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 26, 1998

                        Commission file number 333-33483

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

                                   Maine 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:

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

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

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

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 23, 1998,  determined using the per
share closing price thereof on the New York Stock Exchange  Composite  tape, was
approximately $77.6 million. As of October 23, 1998, 30,285,552 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 26, 1998

              American Skiing Company and Consolidated Subsidiaries

                                Table of Contents

                                    Part I                            Page

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

Item 2   Properties .............................................     24

Item 3   Legal ..................................................     25

Item 4   Submission of Matters to a Vote of Security Holders ....     25

                                     Part II

Item 5   Market for Registrant's Common Equity and Related
         Stockholder Matters ....................................     26

Item 6   Selected Financial Data ................................     26

Item 7   Management's Discussion and Analysis of Financial 
         Condition and Results of Operations.....................     28

Item 7A  Quantitative and Qualitative Disclosures about
         Market Risk ............................................     40

Item 8   Financial Statements and Supplementary Data.............     41

Item 9   Changes in and Disagreements with Accountants on 
         Accounting and Financial Disclosure.....................     41

                                    Part III

Item 10  Directors and Executive Officers of the Registrant......     42

Item 11  Executive Compensation..................................     45

Item 12  Security Ownership of Certain Beneficial Owners and
         Management..............................................     54

Item 13  Certain Relationships and Related Transactions..........     57

                                     Part IV

Item 14  Exhibits, Financial Statement Schedules and
         Reports on Form 8-K.....................................     58

Signatures.......................................................     64

                                   (i)
<PAGE>                             

                                     PART I

Item 1  Business

The Company

          The  Company is the largest  operator of alpine  resorts in the United
States.  The Company owns and operates  nine ski resorts,  including  two of the
five largest resorts in the United States based on 1997-98 skier visits, with at
least one resort in each major skiing market. During the 1997-98 ski season, the
Company's  nine  resorts  generated  approximately  5.3  million  skier  visits,
representing over 9.8% of total skier visits in the United States (compared with
4.9 million and 9.4%,  respectively,  for the 1996-97 ski season). The Company's
Resorts  include Sunday River and Sugarloaf in Maine;  Attitash Bear Peak in New
Hampshire;  Killington,  Mount  Snow/Haystack  and  Sugarbush  in  Vermont;  The
Canyons,  adjacent to Park City, Utah; Steamboat in Colorado;  and Heavenly near
Lake Tahoe,  California  (collectively,  the "Resorts").  After giving pro forma
effect to the November 1997 acquisition of Steamboat and Heavenly, the Company's
revenues and earnings before interest  expense,  income taxes,  depreciation and
amortization  ("EBITDA")  for its 1998 Fiscal year were $344.0 million and $73.8
million, respectively.

          The Resorts  include  several of the top resorts in the United States,
including:  (i)  Steamboat,  the  number  two  overall  ski resort in the United
States,  as ranked in the September 1997 Snow Country magazine  survey,  and the
fourth  largest  ski resort in the United  States  with over 1.0  million  skier
visits in the 1997-98 ski season; (ii) Killington,  the fourth largest resort in
the United  States with over 1.0 million skier visits in the 1997-98 ski season;
(iii) three of the four largest  resorts in the  Northeast  (Killington,  Sunday
River and Mount  Snow/Haystack) in the 1997-98 ski season; (iv) Heavenly,  which
ranked as the second  largest  resort in the Pacific West region for the 1997-98
season with a resort record 888,000 skier visits; and (v) Sugarloaf,  the number
one  resort in the  Northeast  according  to the  September  1997  Snow  Country
magazine survey.

     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  9.5% of the Company's  resort  revenues for
fiscal 1998.

         The  Company's  primary  strength  is its  ability  to  improve  resort
operations by integrating  investments in on-mountain capital  improvements with
the  development  of  mountainside  real  estate.  Since  1994,  the Company has
increased  skier visits by 10.7% in the  aggregate for the three resorts that it
has owned for more than two seasons. In addition,  the Company has increased its
market  share  of  skier  visits  in  the   northeastern   United   States  from
approximately  21.8% in the  1995-96  ski season to  approximately  25.1% in the
1997-98 ski season  (after  giving pro forma  effect to its  acquisition  of the
Killington,  Mount Snow/Haystack and Sugarloaf ski resorts).  In the 1997-98 ski
season, skier visits at The Canyons,  Steamboat and Heavenly (collectively,  the
"Western  Resorts"),  each of which the Company  acquired in 1997,  increased by
11.3% over the prior year.  Management believes that the Western Resorts provide
the Company with several significant  additional operating benefits,  including:
(i)  geographic  diversity;  (ii) enhanced  cross-marketing  of its resorts on a
national  basis;  (iii)  purchasing  and  other  economies  of  scale;  and (iv)
implementation of the Company's  operating  strategies across a more diversified
resort base.

