporate  wide
sponsorship programs.

         The Company  incurred a stock  compensation  charge of $14.3 million in
Fiscal 1998 associated with the grant of non-qualified  stock options to certain
key members of senior management.

         Depreciation and  amortization  increased $19.7 million for Fiscal 1998
compared  to Fiscal  1997.  The  increase  is  principally  attributable  to the
acquisitions of Steamboat, Heavenly and The Canyons and the additional plant and
equipment related to the summer 1997 capital improvement program.

         Interest expense  increased from $23.7 million for Fiscal 1997 to $34.6
million  for Fiscal  1998.  The  increase  is  principally  attributable  to the
Company's Senior Credit Facility,  which was established  contemporaneously with
the closing of its initial public  offering and the acquisition of Steamboat and
Heavenly on November 12, 1997.

         The benefit for income  taxes  decreased  from $3.6  million for Fiscal
1997 to $0.8 million for Fiscal 1998 due to a decrease in the loss before income
taxes.  The  effective  income tax rate  decreased  from 38.7% in Fiscal 1997 to
25.1% in Fiscal 1998 due to the non-recurring  stock option  compensation charge
of $14.3 million, not all of which is deductible for income tax purposes.

         The  extraordinary  loss recorded by the Company results from the early
retirement of certain  indebtedness  in conjunction  with the Company's  initial
public  offering  in  November,  1997,  including  the  Company's  then-existing
revolving  line of credit,  junior  subordinated  discount  notes,  and  certain
indebtedness established upon acquisition of Sugarbush.

         Accretion  of  discounts  and  dividends  accrued  on  the  mandatorily
redeemable  preferred  stock of $5.3  million  in  Fiscal  1998  represents  the
accretion of the exchange  feature,  the  amortization of the issuance costs and
the accrual of dividends  relating to the Series A Exchangeable  Preferred Stock
prior to its  exchange.  The  activity  in this  component  for Fiscal 1998 also
includes $2.8 million of dividends accrued on the 10 1/2% Mandatorily Redeemable
Preferred  Stock  subsequent  to its  exchange  for the  Series  A  Exchangeable
Preferred Stock on November 12, 1997.

Year 2000 Disclosure

         Background.  The "Year 2000  Problem"  is the  result of many  existing
computer programs and embedded chip technologies  containing programming code in
which  calendar  year data is  abbreviated  by using only two digits rather than
four to refer to a year.  As a result of this,  some of these  programs  fail to
operate or may not  properly  recognize a year that begins with "20"  instead of
"19".  This may cause such  software to  recognize a date using "00" as the year
1900  rather  than  the year  2000.  Even  systems  and  equipment  that are not
typically  thought of as  computer-related  often contain  embedded  hardware or
software that may  improperly  understand  dates  beginning  with the year 2000.
Inability of systems to properly  recognize the year 2000 could result in system
failure  or  miscalculations   causing  disruptions  to  operations,   including
temporary  inability  to  process  transactions  or engage  in  normal  business
activities.

         The  Company has  developed a Year 2000 task force with  representation
throughout  the  organization.  The task  force has  developed  a  comprehensive
strategy to systematically  evaluate and update systems as appropriate.  In some
cases, no system changes are necessary or the changes have already been made. In
all other cases,  modifications  are planned to prepare the Company's systems to
be Year 2000 compliant by November 1, 1999. The disclosure  below  addresses the
Company's Year 2000 Project.



                                       28
<PAGE>

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

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

         IT  Systems:  The Company has  continuously  updated or replaced  older
technology  with more  current  technology.  As the  Company  has  acquired  ski
resorts,  it updated certain technology at these resorts.  The Company's main IT
systems  include  an   enterprise-wide   client  server  financial   system,  an
enterprise-wide  client server  ticketing and direct to lift system, a mid-range
enterprise-wide  payroll system,  various point of sale and property  management
systems,  upgraded  personal  computers,  wide area  networking  and local  area
networking.  Phases 1 through 3 are complete.  During phase 1 and 2, the Company
determined  that its Sugarloaf  and  Sugarbush  resorts had not yet converted to
Year 2000 compliant  lodging  systems.  The Company has  subsequently  converted
these two resorts to Year 2000  compliant  systems.  The  Company has  developed
contingency  and  business  contingency  plans for its  crucial IT  systems  and
expects to have these  ready for  implementation  at each  Company  location  by
December 1, 1999.

         Non-IT  Systems:  Internal  non-IT  systems  are  comprised  of  faxes,
copiers,  printers,  postal systems,  security systems, ski lifts, elevators and
telecommunication  systems.  Phases 1 through  5 are  complete  for all  systems
except telecommunication. These systems are expected to be completed by December
1, 1999.

         Related third party  providers:  The Company has  identified  its major
related third party providers as certain  utility  providers,  employee  benefit
administrators and supply vendors.  Phases 1 through 4 are complete.  Phase 5 is
expected to be completed by December 1, 1999.

         Actual and anticipated  costs.  The total cost associated with required
modifications  to become Year 2000  compliant  is not expected to be material to
the Company's  financial  position.  The  estimated  total cost of the Year 2000
Project is approximately  $295,000.  This estimate includes  Information  System
conversions for Year 2000 compliant  lodging systems at Sugarloaf and Sugarbush.
The Company had planned to update these  systems  regardless of Year 2000 issues
to standardize  systems within the Company's resorts.  The total amount expended
on the Year 2000 Project  through July 25th,  1999 was $220,000.  As of July 25,
1999,  the  estimated  future  costs of the Year 2000 Project are $75,000 all of
which relate to replacement  costs of non-compliant IT systems.  The anticipated
costs related to non-IT systems is deemed by management to be immaterial.

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

         Contingency  plans.  The Company has  completed  the  development  of a
contingency  plan  related to Year 2000.  The  Company  is  actively  engaged in
implementing  the contingency  plan to be prepared for any issues that may arise
on January 1, 2000.

                                       29
<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   herein   includes   forward-looking
statements,  the  realization of which may be impacted by the factors  discussed
below.  The  forward-looking  statements  are made  pursuant  to the safe harbor
provisions of the Private Securities  Litigation Reform Act of 1995 (the "Act").
This report contains  forward  looking  statements that are subject to risks and
uncertainties, including, but not limited to, uncertainty as to future financial
results;  substantial  leverage of the Company;  the capital intensive nature of
development  of the Company's  ski resorts;  rapid and  substantial  growth that
could place a  significant  strain on the  Company's  management,  employees and
operations;   uncertainties   associated  with  fully   syndicating  the  Resort
Properties Term Facility;  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 the  Company's  quartershare  interests;
seasonality of resort revenues; fluctuations in operating results; dependence on
favorable weather  conditions;  the discretionary  nature of consumers' spending
for skiing,  destination vacations and resort real estate; regional and national
economic  conditions;  laws and regulations  relating to the Company's land use,
development,  environmental compliance and permitting obligations;  termination,
renewal or extension  terms of the  Company's  leases and United  States  Forest
Service  permits;  industry  competition;  the  adequacy of water  supply at the
Company's  properties;  the  ability  of the  Company  to make  its  information
technology  assets  and  systems  year  2000  compliant  and  the  costs  of any
modifications  necessary in that regard;  and other risks  detailed from time to
time in the Company's filings with the Securities and Exchange Commission. These
risks could cause the Company's  actual  results for fiscal year 2000 and beyond
to differ materially from those expressed in any forward looking statements made
by, or on behalf of, the Company.  The foregoing  list of factors  should not be
construed  as  exhaustive  or  as  any  admission   regarding  the  adequacy  of
disclosures made by the Company prior to the date hereof or the effectiveness of
said Act.


                                     Item 7A
           Quantitative and Qualitative Disclosures about Market Risk

         The  Company's  market risk  sensitive  instruments  do not subject the
Company to material  market  risk  exposures,  except for such risks  related to
interest rate fluctuations.  As of July 25, 1999, the Company has long term debt
and subordinated  notes outstanding with a carrying value of $502 million and an
estimated fair value of $495 million.

         The Company has entered into two interest rate  protection  agreements.
These agreements are in connection with the Company's Senior Credit Facility and
effectively swap variable interest rate borrowings to fixed rate borrowings. The
total amount of the Senior Credit Facility that is effected by this agreement is
$102.5 million. The rate for this portion of the Senior Credit Facility is fixed
at 5.68% plus an incremental rate based on the Company's  leverage,  and expires
November 17, 2005.  Total borrowings under the Senior Credit Facility are $200.5
million,  leaving $98.0  million at a variable rate for which,  depending on the
Company's leverage, the interest rate will be LIBOR plus 1.5% to 3.5%.

         The Company has three other  variable-rate  facilities  associated with
its real estate  activities:  1) the Textron Facility,  which has an interest of
rate of prime plus 2.5% per annum, with an outstanding  balance of $55.8 million
as of July 25,  1999;  2) the  Resort  Properties  Term  Facility,  which has an
interest rate equal to  BankBoston's  base rate plus 8.25%,  with an outstanding
balance of $52.7  million as of July 25, 1999;  and 3) the Key  Facility,  which
bears an  interest  rate of prime  plus 1/4% per annum and had a balance of $6.9
million as of July 25, 1999.

         Fixed interest rate debt outstanding as of July 25, 1999, excluding the
Senior Credit  Facility  debt,  was $186.7  million,  carries a weighed  average
interest rate of 10.98%,  and matures as follows:  $16.8 million in fiscal 2000,
$10.2  million in fiscal 2001,  $15.7  million in fiscal  2002,  $9.2 million in
fiscal 2003,  and $12.7 million in fiscal 2004 and $129.5 million in fiscal 2005
and after.

                                       30
<PAGE>

          The Company has also entered into two  non-cancellable  interest  rate
swap  agreements.  The notional amount of both  agreements is $120 million.  The
first  swap  agreement  matures  on July 15,  2001.  With  respect  to this swap
agreement,  the  Company  receives  interest at a rate of 12% per annum and pays
interest  out at a  variable  rate  based  on the  notional  amount  of the swap
agreement.  The second swap  agreement  expires  July 15, 2006 and  requires the
Company  pay  interest  at a rate of 9.01% per annum and  receive  interest at a
variable  rate  based on the  notional  amount  of the swap  agreement.  The two
variable  portions of the swap agreements offset each other until July 15, 2001.
After that date the Company will be paying interest at a fixed rate of 9.01% per
annum and receiving  interest at a variable  rate. The variable rate of interest
the Company would receive is based on the six month LIBOR, and as of October 12,
1999 that rate was 6.095% per annum.