                                   1
<PAGE>

         In November 1997, the Company consummated an initial public offering of
its common stock, generating net proceeds to the Company of $244.3 million which
were applied,  together with available  cash and borrowings  under the Company's
bank credit facilities, to fund the acquisition of Steamboat and Heavenly for an
aggregate  acquisition cost of approximately  $294.8 million  (excluding amounts
allocated to the Sabal Point Golf Course, which the Company divested in February
1998).

Resorts

         Killington.  Killington, located in central Vermont, is the largest ski
resort in the northeast and the fifth  largest in the United  States,  with over
1.0 million  skier  visits in 1997-98.  Killington  is a  seven-mountain  resort
consisting of  approximately  1,200 acres with 212 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 on-mountain  accommodations at Killington  consist of approximately
5,100 beds, including 532 quartershare  interests at the New Grand Summit Hotel.
The   off-mountain  bed  base  in  the  greater   Sherburne,   Vermont  area  is
approximately 12,000 beds. Killington also owns and operates 16 retail shops, 12
rental and repair shops, a travel and reservation  agency and a cable television
station. At the base of Pico Mountain,  the Company owns a well-developed retail
village and a health club.  Killington is a year-round resort offering complete
golf amenities  including an 18-hole  championship golf course, a golf school, a
pro shop, and a driving range.

Since its  acquisition  in June 1996,  the Company has invested $25.6 million in
capital improvements to update Killington's snowmaking,  trail and lift systems,
and to develop  base  facilities  and real estate  potential  at the base areas.
Major  improvements  and  enhancements  to the resort  completed since June 1996
include (i)  installation  of two  high-speed  quad lifts,  and upgrading of two
additional lifts to high-speed quads,  (ii) installation of one  eight-passenger
high-speed  gondola to service the Peak Restaurant at the Killington  summit and
to replace the old Killington  Peak double chair,  (iii)  construction  of a new
children's center and related base area improvements,  and (iv)a major water and
sewer system expansion.

     In December 1997,  the Company  completed a land exchange with the state of
Vermont whereby  Killington  acquired 1,050 acres of undeveloped  land centrally
located in its principal base area.  The Company's  three-year  capital  program
includes the  interconnection  of lift and trail systems  between the Killington
and Pico resorts. The interconnection of the two mountains is expected to result
in a 16% increase in lift capacity and an  additional  110 acres (9%) of skiable
terrain.

                                       2
<PAGE>

         Sunday River.  Sunday River,  located in the western mountains of Maine
and  approximately  a  three-hour  drive from  Boston,  is one of New  England's
largest ski resorts with over 550,000  skier visits in 1997-98.  Extending  over
eight interconnected mountain peaks, its facilities consist of approximately 654
acres of skiable terrain and 126 trails  serviced by 18 lifts.  The resort has a
3,140-foot  summit and a 2,340-foot  vertical drop. The Company  believes Sunday
River has one of the most modern lift systems in the Northeast. Sunday River has
four base lodges, one of which is located at the top of North Peak.

          The   on-mountain   accommodations   at  Sunday   River   consist   of
approximately 5,850 beds including 726 condominium units, 648 quartershare units
at the Grand Summit  Resort Hotel and 580  quartershare  units at the new Jordan
Grand Resort Hotel. The  off-mountain  bed base in greater Bethel,  Maine totals
approximately  2,000 beds.  The resort owns and operates  five ski shops,  seven
full-service restaurants, four cafeteria-style restaurants and six bars.

          Since  1981,   the  Company  has   continually   invested  in  capital
improvements  at Sunday River to expand and improve its  on-mountain  facilities
and in real estate  development.  Sunday River's 1998 capital program  included:
(i) installation of a new high-speed quad lift on Barker Mountain which replaces
an  earlier  lift,  (ii)  installation  of 150 new tower  snow  guns to  enhance
snowmaking,  (iii) five new  grooming  vehicles,  (iv) a new welcome  center for
condo check-ins and ticket sales, and a new learn to ski/ride  discovery center,
and  (v)  significant  upgrades  of  facilities.   A  Robert  Trent  Jones,  Jr.
championship  golf course is  currently  under  construction  for a planned 2001
opening.  Management believes that Sunday River has significant growth potential
with over 325 acres of land at the base of the new  Jordan  Bowl area  which are
planned for development of extensive retail base facilities  adjacent to the new
Jordan  Grand  Resort  Hotel.  Additionally,  there  are  over  4,000  acres  of
undeveloped  land owned by the  Company  and 3,000  acres for which the  Company
holds purchase options that are suitable for development as skiable terrain.

          Mount Snow/Haystack.  Mount Snow, located in Brattleboro,  Vermont, is
the second largest ski resort in the Northeast with over 600,000 skier visits in
1997-98.  A large  percentage  of the skier  base for Mount  Snow  derives  from
Massachusetts,  Connecticut  and New York. The resort  consists of two mountains
(Mount Snow and Haystack)  separated by  approximately  three miles,  which have
been combined under single management.  Its facilities consist of 134 trails and
approximately  762 acres of skiable terrain serviced by 25 lifts. The resort has
a 3,580-foot summit, a 1,700-foot vertical drop, five full-service base lodges.

     Mount  Snow's  on-mountain  bed base  currently  consists  of  1,960  beds,
including 544 units at the resort's new Grand Summit Hotel. The off-mountain bed
base in the greater Dover, Vermont area has approximately 7,300 beds. The resort
owns and operates eight retail shops,  four rental and repair shops, a pro shop,
a country club and a nightclub.  Mount Snow also  headquarters the Company-owned
"Original Golf School," and operates an 18-hole golf course,  eight golf schools
throughout  the East  Coast,  a  mountain  bike  school,  a 92-room  hotel and a
low-voltage  local television  station.  Since its acquisition in June 1996, the
Company has invested  approximately $15.0 million in capital improvements to the
resort, including the installation of two high-speed quad chairlifts.

     The Company is expanding  Mount Snow's lodges to provide  additional  space
for guest services,  food and beverage services,  retail sales, and a children's
center.  During the Summer of 1998, a 20,000 square foot "Discovery  Center" was
constructed  to service new skiers and  snowboarders.  In addition,  the Company
opened a new restaurant and added over 10,000 square feet of retail space in the
Grand Summit Hotel.

                                       3
<PAGE>

     Sugarloaf.  Sugarloaf  is located  in  Carrabassett  Valley,  Maine and was
ranked as the number one  overall ski resort in the East by the  September  1997
Snow Country magazine survey.  Sugarloaf is a single mountain with approximately
1,400 acres of terrain and 110 trails covering approximately 530 acres, of which
490  acres  have  snowmaking  coverage  serviced  by 14  lifts  including  a new
high-speed  quad chair to  service  lower  mountain  terrain  and an  additional
fixed-grip  quad chair  accessing the snowfields.  There are  approximately  870
additional  acres of off-trail  skiable  terrain.  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 Northeast,  containing numerous restaurants,
retail shops and an abundance of lodging. Sugarloaf is widely recognized for its
challenging  terrain,  including  its  snowfields,   which  represent  the  only
lift-serviced  above-treeline 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.

          Sugarloaf operates a year-round conference center, a cross-country ski
facility and an 18-hole championship golf course designed by Robert Trent Jones,
Jr.,  which is rated by both Golf Digest and Golf magazines as one of the top 25
resort courses in the United States. Sugarloaf's slope-side ski village consists
of its base lodge, two hotels,  banquet facilities for up to 800 people,  retail
stores,  a rental and repair shop, a sports and fitness  club,  870  condominium
units  and  vacation  homes,  restaurants  and an  extensive  recreational  path
network.

          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 432 acres of skiable terrain
and 112 trails  serviced by 18 lifts.  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 summit lodges.

         The on-mountain  accommodations  at Sugarbush  consist of approximately
2,200  beds.  The  off-mountain  bed base  within  the Mad River  Valley  totals
approximately   6,600  beds.  The  resort   operates  three  ski  shops,   three
full-service restaurants and four cafeteria-style  restaurants. The Company also
owns  and  operates  the  46-unit  Sugarbush  Inn,  manages   approximately  200
condominium units, and owns and operates a championship golf course as well as a
sports center and a conference center.

         Since the  acquisition of Sugarbush by the Company in October 1995, the
Company has invested $23.7 million in capital improvements to expand and improve
its on-mountain  facilities.  The most recently completed  improvements  include
four high-speed quad  chairlifts,  a 44% increase in  snowmaking  capacity,  the
creation of new glade skiing terrain, and numerous base area improvements.

     Attitash  Bear  Peak.  Attitash  Bear Peak,  located in the Mt.  Washington
Valley, New Hampshire,  is one of New Hampshire's largest ski resorts.  Covering
two mountain peaks,  its facilities  consist of 273 acres of skiable terrain and
60 trails  serviced  by 12 lifts.  The  resort  has a  2,350-foot  summit  and a
1,750-foot  vertical drop. The resort benefits from its location in the heart of
New  Hampshire ski country and its proximity to the Town of North Conway and the
Mt.   Washington   Valley   tourist  area,   and  is  widely   recognized  as  a
family-oriented resort.

                                       4
<PAGE>

          The  on-mountain  accommodations  of  Attitash  Bear Peak  consist  of
approximately  2,000  beds.  In 1997 the  Grand  Summit  Hotel at  Attitash  was
completed.  It consists of 143 rooms,  2 restaurants,  a lounge,  a health club,
outdoor heated year round pool and 9 conference  rooms  including a 5,600 square
foot  Ballroom.  The  off-mountain  bed base in the Mt.  Washington  Valley area
totals  approximately  16,000 beds. The resort operates three base lodges,  four
ski shops, two full-service restaurants,  three cafeteria-style  restaurants and
two bars.