                                     Item 8
                   Financial Statements and Supplementary Data

Selected Quarterly Operating Results

          The following table presents  certain  unaudited  quarterly  financial
information  of the Company for the eight  quarters  ended July 25, 1999. In the
opinion of the Company's  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
-------------------------------------------------------------------------------------------------------------------
<CAPTION>

                     Oct.26,1997 Jan.25,1998 Apr.26,1998 Jul.26,1998 Oct.25,1998 Jan.24,1999 Apr.25,1999 Jul.25,1999
                                                        (in thousands)
 Net revenues:
 <S>                    <C>         <C>         <C>          <C>         <C>        <C>        <C>            <C>

 Resort                 $ 13,716    $106,181    $144,244     $ 13,433    $ 20,311   $103,205    $154,317      14,725
 Real estate                 710       7,990      40,914       11,378       4,485      6,300      10,324       3,383
                      ----------- ----------- ----------- ------------ ----------- ----------  ----------  ----------
 Total net revenues       14,426     114,171     185,158       24,811      24,796    109,505     164,641      18,108
                      ----------- ----------- ----------- ------------ ----------- ----------  ----------  ----------
 Operating expenses:
 Resort                   17,890      63,328      66,096       23,932      28,073     69,251      74,573      26,334
 Real estate                 832       5,423      28,451        8,848       4,040      7,865       8,554       6,349
 Marketing, general
   and administrative      6,661      13,193      11,427        8,777      10,826     17,922      14,519       8,167
 Stock compensation
   charge                 14,254           -           -            -           -          -           -           -
 Depreciation and
   amortization            1,506      15,009      17,959        3,491       2,709     19,010      19,731       2,752
                      ----------- ----------- ----------- ------------ ----------- ----------  ----------  ----------
 Total operating
  expenses                41,143      96,953     123,933       45,048      45,648    114,048     117,377      43,602
                      ----------- ----------- ----------- ------------ ----------- ----------  ----------  ----------
 Income(loss) from
 operations            $(26,717)    $ 17,218    $ 61,225    $(20,237)   $(20,852)    $(4,543)    $ 47,264   $(25,494)
                      =========== =========== =========== ============ =========== ==========  ==========  ==========

</TABLE>

                                       31
<PAGE>



                                     Item 9
               Changes in and Disagreements with Accountants over
                      Accounting and Financial Disclosures

         The consolidated financial statements of the Company for the year ended
July 25, 1999 have been audited and reported upon by Arthur Andersen LLP ("AA").
Similarly,  AA is expected to serve as the  independent  auditors of the Company
for fiscal 2000.

         For fiscal years prior to 1999, the consolidated  financial  statements
of the Company  were  audited  and  reported  on by  PricewaterhouseCoopers  LLP
("PwC").  On March 13,  1999,  the  Company  was  informed by PwC that they were
resigning as independent accountants of the Company effective March 13, 1999. On
March 31,  1999 the Audit  Committee  of the Board of  Directors  of the Company
approved the hiring of AA as the independent auditors of the Company.

         In connection with the audits of the Company's  consolidated  financial
statements  for the two fiscal years ended July 27, 1997 and July 26, 1998,  and
the  subsequent   interim   period  through  March  13,  1999,   there  were  no
disagreements between the Company and PwC on any matter of accounting principles
or practices,  financial statement disclosure,  or auditing scope or procedures,
which disagreements, if not resolved to PwC's satisfaction would have caused PwC
to make reference to the subject matter of the  disagreement  in connection with
PwCs audit report on the consolidated  financial  statements of the Company.  In
addition,  the audit reports of PwC on the consolidated  financial statements of
the  Company as of and for the two  fiscal  years  ended  July 26,  1998 did not
contain any adverse  opinion or  disclaimer  of opinion,  nor were such  reports
qualified or modified as to uncertainty, audit scope, or accounting principles.

                                      32
<PAGE>



                                    PART III

         Pursuant  to  General  Instruction  G of  Form  10-K,  the  information
contained  in Part III (Items 10, 11, 12 and 13) is  incorporated  by  reference
from the Company's  Definitive  Proxy  Statement,  which is expected to be filed
with the Commission on or before November 22, 1999.

                                     PART IV

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


 (a)   Documents filed as part of this report:                              Page

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

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

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

                                       33
<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

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, BankBoston, N.A. as Agent for the Lenders.

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).


                                       34
<PAGE>

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    Credit Agreement among American Skiing Company Resort Properties, Inc.,
         certain  lenders and  BankBoston,  N.A. as agent dated as of January 8,
         1999  (incorporated  by  reference  to  Exhibit  10.1 to the  Company's
         quarterly report on Form 10-Q for the quarter ended January 24, 1999).

10.18    Forbearance Agreement date as of March 8, 1999, between American Skiing
         Company  Resort  Properties,  Inc.  and  BankBoston,   N.A.,  as  Agent
         (incorporated  by reference to Exhibit 10.2 to the Company's  quarterly
         report on Form 10-Q for the quarter ended April 25, 1999)

10.19    Amended and Restated  Forbearance  Agreement dated as of April 20, 1999
         between American Skiing Company Resort Properties, Inc. and BankBoston,
         N.A.,  as Agent  (incorporated  by  reference  to  Exhibit  10.3 to the
         Company's quarterly report on Form 10-Q for the quarter ended April 25,
         1999).

10.20    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).

10.21    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) . 10.22
         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.

10.23    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).
 .
10.24    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).

10.25    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).
 .
10.26    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).

                                       35
<PAGE>

10.27    $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).

10.28    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).

10.29    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).

10.30    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).

10.31    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).

10.32    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).

10.33    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).

10.34    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).

10.35    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).

10.36    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).

10.37    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).

10.38    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).



                                       36
<PAGE>

10.39    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).

10.40    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).

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

10.42    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).

10.43    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).

10.44    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).

10.45    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).

10.46    Purchase and Development  Agreement by and among the Company,  American
         Skiing Company Resort Properties, Inc., and Marriott Ownership Resorts,
         Inc., dated as of July 22, 1998 (incorporated by reference to Exhibit 1
         to the Company's Form 8-K dated July 27, 1998).

10.47    Construction Loan Agreement between The Canyons Resort Properties, Inc.
         and KeyBank National Association dated as of December 18, 1998

10.48    First Amendment to Construction Loan Agreement between The Canyons
         Resort Properties, Inc.and KeyBank National Association dated as of
         April, 1999


22.1     Subsidiaries of the Company.

23.1     Consent of PricewaterhouseCoopers, LLP

23.2     Consent of Arthur Anderson LLP

23.3     Report of Independent Accountants for fiscal 1998

24.1     Power of Attorney

27.1     Financial Data Schedule.

(b)      Reports filed on Form 8-K.

         The  Company  filed a Form 8-K on July 9, 1999,  reporting  a Preferred
Stock  Subscription  Agreement  between the Company and the Purchasers listed on
Annex A thereto.



                                       37
<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 22nd day of October, 1999.

                                 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. Millerr
                                 --------------------------------
                                 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/ Martel D. Wilson, Jr.
                                 --------------------------------
                                 Martel D. Wilson, Jr., Director

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

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


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

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


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

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

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

                                       38
<PAGE>



                    Report of Independent Public Accountants


To American Skiing Company

         We have audited the accompanying consolidated balance sheet of American
Skiing  Company  and its  subsidiaries  as of July  25,  1999,  and the  related
consolidated statements of operations,  changes in shareholders' equity and cash
flows for the year 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 audit. The financial  statements of the
Company as of July 27, 1997 and July 26, 1998,  were  audited by other  auditors
whose report dated October 14, 1998,  expressed an unqualified  opinion on those
statements.

We conducted our audit in accordance with generally accepted auditing standards.
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 audit provides 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 as of
July 25, 1999 and the results of its  operations and its cash flows for the year
then ended in conformity with generally accepted accounting principles.

                             //Arthur Andersen LLP//

Boston, MA
October 1, 1999
(Except with  respect to the matters  discussed in Note 17, as to which the date
is October 12, 1999.)

                                      F-1
<PAGE>



<TABLE>
                             American Skiing Company
                           Consolidated Balance Sheet
               (in thousands, except share and per share amounts)

<CAPTION>
                                                                      July 26, 1998        July 25, 1999
                                                                      -------------        -------------
Assets
Current assets
<S>                                                                    <C>                  <C>
        Cash and cash equivalents                                      $    15,370          $      9,003
        Restricted cash                                                      4,946                 5,480
        Accounts receivable                                                  7,538                 6,474
        Inventory                                                           13,353                10,837
        Prepaid expenses                                                     3,709                 5,309
        Deferred financing costs                                             1,246                 1,530
        Deferred income taxes                                                1,413                 4,273
                                                                    ---------------     -----------------
              Total current assets                                          47,575                42,906

        Property and equipment, net                                        521,139               529,154
        Real estate developed for sale                                      78,636               207,745
        Goodwill                                                            78,687                76,672
        Intangible assets                                                   23,706                22,987
        Deferred financing costs                                             7,966                 7,749
        Long-term investments                                                7,397                   669
        Other assets                                                        14,479                18,472
        Restricted cash                                                     1 ,314                 1,148
                                                                    ---------------     -----------------
             Total assets                                              $   780,899          $    907,502
                                                                    ===============     =================

Liabilities, Mandatorily Redeemable Preferred Stock and
  Shareholders' Equity
Current liabilities
        Current portion of long-term debt                              $    43,698          $     60,882
        Current portion of subordinated notes and debentures                   455                   673
        Accounts payable and other current liabilities                      44,372                77,951
        Deposits and deferred revenue                                        8,895                19,710
        Demand note, Principal Shareholder                                   1,846                 1,830
                                                                     ---------------     -----------------
             Total current liabilities                                      99,266               161,046

        Long-term debt, excluding current portion                          211,570               313,844
        Subordinated notes and debentures, excluding current portion       127,497               127,062
        Other long-term liabilities                                         10,484                13,461
        Deposits and deferred revenue                                        1,320                 1,140
        Deferred income taxes                                               22,719                10,062
        Minority interest in subsidiary                                        375                   396
                                                                    ---------------     -----------------
             Total liabilities                                             473,231               627,011

Mandatorily Redeemable 10 1/2% Preferred Stock
        par value $1,000 per share; 40,000 shares authorized;
        36,626 issued and outstanding; including cumulative
        dividends in arrears (redemption value of $39,464 at July
        26, 1998 and $43,836 at July 25, 1999)                              39,464                43,836

Shareholders' Equity
        Common stock, Class A, par value $.01 per share;
        15,000,000 shares authorized; 14,760,530 issued and
        outstanding at July 26, 1998 and July 25, 1999                         148                   148
        Common stock, par value of $.01 per share; 100,000,000
        shares authorized; 15,525,022 and 15,526,243 issued and
        outstanding at July 26, 1998 and July 25, 1999,
        respectively                                                           155                   155
        Additional paid-in capital                                         267,890               268,663
        Retained earnings (deficit)                                             11              (32,311)
                                                                    ---------------     -----------------
                Total shareholders' equity                                 268,204               236,655
                                                                    ---------------     -----------------
                Total liabilities, mandatorily redeemable
                preferred stock and shareholders' equity               $   780,899          $    907,502
                                                                    ===============     =================

</TABLE>



           See accompanying notes to consolidated financial statements
                                       F-2


<PAGE>

<TABLE>

                             American Skiing Company
                      Consolidated Statement of Operations
               (in thousands, except share and per share amounts)

<CAPTION>
                                                                 Year Ended
                                               ----------------------------------------------
                                                July 27,         July 26,         July 25,
                                                  1997             1998             1999
                                               ------------    -------------    -------------
<S>                                             <C>              <C>              <C>
Net revenues:
   Resort                                       $  163,310       $  277,574       $  292,558
   Real estate                                      10,721           60,992           24,492
                                               ------------    -------------    -------------
      Total net revenues                           174,031          338,566          317,050
                                               ------------    -------------    -------------

Operating expenses:
   Resort                                          107,230          171,246          198,231
   Real estate                                       8,950           43,554           26,808
   Marketing, general and administrative            25,173           40,058           51,434
   Stock compensation charge                             -           14,254                -
   Depreciation and amortization                    18,293           37,965           44,202
                                               ------------    -------------    -------------
      Total operating expenses                     159,646          307,077          320,675
                                               ------------    -------------    -------------
Income (loss) from operations                       14,385           31,489          (3,625)

Interest expense                                    23,730           34,575           39,382
                                               ------------    -------------    -------------
Loss before benefit from income taxes
 and minority interest in loss of subsidiary       (9,345)          (3,086)         (43,007)

Benefit from income taxes                          (3,613)            (774)         (15,057)
Minority interest in loss of subsidiary              (250)            (445)                -
                                               ------------    -------------    -------------
Loss before extraordinary items                    (5,482)          (1,867)         (27,950)

Extraordinary loss, net of income tax benefit
of $3,248                                                -            5,081                -
                                               ------------    -------------    -------------
Loss before preferred stock dividends              (5,482)          (6,948)         (27,950)

Accretion of discount and dividends accrued on
mandatorily redeemable preferred stock                 444            5,346            4,372
                                               ------------    -------------    -------------
Net loss available to common shareholders       $  (5,926)      $  (12,294)      $  (32,322)
                                               ============    =============    =============
Basic and fully diluted loss per share:
Loss before extraordinary items                    ($6.06)          ($0.28)          ($1.07)
Extraordinary loss                                       -           (0.20)                -
                                               ------------    -------------    -------------
Net loss available to common shareholders          ($6.06)          ($0.48)          ($1.07)
                                               ============    =============    =============
Weighted average shares outstanding                   978           25,809           30,286
                                               ============    =============    =============
</TABLE>




           See accompanying notes to consolidated financial statements
                                       F-3


<PAGE>

<TABLE>

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

                                                                  Class A            Additional
                                      Common stock              Common stock           paid-in      Retained
                               -------------------------  ------------------------
                                  Shares        Amount        Shares     Amount        capital      earnings       Total
                               ------------  -----------  ------------- ----------  ------------- ------------  ------------
<S>                               <C>           <C>                 <C>    <C>         <C>          <C>           <C>
Balance at July 28, 1996          978,300       $   10              -      $   -       $  3,762     $ 18,131      $ 21,903
Exchange of the Principal
  Shareholder's 96% interest
  in ASC East for 100% of the
  Common Stock of the Company    (939,168)         (10)              -          -              -            -          (10)
Restatement of beginning of
  the year retained earnings
  for the establishment of
  the 4% minority interest in
  ASC East and share of
  earnings since inception        (39,132)            -              -          -          (976)          100         (876)
Issuance of Common Stock of
  the Company to the
  Principal Shareholder          1,000,000           10              -          -              -            -            10
Conversion of Common Stock to
  Class A Common Stock         (1,000,000)         (10)      1,000,000         10              -            -             -
Stock split in October 1997,
  accounted for retroactively            -            -     13,760,530          -              -            -             -
Accretion of discount and
  issuance costs and
  dividends accrued on
  mandatorily redeemable
  preferred stock                        -            -              -          -              -        (444)         (444)
Netloss                                  -            -              -          -              -      (5,482)       (5,482)
                               ------------  -----------  ------------- ----------  ------------- ------------  ------------
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
                               ============  ===========  ============= ==========  ============= ============  ============


</TABLE>



           See accompanying notes to consolidated financial statements
                                       F-4


<PAGE>

<TABLE>

                             American Skiing Company
                      Consolidated Statement of Cash Flows
                                 (in thousands)
<CAPTION>
                                                                                Year Ended
                                                            ---------------------------------------------------
                                                              July 27,           July 26,           July 25,
                                                                1997               1998               1999
                                                            -------------      -------------   ----------------
<S>                                                          <C>                <C>               <C>
Cash flows from operating activities
Net loss                                                     $   (5,482)        $   (6,948)       $   (27,950)
Adjustments to reconcile net loss to net cash used in
operating activities:
     Minority interest in loss of subsidiary                       (250)              (445)                  -
     Depreciation and amortization                                18,293             37,966             44,202
     Discount on convertible debt                                  3,300              3,159                333
     Deferred income taxes                                       (3,332)            (3,910)           (15,517)
     Stock compensation charge                                         -             14,254                773
     Extraordinary loss                                                -              8,329                  -
     (Gain)loss from sale of assets                                    -              (773)              2,426
     Decrease (increase) in assets:
          Restricted cash                                         12,587            (3,448)              (368)
          Accounts receivable                                    (1,343)            (3,608)              1,090
          Inventory                                              (2,257)            (2,088)              2,516
          Prepaid expenses                                         1,792            (1,644)            (1,600)
          Real estate developed for sale                        (21,976)           (25,950)          (125,331)
          Other assets                                             (872)           (10,319)            (5,000)
     Increase (decrease) in liabilities:
          Accounts payable and other current liabilities           6,794              2,413             33,579
          Deposits and deferred revenue                              838              (866)             10,635
          Other long-term liabilities                            (1,304)              2,586              2,977
                                                            -------------      -------------   ----------------
Net cash provided from (used in) operating activities              6,788              8,708           (77,235)
                                                            -------------      -------------   ----------------

Cash flows from investing activities
     Payments for purchases of businesses, net of cash
     acquired                                                    (6,959)          (291,773)                  -
     Capital expenditures                                       (23,267)          (106,917)           (46,007)
     Long-term investments                                           836              1,110              1,222
     Proceeds from sale of assets                                  2,626              7,227              7,198
     Proceeds from sale of business                               14,408              5,702                  -
     Other, net                                                  (1,714)                348                101
                                                            -------------      -------------   ----------------
Net cash used in investing activities                           (14,070)          (384,303)           (37,486)
                                                            -------------      -------------   ----------------

Cash flows from financing activities
     Net borrowings under Senior Credit Facility                      -            194,227              7,308
     Net proceeds (repayment of) Old Credit Facility              14,766           (59,623)                  -
     Proceeds from long-term debt                                  1,079              1,568             20,145
     Proceeds from non-recourse real estate debt                   3,504             71,462            115,909
     Repayment of long-term debt                                (11,237)           (15,793)           (10,466)
     Repayment of non-recourse real estate debt                        -           (45,551)           (23,088)
     Deferred financing costs                                    (1,567)            (4,355)            (1,438)
     Net proceeds from initial public offering                         -            244,329                  -
     Repayment of subordinated notes                                   -           (23,223)                  -
     Proceeds from issuance of mandatorily redeemable
     securities                                                   16,377             17,500                  -
     Payments on demand note, Principal Shareholder              (3,267)               (87)               (16)
     Proceeds from exercise of stock options                           -                 40                  -
     Cash payment in connection with early retirement of
     debt                                                              -            (5,087)                  -
                                                            -------------      -------------   ----------------
Net cash provided by financing activities                         19,655            375,407            108,354
                                                            -------------      -------------   ----------------
Net decrease in cash and cash equivalents                         12,373              (188)            (6,367)
Cash and cash equivalents, beginning of period                     3,185             15,558             15,370
                                                            -------------      -------------   ----------------
Cash and cash equivalents, end of period                     $    15,558        $    15,370        $     9,003
                                                            =============      =============   ================


</TABLE>





           See accompanying notes to consolidated financial statements
                                       F-5


<PAGE>

<TABLE>

                             American Skiing Company
                Consolidated Statement of Cash Flows (continued)
                                 (in thousands)
<CAPTION>
                                                                                Year Ended
                                                            ---------------------------------------------------
                                                              July 27,           July 26,           July 25,
                                                                1997               1998               1999
                                                            -------------      -------------   ----------------


<S>                                                             <C>                <C>                 <C>
Supplemental disclosures of cash flow information
 Cash paid for interest                                         $ 20,998           $ 36,583            $41,295
 Cash paid (refunded) for income taxes                           (1,492)                 43               (10)