          Since  its   acquisition  in  July  1994,  the  Company  has  invested
approximately $12.4 million in resort-related  capital  improvements at Attitash
Bear Peak. The summer of 1998 capital  program  included the  installation  of a
high-speed quad lift on Attitash  Mountain and the Attitash  Adventure Center, a
20,000  square foot base  building  housing the  Discovery  Center for beginning
skiers and riders, enhanced space for all children's programs, adaptive programs
and snowboarders. The resort's three year capital improvement program includes a
championship  golf course,  an additional lift upgrades and further additions to
the summer operations.

         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.  In its first season of operation  under the Company's
management,  the resort  generated  over 167,000  skier visits.  Currently,  the
resort has  approximately  2,700 acres of skiable  terrain  with an elevation of
9,990 feet and a 3,200-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
$32 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  2,700 acres at the  resort,  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 the resort has significant growth potential due to
its proximity to Salt Lake City, its  undeveloped  skiable  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.

          Management believes the 2002 Olympic Games will provide  international
exposure  for the  resort.  The  five-year  capital  plan  currently  calls  for
substantial   development   of  the  resort,   involving   anticipated   capital
expenditures  of  approximately  $30 million,  to be completed prior to the 2002
Olympic Games. Management believes that when The Canyons is fully developed, the
resort could  encompass over 7,200 acres  consisting of 14 mountain peaks with a
maximum  elevation of 10,000 feet, a vertical drop of approximately  3,200 feet,
20  high-speed  quad ski lifts and an  eight-passenger  high-speed  gondola.  In
addition to the $32 million of capital improvements at The Canyons over the past
15 months, the Company estimates that it will need approximately $30 million for
on-mountain capital  improvements and approximately $150 million for real estate
development in order to fulfill its five-year development plan for The Canyons.

                                       5
<PAGE>

          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 under a Special Use Permit  issued by the
USFS and 245 acres of private land owned by Steamboat located at the base of the
ski area. The 1998-99 trail network consists of 140 trails covering 2,939 permit
access  that is  serviced  by 22 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 visits each of the past nine seasons.

          Restaurant  facilities  are currently  located in the base area and at
three other  points  throughout  the resort  (Thunderhead,  Four Points Hut, and
Rendezvous  Saddle).  On 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.  As
further Pioneer Ridge expansion occurs, an additional on-mountain restaurant may
be constructed at Cyclone Flats.

          During the summer of 1998,  Steamboat  built the new Pony Express quad
detachable  chairlift in Pioneer Ridge. The snowmaking  system was also extended
this  year  to  reach  the  very  top of the  mountain.  This  expansion  allows
top-to-bottom  coverage to insure  quality  snow from the top of the mountain to
the ski area base,  and will improve some of  Steamboat's  most popular trails.

                                       6
<PAGE>

          Heavenly.  Located  on the south  shore of Lake Tahoe in the states of
Nevada and California,  Heavenly  consists of two peaks with a maximum elevation
of  approximately  10,000 feet, 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 over  880,000  skier
visits for the 1997-98 ski season.  Snowmaking  covers over 268 acres of skiable
terrain,  representing  approximately 43% of the trails. 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.  There are no ski-in,  ski-out
residential  units or tourist  accommodation  units at the ski resort;  however,
there is a well-developed 11,000-bed base in the greater South Lake Tahoe area.

          Heavenly's  master plan was approved in 1996 and is being  implemented
by the Company.  The plan calls for the  improvement and expansion of winter and
summer uses and support  facilities  at the resort.  A primary  objective of the
master plan is to refocus the primary  entrance to the ski resort from the three
existing base areas (California,  Stagecoach and Boulder) to the commercial core
of South Lake Tahoe utilizing a new high-capacity  gondola. The gondola has been
designed for year round  sightseeing,  while the top station will provide direct
ski  access to both the  Nevada  and  California  sides  via  three  new  lifts.
Additional  snowmaking  coverage is  contemplated  which will increase  existing
coverage from  approximately  268 acres to  approximately  500 acres. The master
plan provides for the construction of base facilities and new restaurants at Sky
Meadows,  East Peak Lake and California  base. The Company's summer 1998 capital
program included $7.8 million in proposed improvements at Heavenly including two
four-passenger   high-speed   chairlifts   known  as  "Gunbarrel   Express"  and
"Stagecoach  Express" and a fixed-grip  three  passenger  chairlift known as the
"Perfect Ride" are currently under  construction,  and are scheduled to open for
the beginning of the 1998-99 ski season.

                                       7
<PAGE>

Alpine Resort Industry

         There are approximately  750 ski areas in North America.  In the United
States,  approximately  521 ski areas generated  approximately  54 million skier
visits during the 1997-98 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  521 in 1998,  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
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 1997-98 ski season:
 .........
<TABLE>
<CAPTION>

  Geographic Region          1997-98        Percentage of Total     Skier Visits at       Company Market       Company Resorts
                           Total Skier          Skier Visits        Company Resorts            Share
                           Visits (in                                (in millions)
                            millions)
  -----------------        ---------        ------------------     ---------------       --------------      ------------------
<S>                           <C>                  <C>                    <C>                  <C>           <C>           
Northeast                     12.7                 23.5%                  3.2                  25.2%         Killington,
                                                                                                             Sugarbush, Mount
                                                                                                             Snow/Haystack,
                                                                                                             Attitash/Bear Peak,
                                                                                                             Sunday River,
                                                                                                             Sugarloaf USA
Southeast                      4.3                  7.9%                  ---                   ---
Midwest                        6.7                 12.4%                  ---                   ---
Rocky Mountain                19.2                 35.5%                  1.2                  6.3%          The Canyons,
                                                                                                             Steamboat
Pacific West                  11.2                 20.7%                  0.9                  8.0%          Heavenly
---------------------- -------------------- --------------------- --------------------- -------------------- ---------------------
U.S. Overall                  54.1                 100.0%                 5.3                  9.8%

--------------------
(*) Source:  Kottke National End of Season Survey 1997/98 Final Report
</TABLE>

                                       8
<PAGE>

         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 skier  experience  and travel
time,  while  destination  travelers  are  attracted  to the  number and type of
amenities  available and activities  offered,  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 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  11.2
million  in  the  1997-98  ski  season,   a  compound   annual  growth  rate  of
approximately  20.6%.  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
continue to 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 a 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  statistical and usage information and technology systems for
application across all of the Company's resorts.

                                       9
<PAGE>

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,  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
1997-98 ski season,  the Company  increased its average yield per skier visit by
approximately  2.2% as compared to the 1996-97 ski season.  Season pass  revenue
for the 1997-98 ski season at the Resorts  increased by 11.0% as compared to the
1996-97 ski season. In addition to its on-mountain  activities,  the Company has
expanded its retail  operations by establishing  retail stores in strategic high
traffic and recognized retail districts such as Freeport,  Maine,  North Conway,
New Hampshire, and South Lake Tahoe, California,  thereby strengthening the name
and image of the Company and its resorts.

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 engages in joint
marketing  programs  with  nationally  recognized  commercial  partners  such as
Marriott,  Mobil, Budweiser,  Pepsi/Mountain Dew, Saab, Motorola,  Vermont Pure,
Very Fine,  Kodak,  Swatch,  Airwalk,  FILA,  Burton and  Rossignol.  Management
believes these joint marketing programs create a high-quality image and a strong
market  presence on a regional and  national  basis.  In  addition,  the Company
utilizes loyalty based incentive programs such as the Edge Card, a private label
frequent  skier  program in which  participants  receive  credits  towards  lift
tickets and other products.

     The Company  utilizes a variety of marketing media  including  direct mail,
television  and the Internet.  Television  marketing  efforts  include  targeted
commercials and programming such as the MTV Winter Lodge, which is hosted by MTV
and targets teens and young adults. Internet marketing efforts include a Company
sponsored  web  site  at  www.peaks.com   featuring   photographs  and  detailed
information  about the  Company's  resorts and current  skiing  conditions.  The
Company's  aggregate  marketing  budget for fiscal  1998 was  approximately  $28
million,   including  the  value  of  contributions  from  strategic  commercial
marketing partners.

                                       10
<PAGE>

High Impact Capital Improvements

          The  Company  attracts  skiers to its  resorts by  creating a superior
skiing  and  riding  experience  through  high  impact  capital  investments  in
on-mountain  facilities.  The Company focuses its investments on increasing lift
capacity,  expanding  skiable  terrain and snowmaking  coverage,  and developing
other exciting alpine  attractions.  For example,  during the last two years the
Company has: (i) expanded  glade skiing  terrain at most resorts,  (ii) expanded
skiable  terrain at The Canyons to 2,700 acres  making it one of Utah's  largest
resorts, and (iii)  installed  heated  eight-passenger  high-speed  gondolas  at
Killington and The Canyons.  Since 1994, when the Company began implementing its
acquisition  strategy,  the Company has  significantly  increased lift capacity,
skiable terrain and snowmaking coverage at its resorts.

Growth through Acquisitions

     Since  fiscal  1994,  the Company has  achieved  substantial  growth in its
business   through   acquisitions.   The  Company  intends  to  consider  future
acquisitions of large  well-established  destination  resorts as well as smaller
"feeder"  resorts.  The Company  focuses on acquiring  larger  resorts  where it
believes it can improve  profitability by implementing the Company's  integrated
real estate  development  and  on-mountain  capital  improvement  strategy.  The
Company also believes that by acquiring  smaller  regional  resorts which have a
strong  local  following  it  can  capitalize  on a  broader  customer  base  to
cross-market its major  destination  resorts.  The acquisition of less developed
resorts may also offer opportunities for expansion.