 Supplemental schedule of noncash investing
 and financing activities
 Property acquired under capital leases                          $ 7,824            $ 9,832            $ 7,425
 Notes payable issued for purchase of assets                           -             14,232              1,395
 Liabilities assumed associated with purchased companies           1,826             17,205                  -
 Deferred tax asset (liability) associated with purchased
    companies                                                          -              1,650                  -
 Purchase price adjustments                                        1,541                  -                  -
 Purchase price adjustments related to deferred taxes              1,317              1,226                  -
 Note payable issued for purchase of a business                    6,500                  -                  -
 Note receivable received for sale of a business                   2,750                  -                  -
 Purchase of minority interest                                       626                375                  -
 Accretion of discount and issuance costs and dividends
    accrued on mandatorily redeemable preferred stock                444              5,346              4,372
 Exchange of mandatorily redeemable securities for 10 1/2%
    Repriced Convertible 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 East and ASC West are holding companies which are wholly-owned
subsidiaries of ASC. ASC East and its  wholly-owned  subsidiaries  (collectively
"ASC East")  operate the following  resorts:  Sugarloaf/USA  and Sunday River in
Maine, Attitash Bear Peak in New Hampshire, and Killington,  Mount Snow/Haystack
and  Sugarbush  in Vermont.  ASC West and its  subsidiaries  (collectively  "ASC
West")  operate the  following  resorts:  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.  For periods prior to June 17, 1997, the term "the
Company"  refers to ASC East and its  subsidiaries,  and  after  such  date,  to
American Skiing Company and its subsidiaries  (including ASC East). In 1997, the
Company formed ASC Utah, a wholly-owned subsidiary, for the purpose of acquiring
the Wolf Mountain ski area in Utah, which was subsequently  renamed The Canyons.
In August  1997,  the  Company  formed  ASC West for the  purpose  of  acquiring
Steamboat and Heavenly.

          ASC was formed on June 17, 1997,  when Leslie B. Otten (the "Principal
Shareholder")  exchanged his 96% ownership  interest in 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  accompanying  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  the  Principal
Shareholder.

          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.

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 1997,  1998 and 1999
consisted of fifty-two weeks.

                                      F-7
<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.  Restricted cash classified
as long-term  represents  deposits  held in escrow  relating to  pre-sales  with
anticipated closing dates subsequent to fiscal 2000.

          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 1997, 1998, and 1999 totaled $473,000,
$2.4 million and $6.4 million, respectively.

         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 interest method.

                                      F-8
<PAGE>

         Long-Term Investments

          Long-term  investments  are  comprised  of U.S.  Treasury  Securities,
Obligations of U.S. Government corporations and agencies and corporate bonds. It
is management's intent to hold these securities until maturity. These securities
are carried at amortized cost, which  approximates  quoted market values at July
26, 1998 and July 25, 1999. Contractual maturities relating to these investments
range from less than one year to five years at July 25, 1999.

         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
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 25, 1999,  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.  Deposits and deferred  revenue  classified as long-term
represent deposits held in escrow relating to pre-sales with anticipated closing
dates subsequent to fiscal 2000.

        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 1997, 1998 and
1999, the Company incurred total interest cost of $24.3 million,  $37.5 million,
and  $46.4  million  respectively,  of which  $575,000,  $2.9  million  and $7.1
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 1997, 1998 and 1999.  Contributions  to the savings
plans for 1997, 1998 and 1999 totaled $301,000, $225,000 and $395,000, excluding
contributions  to the  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.

                                      F-9

<PAGE>

         Advertising Costs

          Advertising  costs are expensed the first time the  advertising  takes
place.  At July 26, 1998 and July 25,  1999,  advertising  costs of $407,000 and
$244,000,  respectively,  were recorded in prepaid  expenses in the accompanying
consolidated  balance  sheet.  Advertising  expense for the years ended July 27,
1997,  July 26, 1998 and July 25, 1999 was $5.2  million,  $7.6 million and $9.5
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.

         Earnings Per Share

          In February  1997,  the Financial  Accounting  Standards  Board issued
Statement of Financial Accounting Standards No. 128, "Earnings Per Share" ("SFAS
128").  This   pronouncement   supersedes  the  previous   methodology  for  the
calculation of earnings per share as promulgated  under APB Opinion No. 15. SFAS
128 requires presentation of "basic" earnings per share (which excludes dilution
as a result of unexercised stock options and the Mandatorily  Redeemable 10 1/2%
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 27,  1997,  July 26,  1998 and July 25,  1999,  basic and
diluted loss per share are as follows:

<TABLE>
<CAPTION>

                                                                             Year Ended
                                                            -----------------------------------------------
                                                            July 27, 1997   July 26, 1998   July 25, 1999
                                                            --------------  --------------  ---------------
                           Income (loss)                       (in thousands, except per share amounts)
<S>                                                            <C>             <C>             <C>
        Income (loss) before preferred stock dividends and
            accretion and extraordinary items                  $  (5,482)      $  (1,867)      $  (27,950)
        Accretion of discount and dividends accrued on
            mandatorily redeemable preferred stock                   444           5,346            4,372
                                                            --------------  --------------  ---------------
        Income (loss) before extraordinary items                  (5,926)         (7,213)         (32,322)
        Extraordinary loss                                             -           5,081                -
                                                            --------------  --------------  ---------------
        Net income (loss) available to common shareholders     $  (5,926)     $  (12,294)      $  (32,322)
                                                            ==============  ==============  ===============

                              Shares
        Total weighted average shares outstanding (basic
        and diluted)                                                  978          25,809           30,286
                                                            ==============  ==============  ===============

              Basic and diluted loss per common share
        Loss before extraordinary items                        $   (6.06)      $   (0.28)       $   (1.07)
        Extraordinary loss                                              -            0.20                -
                                                            --------------  --------------  ---------------
        Net loss available to common shareholders              $   (6.06)      $   (0.48)       $   (1.07)
                                                            ==============  ==============  ===============
</TABLE>

         The Company  currently has  outstanding  36,626  shares of  Mandatorily
Redeemable  Convertible Preferred Stock which are convertible into shares of the
Company's  common stock. The common stock shares into which these securities are
convertible  have not been  included in the dilutive  share  calculation  as the
impact of their inclusion would be anti-dilutive. The Company also has 2,746,048
exercisable options outstanding to purchase shares of its common stock under the
Company's stock option plan as of July 25, 1999.  These shares are also excluded
from the dilutive share  calculation as the impact of their inclusion would also
be anti-dilutive.

                                      F-10
<PAGE>

         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" (Note 13).

         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 25,  1999.  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 26, 1998 and July 25, 1999 are
presented below (in thousands):

<TABLE>
<CAPTION>
                                              July 26, 1998                             July 25, 1999
                                          Carrying           Fair                 Carrying         Fair
                                           amount           value                 amount           value

<S>                                     <C>              <C>                      <C>              <C>
12% Senior Subordinated Notes           $   117,002      $  134,400               $   117,240      $  110,400
Other subordinated debentures           $    10,950      $    8,667               $    10,495      $    9,417
</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 with the fiscal 1999 presentation.

Recently Issued Accounting Standards

         In fiscal 1999, the Company adopted  Statement of Financial  Accounting
Standards No. 130,  "Reporting  Comprehensive  Income". As of July 25, 1999, the
Company has no such items that would  necessitate  disclosure  of  comprehensive
income.  As  such,  the  Company's  adoption  of SFAS 130 had no  effect  on the
accompanying consolidated financial statements.

         In fiscal 1999, the Company adopted  Statement of Financial  Accounting
Standards No. 131,  "Disclosures  about  Segments of an  Enterprise  and Related
Information"  ("SFAS 131"). This statement  established  standards for reporting
information on operating  segments in interim and annual  financial  statements.
The  Company  had  previously  disclosed  segment  information  under  SFAS  14,
"Financial  Reporting  for Segments of a Business  Enterprise".  The adoption of
SFAS  131 did  not  result  in a  change  in the  composition  of the  Company's
operating segments, or in the previously reported net income for each segment.

                                      F-11
<PAGE>

         In April 1998,  the AICPA issued SOP 98-5,  "Reporting  on the Costs of
Start-Up  Activities".  At adoption,  SOP 98-5 requires 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  Company  is  required  to and will  adopt  SOP 98-5 in the first
quarter of fiscal 2000 and  estimates  that it will  recognize  a  corresponding
charge of approximately $1 million as a change in accounting principle.

         In June 1998, the Financial  Accounting Standards Board ("FASB") issued
Statement of Financial  Accounting Standards No. 133, "Accounting for Derivative
Instruments and Hedging  Activities" ("SFAS 133"). In June 1999, the FASB issued
SFAS No. 137,  "Accounting for Derivatives and Hedging  Activities - Deferral of
the Effective Date of FASB Statement No. 133" ("SFAS 137"). SFAS 137 extends the
effective  date of SFAS 133 to all fiscal  years  beginning  after June 15, 2000
(fiscal  year  2001 for the  Company).  SFAS 133  requires  that all  derivative
instruments be recorded on the balance sheet at their fair value. Changes in the
fair value of derivatives are recorded each period in current  earnings or other
comprehensive income, depending on whether a derivative is designated as part of
a hedge transaction and, if it is, the type of hedge transaction.  Management of
the Company is currently  reviewing  the impact of SFAS 133 on its  consolidated
financial statements. 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
                                                                =============



          Amortization of goodwill and intangible assets charged to depreciation
and amortization was $1.3 million and $544,000,  respectively,  for fiscal 1998,
and $1.3 million and $545,000, respectively, for fiscal 1999.

                                      F-12
<PAGE>

          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.

         The minority  interest of $396,000 at July 25, 1999 is comprised of the
balance of $364,000 as of the Kamori  Acquisition date and the minority interest
in the income of the  subsidiary  of $11,000  for fiscal  1998 and  $21,000  for
Fiscal 1999.

           The  following  unaudited  pro forma  financial  information  for the
Company  gives  effect  to the  Kamori  Acquisition  as if the  transaction  had
occurred on July 29, 1996 (in thousands, except per share amounts):

<TABLE>
<CAPTION>
                                                                Year ended         Year ended
                                                               July 27, 1997      July 26, 1998
                                                                (unaudited)        (unaudited)
                                                               --------------     --------------

<S>                                                                <C>                <C>
                    Revenues                                       $ 262,566          $ 342,172
                    Loss from continuing operations                   (3,874)            (9,416)
                    Net loss                                          (4,318)           (19,843)

                    Basic and diluted loss per common share:
                      Loss before extraordinary items                ($0.15)            ($0.49)
                      Extraordinary loss                                   -             (0.17)
                                                               --------------     --------------
                      Net loss available to common shareholders      ($0.15)            ($0.66)
                                                               ==============     ==============

</TABLE>
          These pro forma  results have been prepared for  comparative  purposes
only and do not  purport to be  indicative  of the results of  operations  which
actually  would  have  resulted  had  the  transactions  occurred  on  the  date
indicated.

 Other Acquisitions

          On August 30, 1996,  the Company  purchased the remaining 49% minority
interest in  Sugarloaf/USA  for $2.0 million  cash.  The Company had  originally
purchased 51% of  Sugarloaf/USA  in connection  with its  acquisition of all the
outstanding common stock of S-K-I on June 28, 1996 (the "S-K-I Acquisition"). In
connection with the purchase of the minority  interest,  the Company  recorded a
liability in the amount of $492,000 to provide for contingent consideration that
may be paid  pursuant to the purchase  agreement.  During fiscal 1998 and fiscal
1999, the Company paid contingent  consideration of approximately $492,000, thus
exhausting the liability established for such payments.  The Company anticipates
that it will be required to make additional future contingent  payments pursuant
to the purchase agreement over the next three fiscal years. Such future payments
will be  treated in  accordance  with APB 16,  which  requires  that  contingent
consideration  be recorded as an additional cost of the acquired  enterprise and
amortized over the remaining life of the acquired  asset. In connection with the
purchase of Sugarloaf,  the Company paid certain debt in advance of its maturity
and  incurred  a  prepayment  penalty of  $600,000.  The  prepayment  penalty is
recorded in  interest  expense in the  accompanying  consolidated  statement  of
operations for the year ended July 27, 1997.

          In  November  1996,  the Company  purchased  the Pico Ski Resort for a
total purchase price of $5.0 million. The purchase price includes a cash payment
of $3.4 million and assumed liabilities of $1.6 million.

         Pursuant  to a consent  decree with the U.S.  Department  of Justice in
connection with the S-K-I Acquisition,  the Company sold the assets constituting
the Mt. Cranmore and Waterville Valley resorts for $17.2 million on November 27,
1996.

         In July 1997,  the Company  purchased The Canyons for a total  purchase
price of $8.3  million.  The  purchase  price  includes  a cash  payment of $1.6
million,  assumed  liabilities of $200,000 and the issuance of a note payable in
the amount of $6.5 million.

                                      F-13
<PAGE>

4.      Property and Equipment

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

                                                     July 26,        July 25,
                                                       1998             1999
                                                       ----             ----
                Buildings and grounds                 $ 159,841        $ 176,952
                Machinery and equipment                 117,704          166,475
                Lifts and lift lines                    158,074          161,102
                Trails                                   36,072           37,130
                Land improvments                         14,954           19,006
                                                    ------------    ------------
                                                        486,645          560,665

                Less: accumulated depreciation           69,817          111,288
                                                    ------------    ------------
                                                        416,828          449,377

                Land                                     73,755           72,249
                Construction-in-process                  30,556            7,528
                                                    ------------    ------------
                Property and equipment, net           $ 521,139        $ 529,154
                                                    ============    ============

          Property and equipment includes  approximately $19.3 million and $52.3
million of machinery and  equipment and lifts held under capital  leases at July
26, 1998 and July 25,  1999,  respectively.  At July 26, 1998 and July 25, 1999,
related accumulated  amortization on property and equipment under capital leases
was  approximately  $3.8 million and $9.0  million,  respectively.  Amortization
expense for property and equipment under capital leases was  approximately  $1.6
million,  $2.2 million and $4.4 million for 1997,  1998 and 1999,  respectively.
Total  depreciation  and  amortization  expense  relating  to all  property  and
equipment was $34.0 million and $40.4 million for 1998 and 1999, respectively.

5.       Demand Note, Principal Shareholder

          In June 1996, prior to the S-K-I Acquisition, the Company delivered to
the Principal  Shareholder a demand note in the principal amount of $5.2 million
for the amount  expected to become payable by the Principal  Shareholder in 1996
and  1997  for  income  taxes  with  respect  to the  Company's  income  as an S
Corporation  through  the date of the  S-K-I  Acquisition.  The  demand  note is
unsecured and bears interest at 5.4% per annum,  the applicable  federal rate in
effect at the time of  issuance.  The  amount in the  accompanying  consolidated
balance  sheet  at July 25,  1999 of $1.8  million  was  repaid  by the  Company
subsequent to the end of fiscal 1999 (see Note 17 - Subsequent Events).

6.       Long-Term Debt
<TABLE>
<CAPTION>

Long-term debt consists of (dollar amounts in thousands):
                                                                                             July 26,      July 25,
                                                                                               1998          1999
                                                                                            -----------   ------------
<S>                                                                                           <C>            <C>
Senior Credit Facility (Note 8)                                                               $194,227       $200,485

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 are due in March 2002. The note is collateralized
by the real estate developed for sale of GSRP.                                                  31,411         55,796

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.                    -         52,654

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.                                                                                       -          3,530

                                      F-14
<PAGE>

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 are due in June 2000.                         2,000          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.               1,844          1,912

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 is due in full in
July 2000.                                                                                       1,720          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 is due in full in July 2000.          1,000          1,000

Note payable with a face value of $2,097 and bearing interest at the rate of 8.25% per
annum. The principal and interest are payable upon completion of the Sundial Lodge at the
Canyons resort, which is expected in the Company's fiscal year 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 is payable upon completion of the Grand Summit Hotel at
the Canyons resort, which is expected in the Company's fiscal year 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 is due upon
completion of the Sundial Lodge project at the Company's Canyons resort. This project is
expected to be completed 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.                                 467          1,831

Note payable with face value of $1,000 to finance the purchase of a retail store. The note
does not accrue interest. The principal is due as follows: $200 in August 1999; $200 in
August 2000 and $300 in August 2001.                                                             1,000            700

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
remaining principal and accrued interest are due in February 2003.                               2,255          2,154

Obligations under capital leases                                                                12,664         33,642
Other notes payable                                                                              2,830          3,617
                                                                                            -----------   ------------
                                                                                               255,268        374,726
                                                                                            -----------   ------------
Less: current portion                                                                           43,698         60,882
                                                                                            -----------   ------------

Long-term debt, excluding current portion                                                     $211,570       $313,844
                                                                                            ===========   ============
</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 25, 1999.

At July 25, 1999,  the Company had letters of credit  outstanding  totaling $2.5
million.

                                      F-15
<PAGE>

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

                                      Long-term     Subordinated      Total
                                         debt          notes          debt
                                    -------------  ------------   ------------
2001                                $  62,561      $    525      $  63,086
2002                                   70,624           549         71,173
2003                                   15,752         1,074         16,826
2004                                   12,238         1,466         13,704
2005 and
thereafter                            160,038       123,448        283,486
Interest related to capitalized
leases                                (7,124)             -        (7,124)
Debt discount                           (245)             -          (245)
                                   -------------  ------------   ------------
                                    $ 313,844     $ 127,062      $ 440,906
                                   =============  ============   ============


7.       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. The Notes are general
unsecured  obligations  of ASC East,  subordinated  in right of  payment  to all
existing and future  senior debt of ASC East,  including  all  borrowings of the
Company under the Senior Credit  Facility.  The Notes mature July 15, 2006,  and
will be  redeemable  at the option of ASC East, in whole or in part, at any time
after July 15, 2001. ASC East incurred  deferred  financing  costs totaling $6.7
million in  connection  with the  issuance  of the Notes  which are  recorded as
deferred financing costs, net of accumulated  amortization,  in the accompanying
consolidated  balance sheet.  Amortization  expense included in the accompanying
consolidated statement of operations for the years ended July 27, 1997, July 26,
1998  and  July  25,  1999   amounted  to  $781,000,   $713,000  and   $668,600,
respectively. (See Note 17 - Subsequent Events)

         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,  commencing on January 15, 1997. Interest expense on the Notes amounted to
$14.6 million in 1997, 1998, and 1999.

          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.

          The  Company  entered  into  two  non-cancelable  interest  rate  swap
agreements (the "Swap Agreements") with BankBoston,  N.A. ("BankBoston") with an
effective date of February 9, 1998 (the "Effective Date") to manage the interest
rate risk associated with the Notes. The notional amount of both Swap Agreements
of $120.0  million  is equal to the face  value of the  Notes.  The  first  Swap
Agreement  matures on July 15, 2001,  the date on which the related  Notes first
become  redeemable  at the  option of the  Company.  The second  Swap  Agreement
matures on July 15, 2006,  the date on which the related Notes mature.  From the
Effective Date through July 15, 2001, the Swap Agreements effectively reduce the
Company's cash outflow relating to the payment of interest on the Notes from 12%
to 9.01%,  with the Company's  payment of interest to BankBoston at 9.01% of the
notional  amount and  BankBoston's  payment of interest to the Company at 12% of
the notional  amount.  The reduction in the net cash outflow for interest had no
impact on the accompanying  consolidated statement of operations as the net swap
receipt from  BankBoston of $5.1 million for the period from the Effective  Date
through  July  25,  1999 is  included  in  other  long-term  liabilities  in the
accompanying  consolidated  balance  sheet.  The Company  will  accrue  interest
expense on the  cumulative  net swap  receipt  over the period of the first Swap
Agreement.  This other long-term liability,  including accrued interest thereon,
will be amortized as a credit to interest  expense over the period from July 15,
2001 to July 15,  2006.  Under the second Swap  Agreement,  which will remain in
effect for the period from July 15, 2001 to July 15, 2006, the Company will make
interest payments to BankBoston at 9.01% of the notional amount while BankBoston
will make  interest  payments back to the Company at the LIBOR rate in effect at
that  time.  Depending  on the  LIBOR  rate in effect  during  the  second  Swap
Agreement,  the  Company's  interest  rate  exposure  and its related  impact on
interest  expense and net cash outflow may  increase or decrease  from the fixed
rate under the Notes of 12%.  The Company is exposed to credit loss in the event
of  nonperformance  by  the  other  party  to  the  Swap  Agreements;   however,
nonperformance is not anticipated.