Integration of Investments in Resort Infrastructure and Real Estate

     The  Company  develops   mountainside  real  estate  that  complements  its
investments  in ski  operations  to enhance  the overall  attractiveness  of its
resorts as  vacation  destinations.  Management  believes  that this  integrated
approach results in growth in overall skier visits,  including multi-day visits,
while  generating  significant  revenues  from real  estate  sales and  lodging.
Investment  typically begins with on-mountain  capital  improvements such as the
creation  of new  lifts,  trails,  expanded  snowmaking  capability,  additional
restaurants  and improved  ski  schools.  As resort  attendance  increases,  the
Company  develops  mountainside  real estate to provide  accommodations  for the
increased number of resort guests.  The Company  carefully  manages the type and
timing of real  estate  development  to achieve  capital  appreciation  and high
occupancy of accommodations.  The Company's  integrated  investment strategy was
developed and refined at its Sunday River  resort,  where it has sold over 1,600
units of  residential  real estate since 1983.  During the same  period,  annual
skier  visits  at  Sunday  River  increased  from  approximately  50,000 to over
550,000, representing an approximate 18% compound annual growth rate.

Mountainside Real Estate Development

          The  Company's  real  estate  development   strategy  is  designed  to
capitalize  on the 7,000  acres of  developable  land it controls at or near its
resorts and its 15 years of experience in real estate  development.  The Company
owns or has  rights to land  providing  the  capacity  to  develop  over  30,000
residential  units.  The Company's  resort real estate  development  strategy is
comprised  of  three  distinct,  but  related,   components:  (i)  Grand  Summit
quartershare  hotels,  (ii) alpine resort village development and (iii) discrete
resort-specific  projects.  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.  In addition to its
Grand Summit Hotels, the Company is developing alpine resort villages at five of
its largest  resorts.  Each village  consists of carefully  planned  communities
integrated with condominiums,  luxury townhouses, single family luxury dwellings
or  lots  and  commercial  properties.   The  Company  established  a  strategic
partnership  with Marriott  Ownership  Resorts,  Inc.  which will bring 200 unit
timeshare  resort  villas to the  center  of each  resort  village.  Each of the
Company's resorts also has the potential for additional real estate  development
involving  discrete projects tailored to the  characteristics  of the particular
resort.

                                       11
<PAGE>

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., is rated as one of the top 25 upscale  courses in the
country according to the May 1996 Golf Digest magazine survey and one of the top
25 public courses in the country according to the May 1996 Golf magazine survey.
In addition,  a  championship  course  designed by Robert  Trent  Jones,  Jr. is
currently under  construction  at Sunday River.  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 represented  approximately  48%
of total  resort  operations  revenue for fiscal  1998,  after  giving pro forma
effect for the November 1997 acquisition of Heavenly and Steamboat Resorts.

     The  following  chart  reflects the  Company's  sources of resort  revenues
across certain  revenue  categories as well as the percentage of resort revenues
constituted  by each  category for the fiscal year ended July 26, 1998, on a pro
forma basis.

<TABLE>
<CAPTION>
                                                                                                                      ....
                                               Fiscal Year Ended July 26, 1998
                                                     Pro Forma
Revenue Category                                  Resort Revenues      Percentage of
                                                    (in millions)     Resort Revenues

<S>                                                    <C>                 <C>  
Lift Tickets  ....................................     $136.1              48.2%
Food and Beverage .................................      35.7              12.7%
Retail Sales ......................................      39.6              14.0%
Lodging and property management....................      29.7              10.5%
Skier development .................................      22.3               7.9%
Golf, other summer activities and miscellaneous ...      18.8               6.7%
---------------------------------------------------     -----              -----
Total Resort Revenues .............................    $282.2             100.0%
</TABLE>

                                       12
<PAGE>

     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.  Retail revenue aids in stabilizing  the Company's  daily and
weekly cash flows,  as the  Company's  retail  shops tend to have the  strongest
sales on poor weather days. 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 its 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.

                                       13
<PAGE>

     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.  Perfect  Turn is  currently  licensed  to five  resorts in the United
States and Canada.  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. For the 1998-99
season the Company has embarked upon a new skier  development  program that will
focus on the  marketing  and sales of the  entire  mountain  resort  experience,
rather than simply traditional learn-to-ski concepts.

Marketing Programs

     The  Company's  marketing  programs are designed to: (i) increase the skier
and rider market,  (ii) build the  individual  images of the Company's  resorts,
(iii) retain  customers  within the Company's  system of resorts through loyalty
programs,  (iv) utilize marketing partners to leverage  marketing  efforts,  and
(v) develop new programs in both summer and winter to attract new guests.