                                      F-16
<PAGE>

           On January  26,  1998,  the  Company and the holders of the 4% of the
outstanding  shares of ASC East entered  into an  agreement  whereby the Company
issued  615,022  shares of its Common  Stock in exchange for all ASC East common
stock shares not owned by the Company.  In  connection  with the  exchange,  the
Company  recorded $8.5 million of goodwill which  represented  the excess of the
fair market value of the common stock  exchanged  relative to the carrying value
of the  minority  interest.  Amortization  expense  relating to the goodwill was
$127,000  and  $228,000  for the years  ended July 26,  1998 and July 25,  1999,
respectively.

         A portion of the proceeds from the Senior Credit Facility (Note 8) 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 25, 1999 are
due as follows (in thousands):

                                                 Interest   Principal
                                       Year        Rate       Amount
                                   ------------------------------------
                                       2000         6%       $     673
                                       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
                                                            -----------
                                                              $ 10,495
                                                            ===========

8.       Senior Credit Facility

         In connection with the Offering,  the Company entered into a new credit
facility (the "Senior Credit Facility") with BankBoston on November 12, 1997 and
repaid the  indebtedness  under the Company's then existing credit facility (the
"Old 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 November 13, 1997,  BankBoston,
as agent,  syndicated  the Senior  Credit  Facility to a group of  participating
lenders (the "Banks").

         The Senior Credit  Facility is divided into two  sub-facilities,  $64.6
million of which is available for  borrowings  by ASC East and its  subsidiaries
(the "East Facility") and $149.0 million of which is available for borrowings by
the Company excluding ASC East and its subsidiaries  (the "West Facility").  The
East Facility consists of a six-year  revolving credit facility in the amount of
$34.9  million and an eight-year  term facility in the amount of $29.7  million.
The West  Facility  consists of a six-year  revolving  facility in the amount of
$74.7 million and an eight-year term facility in the amount of $74.3 million

         The revolving facilities are subject to an annual requirement to reduce
the  outstanding  debt to a balance of not more than $9.9  million  for the East
Facility and not more that $44.7  million for the West  Facility for a period of
30 days. The maximum  availability  under the revolving  facilities  will reduce
over the term of the Senior Credit Facility by certain prescribed  amounts.  The
term facilities amortize at a rate of approximately 1.0% of the principal amount
for the first six years with the  remaining  portion of the principal due in two

                                      F-17
<PAGE>

substantially equal installments in years seven and eight.  Beginning July 1999,
the Senior Credit Facility requires  mandatory  prepayment of 50% of excess cash
flows during any period in which the ratio of the Company's total senior debt to
earnings before interest  expense,  income taxes,  depreciation and amortization
("EBITDA")  exceeds  3.50  to 1.  In no  event,  however,  will  such  mandatory
prepayments reduce either revolving facility commitment below $35.0 million. The
Senior Credit Facility contains  affirmative,  negative and financial  covenants
including  maintenance of debt to EBITDA,  minimum net worth, EBITDA to interest
expense, and cash flow to debt service financial ratios.  Except for the debt to
EBITDA  and  minimum  net worth  ratios,  which are  calculated  at both the ASC
consolidated  level  and at the ASC East and ASC West  levels,  compliance  with
financial  covenants is determined on a consolidated basis  notwithstanding  the
bifurcation of the Senior Credit Facility into sub-facilities.

         At July 25, 1999, the revolving portion of the East and West Facilities
had  outstanding  borrowings  of $30.0 million and $64.0  million,  respectively
under LIBOR  contracts  which bear interest at rates ranging from 8.64% to 8.69%
per  annum.  At July 25,  1999,  the East and West  Facilities  had  outstanding
borrowings of $1.9 million and $700,000,  respectively, in Money Market accounts
which bear interest at 8.50%. The balance of the borrowings  outstanding at year
end  under the West  Facility  of  $48,000  bears  interest  at the  greater  of
BankBoston's  base rate or the Federal Funds Rate plus 2% per annum.  There were
no  borrowings  outstanding  under the East Facility at July 25, 1999 other than
those described above under LIBOR contracts and Money Market  accounts.  At July
25, 1999, the LIBOR,  Money Market and Base rates were 8.68%,  8.50% and 10.00%,
respectively. At July 25, 1999, the term portion of the East and West Facilities
had outstanding borrowings of $29.7 million and $74.3 million, respectively, and
bear interest at rates ranging from 9.18% to 10.5%.  Both the revolving and term
portions of the Senior Credit  Facility  accrue  interest daily and pay interest
quarterly,  in arrears. At July 25, 1999, accrued interest for the East and West
Facilities was $1.2 million and $2.8 million, respectively. The East Facility is
secured by substantially all the assets of ASC East and its subsidiaries, except
the real estate  development  subsidiaries,  which are not  borrowers  under the
Senior Credit Facility.  The West Facility is secured by  substantially  all the
assets of ASC West and its subsidiaries.

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

         In November  1997,  the Company paid financing fees with respect to the
Senior Credit Facility of 1.75% of the total commitment,  or $3.8 million to the
Banks.  In March  1999,  the  Company  also paid  additional  financing  fees of
$806,000  with  respect  to the  Credit  Facility  Amendment.  The  Company  has
capitalized  these fees and certain  other debt related  costs and is amortizing
them over the term of the Senior Credit Facility.  Total  unamortized  financing
fees relating to the Senior Credit Facility recorded in deferred financing costs
in the  accompanying  consolidated  balance  sheet were $4.3 million at July 25,
1999.

     The Senior Credit Facility was restructured subsequent to the end of fiscal
1999 pursuant to a fourth  amendment  entered into by the Company (see Note 17 -
Subsequent Events).

                                      F-18

<PAGE>


9.        Income Taxes

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

                                                                            Year ended
                                                          ------------- --- ------------ --- --------------
                                                          July 27, 1997     July 26, 1998    July 25, 1999
                                                          -------------     ------------     --------------
<S>                                                       <C>               <C>              <C>
Current tax provision
     Federal                                              $        -        $        -       $        -
     State                                                         -                 -                -

Deferred tax provision (benefit)
     Federal                                                   (2,815)              580           (11,939)
     State                                                       (798)          (1,354)            (3,118)
                                                          -------------     ------------     --------------

Total provision (benefit)                                    $ (3,613)         $  (774)         $ (15,057)
                                                          =============     ============     ==============
</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.

     Deferred tax  liabilities  (assets) are  comprised of the following at July
26, 1998 and July 25, 1999 (in thousands):

<TABLE>
<CAPTION>
                                                                        July 26, 1998    July 25, 1999
                                                                        -------------    -------------
<S>                                                                       <C>              <C>
    Property and equipment basis differential                             $   43,992       $   53,814
    Other                                                                        880              640
                                                                        -------------    -------------
    Gross deferred tax liabilities                                            44,872           54,454

    Tax loss and credit carryforwards                                       (15,017)         (30,887)
    Capitalized  cost                                                        (1,042)          (1,856)
    Deferred revenue and contracts                                             (259)         (10,536)
    Stock compensation  charge                                               (4,939)          (3,112)
    Reserves and accruals                                                    (3,527)          (4,239)
    Other                                                                    (1,229)            (661)
                                                                        -------------    -------------
    Gross deferred tax assets                                               (26,013)         (51,291)
    Valuation allowance                                                        2,447            2,626
                                                                        -------------    -------------
    Net deferred tax liability (asset)                                    $   21,306        $   5,789
                                                                        =============    =============

</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,  minority
interest  in loss of  subsidiary  and  extraordinary  loss  as a  result  of the
following differences (in thousands):

<TABLE>
<CAPTION>

                                                                              Year ended
                                                            ------------- -- -------------- -- --------------
                                                            July 27, 1997     July 26, 1998     July 25, 1999
                                                            -------------    --------------    --------------
<S>                                                            <C>               <C>              <C>
Income tax provision (benefit) at the statutory U.S. tax
rates                                                          $ (3,271)         $ (1,080)        $ (15,052)
Increase (decrease) in rates resulting from:
      State taxes, net                                             (798)           (1,354)           (3,118)
      Change in valuation allowance                                   71               250                 -
      Stock option compensation                                        -             1,019             1,623
      Nondeductible items                                            243               634               848
      Other                                                          142             (243)               642
                                                            -------------    -------------     --------------
Income tax provision (benefit) at the effective tax rates      $ (3,613)           $ (774)       $  (15,057)
                                                            =============    ==============    ==============
</TABLE>

         At July 25, 1999,  the Company has federal net  operating  loss ("NOL")
carryforwards  of  approximately  $67.3 million which expire in varying  amounts
though  the year 2019 and a federal  capital  loss  carryover  of  approximately
$700,000 that expires in the year 2003. 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

                                      F-19
<PAGE>

ownership.  In  November  of 1997  as a  result  of the  Offering,  the  Company
experienced  a change in ownership.  Approximately  $27.5 million of the federal
NOL  carryforwards  were  incurred  prior to the  Offering and are subject to an
overall  annual  limitation  under  Section 382 of  approximately  $14  million.
Because of recent  acquisitions,  the  limitation 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 lower annual limitations as a result of previous changes in
ownership.  Subsequent  changes in ownership could further affect the limitation
in future years.(See Note 17 - Subsequent Events).

         In addition to the  limitations  under  Section 382,  approximately  $7
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.  Management
believes that the valuation  allowance of $2.6 million is  appropriate  because,
due to the change of ownership and the resulting annual limitations, the Company
will not be able to use all of the  potential  tax  benefits  from  existing NOL
carryforwards and tax credits as of July 25, 1999.

10.      Mandatorily Redeemable Securities

          Pursuant to a Securities  Purchase  Agreement (the "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 "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  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.