          Increase the skier and rider  market:  The company has developed a new
and proprietary skier development system. It combines the unique learning method
of Perfect Turn with  graduated  length skis, a new sales  process and specially
designed discovery centers for first time skiers and riders. Management believes
this new system will  significantly  increase the  retention  rate of first time
skiers and riders.  In addition to this new system the Company is implementing a
major public relations  campaign with Jonny Moseley,  1998 Olympic Gold Medalist
in Freestyle Mogul Skiing, as the official  spokesperson of the Company designed
to increase participation in the sport.

          Build the individual  images of the Company's  resorts:  The Company's
resorts attract different and distinct market segments. Marketing emphasis is on
building a close  relationship  with the Company's guests.  Management  believes
that by establishing a clear,  concise and compelling  position for each resort,
customer loyalty will be increased.

     Retain customers within our system of resorts through loyalty programs: The
Company has developed  several loyalty  programs to retain  customers within the
Company's  system:  (i) Magnificent 7 which allows frequent skiers to purchase 7
or more days of skiing at a special price, (ii) season passes which are targeted
to the very frequent  skiers,  (iii) The Edge(R) frequent skier card targeted to
less frequent skiers that can earn points towards future lift ticket  purchases,
(iv) the direct to lift Edge card which  allows  guests to earn  frequent  skier
points and bypass ticket windows, and (v) The First USA Edge Visa(R) card with a
special bonus points  program based on charge volume that enables guests to earn
credits to be used at our resorts.

     Utilize marketing partners to leverage our marketing efforts:  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  that  include  television,  radio  and  special  events
programs with many major  corporations  including  Marriott,  Mobil,  Budweiser,
Pepsi/Mountain Dew, SAAB, Motorola,  Vermont Pure, Very Fine, Burton, Rossignol,
Kodak, Swatch, and Airwalk.

                                       14
<PAGE>

          Develop  new  programs  both  summer and winter to attract new guests:
Winter  activities at Company  resorts have been have greatly  expanded with the
addition  of  new  Fun   Centers.   These  Fun  Centers   include  ice  skating,
snowmobiling, snow tubing, snowshoeing, luging, 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 waterslides,  canoeing,
mountain biking,  climbing walls,  chairlift  rides,  golf,  tennis,  hay rides,
alpine slides, BMX parks, and swimming.

Real Estate Development

     General. The Company has been developing alpine resort real estate for over
fifteen  years  as part of its  integrated  resort  and real  estate  investment
strategy.  Since 1983, the Company has sold over 1,600 units of residential real
estate at Sunday River  (including  condominiums,  townhouses  and  quartershare
interval ownership interests). The three components of the Company's real estate
development  strategy are (i) the Grand Summit quartershare hotel concept,  (ii)
development  of  alpine  resort  villages,  and (iii)  resort-specific  discrete
projects.  The Company  believes it has a  significant  real estate  development
pipeline over the next 10 to 15 years.

          The  Company's  real  estate  development  program  achieved  national
prominence in fiscal 1998. This program generated over $105 million in pre-sales
in fiscal 1998,  compared with $10.4 million in fiscal 1996 and $38.7 million in
fiscal 1997.  The Company  opened  three  200-room  Grand  Summit  Hotels at New
England  resorts  and  commenced  construction  of three new  hotels at  Western
Resorts on the strength of very high pre-sales.

          The  Company's  strategy  for real  estate  development  calls for the
completion  of at least 12  projects  over  the  next 36  months.  Four of these
projects are the new Grand Summit Hotels in New England, where the Company is in
the  process  of  selling  out the  remaining  inventory.  More  than 50% of the
inventory in those hotels is currently sold.

     The next  component of the real estate  development  plan is  completion of
three hotels  currently under  construction at The Canyons in Utah and Steamboat
in Colorado.  The Grand  Summit Hotel at The Canyons is a 358-room  full-service
hotel that has generated  more than $40 million in pre-sales  since marketing
began in late  January  1998.  The Grand Summit Hotel at Steamboat is a 325-room
facility that has generated over $26 million in presales since  marketing  began
in early  February  1998.  The final  western  hotel under  construction  is the
Company's  prototype  condominium  hotel at The Canyons called Sundial Lodge. In
July 1998,  the  Company  pre-sold  100% of this  150-unit  facility in only ten
hours, generating $42.5 million in sales contracts.

          The remaining five projects  include a Grand Summit Hotel at Heavenly,
located in the Park Avenue Redevelopment  District in downtown South Lake Tahoe,
and  condominium  hotels based upon the Company's  Sundial Lodge prototype to be
constructed  at The Canyons,  Heavenly,  Steamboat and Sunday River.  Any one or
more projects from the Company's  existing pipeline could be substituted for any
of these five projects, as market conditions and strategy dictate.