          On November 15, 1997,  subsequent  to the  completion of the Offering,
each share of 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 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  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 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 25, 1999 as well as any Common  Stock and Class A Common Stock issued in
the future.

                                      F-20
<PAGE>

11.      Related Party Transactions

          The  Principal  Shareholder's  wife  is  employed  by the  Company  as
director of retail  purchasing and is actively  involved in the Company's retail
sales activities. During fiscal 1997, 1998 and 1999, the Principal Shareholder's
wife received total compensation of $52,000, $52,000 and $54,000,  respectively.
During the first  quarter of fiscal  1998,  the Company  granted  the  Principal
Shareholder's  wife fully  vested  options to  purchase  up to 20,060  shares of
Common Stock at a price of $2.00 per share.  During 1999 the Company granted the
Principal  Shareholder's  wife  options to  purchase  up to 750 shares of Common
Stock at a price of $7.00 per share that will vest over the next four years.

         Western Maine Leasing Co., a corporation  wholly-owned by the Principal
Shareholder,  leases heavy equipment to Sunday River under short-term leases. In
fiscal 1997, 1998 and 1999, payments under such leases totaled $24,000,  $17,000
and $0 respectively.

         Sunday River provided  lodging  management  services for Ski Dorm, Inc.
("Ski Dorm"), a corporation  owned by the Principal  Shareholder and his mother,
which owns a ski dorm located near the Sunday River resort.  During fiscal 1997,
1998 and 1999, payments by Ski Dorm to Sunday River totaled $258,000, $2,000 and
$  65,000,  respectively.  In  addition,  Ski  Dorm  issued  to  Sunday  River a
promissory note in 1995 with a principal  amount of $265,000,  of which $250,000
was  outstanding  at July 25,  1999.  This note is secured by a mortgage on real
estate  and  related  improvements  owned by Ski Dorm.  Interest  on the note is
charged at the prime rate plus 1 1/2% and principal and any accrued interest are
due in  December  1999.  The  Company  purchased  Ski Dorm  from  the  Principal
Shareholder  (among other assets) subsequent to the end of fiscal 1999 (see Note
17 - Subsequent Events).

     The  Company  provided  an  interest  free  construction  loan to Mr.  Rich
McGarry, Senior Vice President and General Manager of Killington Ski Resort. The
Company  relocated Mr.  McGarry to  Killington  during fiscal 1999 and agreed to
provide financing on the construction of a home in the Killington area until his
previous  residence  was sold.  As of July 25,  1999 the balance of the loan was
$316,027 which was the largest amount advanced during fiscal 1999.

          The  Principal  Shareholder  is the  obligor  under a margin loan (the
"Margin  Loan")  with ING (U.S.)  Capital  Corporation.  The Margin Loan has two
different  maintenance  bases:  (i) one which requires that the aggregate market
value of the  collateral  be at a  certain  level  in  order to take  additional
advances under the  arrangement to make interest  payments (the "Advance  Base")
and (ii) one which requires that the aggregate market value of the collateral be
at a  certain  level in order to avoid a default  under the terms of the  Margin
Loan (the "Minimum Base").  The Margin Loan is  collateralized  by the Principal
Shareholder's 833,333 shares of the Company's Common Stock and 14,760,530 shares
of the  Company's  Class A Common Stock.  At any time that the aggregate  market
value of the collateral is below the Minimum Base, the Principal  Shareholder is
required  to  either  pay down  the  balance  of the  Margin  Loan or to  pledge
additional  collateral.  The  Company is not liable for nor do any of its assets
collateralize the Margin Loan.

12.      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 1997, 1998 and 1999
was $2.2 million, $2.5 million and $2.6 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

                                      F-21
<PAGE>

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 1997, 1998
and 1999 was $0, $473,000, and $311,000,  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 $19.0 million and are
payable at various times and in varying  amounts,  at the Company's  discretion,
through July 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.  Option  payments for the year ended July 26, 1998 and July 25,
1999 were $7.6 million and $3.6 million, respectively, and are included in other
assets in the accompanying consolidated balance sheet.

          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 $4.2 million $6.4 million
and $6.1 million for the years ended 1997, 1998 and 1999, respectively.

         Future  minimum lease  payments for lease  obligations at July 25, 1999
are as follows (in thousands):

                                                    Capital        Operating
                                                     leases          leases
                                                 ------------    ------------
2000                                              $ 8,349         $ 5,410
2001                                                8,503           2,122
2002                                                8,791           1,646
2003                                                6,025           1,242
2004 and thereafter                                11,639          25,418
                                                 ------------    ------------
       Total payments                              43,307         $ 35,838
                                                                 ============
       Less interest                                9,665
                                                 ------------
       Present value of net minimum payments       33,642
       Less current portion                         5,761
                                                 ------------
       Long-term obligations                     $ 27,881
                                                 ============

          In the fourth quarter of fiscal 1998,  the Company began  construction
on two quartershare hotel projects,  one at The Canyons,  one at Steamboat and a
whole ownership hotel project at The Canyons. Total construction costs for these
three projects are estimated to be $244.8 million.  These projects are primarily
being financed  through a $110.0 million  revolving  construction  loan facility
with TFC Textron for the quarter share  projects and a $29 million  construction
loan from Key Bank for the whole  ownership  hotel.  The Company  also has a $58
million term facility  with  BankBoston  that can be used for these  projects as
well as general and operating expenditures.  As of July 25, 1999 the Company had
drawn  outstanding $55.8 million on the Textron facility and $6.9 million on the
Key Bank  facility.  The Company  estimates  that total costs to complete  these
projects will be approximately  $129.3 million dollars,  with available drawings
of $125.8 million.  The additional funds will be generated from the net proceeds
of the sale of existing inventory.

         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

                                      F-22
<PAGE>

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.

         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 recently  received  notification that its Heavenly resort is expected to
be designated as a PRP at a Superfund site in Patterson, CA. The Company has yet
to be officially designated with respect to this 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.

13.     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
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
                ------------------------------------------------------------

         During fiscal 1998, the Company granted  nonqualified options under the
Plan to certain key members of management to purchase  672,010  shares of common

                                      F-23
<PAGE>

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 $5.7 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 will vest ratably to 100% over the following
four years. For fiscal 1998 and fiscal 1999, the Company recognized $500,000 and
$773,000, 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  recorded  in  fiscal  1999 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  $200,000  in tax bonus  payments  made in  fiscal  1999 in
connection  with  options  exercised.  The  remaining  $5.5  million  tax  bonus
liability is reflected in accounts payable and other current  liabilities in the
accompanying  consolidated  balance  sheet at July 25,  1999.  All  other  stock
options  granted in fiscal 1998 and fiscal  1999 had an exercise  price equal to
the fair market value of the common stock on the date of the grant in accordance
with the Plan.

         The  following  table  summarizes  information  about the stock options
outstanding under the Stock Plan at July 25, 1999:
<TABLE>
<CAPTION>

                                           Weighted
                                            Average
                                          Remaining     Weighted                 Weighted
              Range of                  Contractual      Average                  Average
              Exercise    Outstanding      Life (in     Exercise Exercisable     Exercise
              Prices        @ 7/25/99        years)        Price   @ 7/25/99        Price
              ----------------------------------------------------------------------------
<S>            <C>            <C>               <C>        <C>       <C>            <C>
               $2 - $5        653,289           8.0        $2.01     557,001        $2.01
                6 - 10      1,193,500           9.0         7.18      145,000        7.16
               11 - 15         22,500           8.0        14.19       22,500       14.19
               16 - 18      2,021,547           8.0        18.00    2,021,547       18.00
              ----------------------------------------------------------------------------
               $2 - $18     3,890,836           8.3       $11.97    2,746,048      $14.15
              ----------------------------------------------------------------------------
</TABLE>

         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 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  increased  to the pro forma  amounts
indicated below (dollar amounts in thousands):

<TABLE>
<CAPTION>
              Fiscal Years Ended                               July 26, 1998        July 25, 1999
              ---------------------------------------------------------------------------------
<S>                                                         <C>                    <C>
              Net Loss
                   As reported                              $  (12,294)            $  (32,322)
                   Pro forma                                   (27,562)               (32,691)
              Basic and fully diluted net
              loss per common share
                   As reported                                   (0.48)                 (1.07)
                   Pro forma                                     (1.07)                 (1.08)

</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>
<CAPTION>

             Fiscal Years Ended                               July 26, 1998        July 25, 1999
             ---------------------------------------------------------------------------------
<S>                                                          <C>                   <C>
             Expected life                                   10 yrs                10 yrs
             Risk-free interest rate                          5.6%                  6.0%
             Volatility                                      47.1%                  68.4%
             Dividend yield                                    ---                   ---
</TABLE>
                                      F-24
<PAGE>

         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 1998 with an exercise  price of $2.00 per share was $16.92.  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.


14.      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 the Principal  Shareholder 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.  The
Principal  Shareholder  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. (See Note 17 - Subsequent Events).


15.      Business Segment Information

          The Company currently operates in two business  segments,  Resorts and
     Real Estate. Data by segment is as follows:

<TABLE>
<CAPTION>

                                                   July 27, 1997       July 26, 1998       July 25, 1999
                                                   --------------      --------------      ---------------
<S>                                                   <C>                 <C>                  <C>
      Net revenues:
         Resorts                                      $  163,310          $  277,574           $  292,558
         Real estate                                      10,721              60,992               24,492
                                                   --------------      --------------      ---------------
                                                      $  174,031          $  338,566           $  317,050
                                                   ==============      ==============      ===============

      Income from operations:
         Resorts                                      $   19,666          $   40,811           $   15,169
         Real estate                                       1,771              17,438              (1,532)
         Corporate                                       (7,052)            (26,760)             (17,262)
                                                   --------------      --------------      ---------------
                                                      $   14,385          $   31,489          $   (3,625)
                                                   ==============      ==============      ===============

      Depreciation and amortization:
         Resorts                                      $   16,934          $   35,579           $   39,455
         Real estate                                           -                 385                  976
         Corporate                                         1,359               2,001                3,771
                                                   --------------      --------------      ---------------
                                                      $   18,293          $   37,965           $   44,202
                                                   ==============      ==============      ===============
      Capital expenditures:
         Resorts                                      $   31,091           $  92,998           $   52,465
         Real estate                                      30,926              93,255              153,106
                                                   --------------      --------------      ---------------
                                                      $   62,017          $  186,253           $  205,571
                                                   ==============      ==============      ===============
      Identifiable assets:
         Resorts                                                          $  613,922           $  599,173
         Real estate                                                         120,957              248,412
         Corporate                                                           44,607                55,644
                                                                       --------------      ---------------
                                                                          $  779,486           $  903,229
                                                                       ==============      ===============

</TABLE>
                                      F-25
<PAGE>


16.      Quarterly Financial Information (Unaudited)

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

                                                           First        Second        Third        Fourth
                                                          Quarter      Quarter       Quarter      Quarter
                                                        -----------  ------------  -----------   ----------
<S>                                                        <C>          <C>          <C>           <C>
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

Year ended July 26, 1998:

Net sales                                                  $14,426      $114,171     $185,158      $24,811
Income (loss) from operations                             (26,717)        17,218       61,225     (20,237)
Extraordinary loss, net of income tax benefit                    -         5,081            -            -
Income (loss) before preferred stock dividends            (20,995)         (126)       32,781     (18,608)
Net income (loss) available to common shareholders        (23,426)         (866)       31,690     (19,692)

Basic income (loss) per share:
Income (loss) before extraordinary items                  $ (1.59)      $   0.15     $   1.05     $ (0.65)
Extraordinary loss                                               -        (0.18)            -            -
Net income (loss) available to common shareholders        $ (1.59)     $  (0.03)     $   1.05     $ (0.65)
Weighted average shares outstanding                         14,761        27,913       30,266       30,271

Fully diluted income (loss) per share:
Income (loss) before extraordinary items                  $ (1.59)      $   0.15     $   1.03     $ (0.65)
Extraordinary loss                                               -        (0.18)            -            -
Net income (loss) available to common shareholders        $ (1.59)     $  (0.03)     $   1.03     $ (0.65)
Weighted average shares outstanding                         14,761        28,424       30,840       30,271
</TABLE>


17.      Subsequent Events

Issuance of 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.  After using a portion of the proceeds
from the Series B Preferred  Stock sale to (1) pay $5.4 million to the Principal
Shareholder for the purchase of certain  strategic assets and the repayment of a
demand note issued by a subsidiary  of the Company,  (2) pay  approximately  $16
million in fees and  expenses in  connection  with the Series B Preferred  Stock
sale and related transactions, the Company used the remaining proceeds to reduce
indebtedness  under its Senior  Credit  Facility,  approximately  $30 million of
which will be reborrowed and invested in its principal  real estate  development
subsidiary.

      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 48.5% of the Company's outstanding common stock and Class A common
stock as of August 9, 1999.  Oak Hill is entitled to vote its shares of Series B
Preferred  Stock on matters  (other than the  election of  Directors)  as if its

                                      F-26
<PAGE>

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  Principal  Shareholder  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 the Principal  Shareholder may elect up to eight of
the 11 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,  at which time the  dividend  rate will revert
back to  8.5%.  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,  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  following  pro forma  financial  information  of the Company gives
effect to the Series B Preferred  Stock sale as if the  transaction had occurred
on July 27, 1998,  with dividends on the Series B Preferred  Stock accrued at an
effective rate of 9.7%, assuming that the Company will elect to accrue dividends
for the first five years:

<TABLE>
<CAPTION>

                                                Year Ended
                                               July 25, 1999       Transaction         Pro Forma
                                                The Company        Adjustments        As Adjusted
                                              ----------------    --------------     --------------
                                               (in thousands of dollars except per share amounts)

<S>                                              <C>                   <C>            <C>
    Depreciation and amortization                $     44,202              $529        $    44,731
                                              ----------------    --------------     --------------
    Loss from operations                              (3,625)             (529)            (4,154)
    Interest expense                                   39,382          (10,915)             28,467
    Provision for (benefit from) income
     taxes                                           (15,057)             4,050           (11,007)
                                              ----------------    --------------     --------------

    Income (loss) before accretion of
     discount and dividends accrued on preferred
     stock                                           (27,950)             6,335           (21,615)

    Accretion of discount and dividends
     accrued on mandatorily redeemable preferred
     stock                                              4,372            16,386             20,758
                                              ----------------    --------------     --------------
    Net loss available to common
     shareholders                               $    (32,322)      $   (10,051)       $   (42,373)
                                              ================    ==============     ==============
    Basic and diluted earnings per share:
     Net loss available to common
     shareholders                               $     (1.07)                          $    (1.40)
                                              ================                       ==============
</TABLE>

         These pro forma  results have been  prepared for  comparative  purposes
only and do not  purport to be  indicative  of the results of  operations  which
actually would have resulted had the transaction occurred on the date indicated.

      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  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. In connection with the
merger,  the certificate of  incorporation  of the new company provides that all
members of the new company's board of directors be elected  annually in contrast
to the Company's previous election process in which  approximately  one-third of
the Board of Directors was elected for three year terms every three years.

      On October 7, 1999, a special meeting of stockholders  was held to vote on
(1) the approval of the issuance of 46,124,575  shares of the  Company's  common
stock,  which would be issued upon conversion of the Series B Preferred Stock if
the  Company  elects to accrete  dividends  rather than pay them in cash for the
first five years, and (2) the approval of the Delaware Reincorporation.  Both of
these  proposals were approved by a majority of the  shareholders at the special
meeting.

                                      F-27

<PAGE>

Internal Revenue Code Section 382 Change of Control; Loss of Tax Benefits

      The Company  anticipates that the issuance of the Series B Preferred Stock
to Oak Hill will  result in an  "ownership  change"  for  federal  and state tax
purposes.  An ownership  change will cause certain  limitations  to apply to the
Company's and its subsidiaries' use of their net operating loss carryforward and
other tax carryforward attributes (collectively, "tax attributes").  Determining
the amount of such limitation  requires a number of factual  determinations  and
the  application  of  recently   issued,   complex   Internal   Revenue  Service
Regulations.  The  Company is  currently  evaluating  the change in control  and
effect this will have on the tax attributes.  If all tax attributes are lost due
to the change in control the Company will be required to write off approximately
$50 million in the first quarter of fiscal 2000.

Related Transactions

      In connection  with Series B Preferred  Stock sale,  the Company  obtained
consents (1) from lenders and creditors of the Company stating that the Series B
Preferred  Stock  sale would not  constitute  a "change  of  control"  under the
relevant  loan  agreements,  (2) from the holders of the 10.5% Senior  Preferred
Stock of the Company  approving the issuance of the Series B Preferred Stock and
the terms of such stock and (3) from noteholders under the Indenture relating to
the 12% Senior Subordinated Notes due 2006 of the Company's subsidiary, ASC East
(the  "Indenture"),   approving  the  "rollup  and  restructuring"   transaction
(described below) and certain other amendments to the Indenture.

Rollup and Restructuring Transaction

       In order to comply with the  conditions to closing the Series B Preferred
Stock sale, certain amendments were made to the Indenture. 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.  On July 20,  1999 ASC
East issued a consent  solicitation to the holders of the Notes,  the purpose of
which was to approve a merger of ASC with ASC East and ASC West. This merger was
approved on August 1, 1999 and a payment of approximately  $1.5 million was paid
to the holders of the Notes.  The Company,  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  certain  credit
facilities and under the Indenture.  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  merger:  (a) ASC East is no  longer
required to file annual reports and make other filings under the  regulations of
the  Securities  Exchange  Act of 1934  ("Securities  Act");  (b) the  Company's
capital  structure has been  simplified,  which is expected to make it easier to
raise capital in the future;  and (c) the capital and assets of ASC East and its
subsidiaries  are  available  to  satisfy  the  obligations  of ASC West and its
subsidiaries.

      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 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.  Previous ASC East Securities Act filings
included condensed  consolidating  financial  information that listed separately
the issuer (ASC  East),  the  guarantor  subsidiaries  under the Notes,  and the
non-guarantor subsidiaries. Because the Notes are now guaranteed by subsidiaries
formerly  owned by ASC  West in  addition  to the  original  ASC East  guarantor
subsidiaries,  the  non-guarantor  subsidiaries  subsequent to the merger are de

                                      F-28
<PAGE>

minimis as compared to the Company,  and as such,  the  condensed  consolidating
financial  information  relating to the guarantor  subsidiaries of the Notes are
not included in the  footnotes to the financial  statements of the Company.  The
total assets of the  non-guarantor  subsidiaries  represented  0.5% of the total
assets of the Company as of July 25, 1999.  Pre-tax income of the  non-guarantor
subsidiaries  represented  1.75% of total pre-tax  income of the Company for the
year ended July 25, 1999, and net income available to common shareholders of the
non-guarantor  subsidiaries  represented  1.33% of total net income available to
common shareholders of the Company for the year ended July 25, 1999.

Restructuring of Senior Credit Facility

      In connection  with the Series B Preferred Stock sale, the Company entered
into a Fourth  Amendment  to the Senior  Credit  Facility,  dated August 6, 1999
("the Amended  Senior Credit  Facility") to (1) change the definition of "change
in control" so that it would not be  triggered  by the  issuance of the Series B
Preferred  Stock;  (2) allow the issuance of the Series B Preferred  Stock;  (3)
allow the consummation of the rollup transaction  described above; (4) allow the
investment of approximately $30 million into the Company's principal real estate
development  subsidiary;  (5) allow the purchase of certain assets from entities
controlled  by  the  Principal  Shareholder;  (6)  allow  the  amendment  of the
Indenture  described  above;  and (7) allow for $23.1 million in resort  capital
expenditures  during fiscal year 2000 plus up to an  additional  $30 million for
construction of a gondola at the Heavenly  resort,  which the Company  currently
plans to construct during fiscal years 2000 and 2001.

      Pursuant to the Fourth Amendment,  the Senior Credit Facility was restated
and  consolidated  from two  sub-facilities  totaling  $215  million to a single
facility totaling $165 million. The Amended 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 Amended  Senior Credit
Facility matures on May 31 2004, and the term portion matures on May 31, 2006


                                      F-29
<PAGE>