                                       15
<PAGE>

          These  12  projects  will  make up the  first  phase  of  Management's
comprehensive development strategy, which envisions the full development of five
alpine  resort  villages,  including  one  each  at  Sunday  River,  Killington,
Steamboat,  The  Canyons and  Heavenly.  Pricing  strategy  within each of these
villages is carefully  orchestrated  to build  pricing  momentum as  development
progresses. A key measure for this development program is revenue per unit sold,
which is expected to increase as the villages  gain critical  mass.  Each resort
village  reflects the Company's  carefully  crafted plaza design concept,  which
creates an energy center at the heart of each resort village.

          In July 1998, the Company  established a joint venture  agreement with
Marriott Vacation Club  International to bring a 200-unit timeshare luxury villa
to the center of each resort  village.  This  unique  partnership  provides  the
Company  with  access  to  Marriott's  distribution  capabilities,  as  well  as
increases the profile of the resort  villages.  The combination of the Company's
alpine  resort  locations  and  Marriott's  recognized  brand name  expands  the
Company's  position in the timeshare  industry and is expected to provide a more
visible presence nationwide.

<TABLE>
<CAPTION>
             Development
             Commencement                                                                                                Reserved
               Dates                 Under                        Sales        Future                    Under          or future
Resort       (fiscal year)  Sold  Development (1)  Pre-Sold(2)  Inventory(3) Development(4) Completed  Development(1) Development(4)
------        ------------- ----  ---------------  -----------  -----------  -------------- ---------- -------------  -------------
                                             Residential Units                                 Commercial Space (square ft.)
              ----------------------------------------------------------------------------- ---------------------------------------
<S>              <C>         <C>        <C>            <C>           <C>         <C>          <C>                        <C>    
Sunday River     1982        1,625      378            51            284         4,894        248,405      --            207,995
Sugarbush        1996         --        352            --             --         2,150          1,800      40,419         22,581
Attitash
  Bear Peak      1996          159      460             5            256           219         40,800      --             60,000
Killington       1997          276      --             59            189        11,282         61,614      --            343,086
Mt. Snow         1997          176      --             70            294         2,308         54,785      --            160,015
The Canyons      1997         --        982           400             --         5,992         14,900     106,383        299,717
Sugarloaf        1998         --        358            --             81         1,820           --         8,426        120,000
Steamboat        1998         --        928           276             --         3,005           --        62,950        170,350 
Heavenly         1998         --        760            --             --            30           --        23,315         99,287
                             -----     ----           ----          -----       ------        -------     -------      ---------
Total                        2,236     4,218          861           1,104       31,700        
<FN>
(1)       Includes all units or commercial space currently under construction or
          in the permitting process.

(2)       Pre-Sold is defined as units secured with either binding  purchase and
          sales agreements or non-binding reservation agreements.

(3)       Sales Inventory is defined as constructed units remaining unsold.

(4)       Based on,among  other things,  the Company's  capital and  development
          plan  for  the  next  10 to 15  years,  the  Company's  estimates  for
          projected demand of units and the availability of developable acreage.
          There can be no assurance,  however,  that the Company will undertake,
          or have adequate financing to complete, such development,  or that the
          Company will receive all necessary permits and regulatory approvals.
</FN>
</TABLE>
                                       16
<PAGE>

          Grand Summit Hotels.  The Company operates six Grand Summit Hotels and
has four additional hotels under development. The Grand Summit Hotel is a unique
interval  ownership  product which is based on the Company's  successful  Summit
Hotel at its Sunday River resort. Each hotel is a condominium consisting of both
residential and commercial units and includes:  a multi-level  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.  The
commercial  space is  retained by the Company and used to operate the core hotel
business,  while the residential units are sold in quartershare interests.  Each
quartershare  consists of a 13-week ownership  interest spread evenly across the
year.  At the  Company's  Sunday  River  Hotel,  owners  utilize the unit for an
average of approximately  three weeks out of a possible 13 weeks. Weeks that are
not used by an owner are typically  dedicated to the Company's  optional  rental
program for rental to a third party on terms  allowing  the Company to retain up
to 50% of gross rental revenue.  Consequently, the Company benefits from revenue
generated by: (i) the sale of units,  (ii) the  recurring  revenues from lodging
rental revenue and (iii) other hotel and commercial operations.

          Quartershare  owners participate in Resort  Condominium  International
("RCI"),  the world's largest vacation interval  exchange  program.  The Company
also operates an internal  exchange  program  within its expanding  Grand Summit
Hotel network. The Company expects that the opportunity to exchange intervals at
any of its resorts nationwide will enhance its loyalty programs, cross-marketing
of  resorts   and  unit  sales   opportunities.   Alpine   Village   Development
Participation  in the RCI program  allows the Company's  quartershare  owners to
exchange their occupancy  right for an occupancy  right in one of  approximately
3,000 participating resorts worldwide.

     The Company has begun  construction  of four of its five resort villages at
The Canyons,  Killington,  Sunday River's  Jordan Bowl,  Steamboat and Heavenly.
Each village will be  characterized by its proximity to resort  facilities,  ski
in/ski  out  access,   dramatic   landscape  and  resort   specific  design  and
architecture.

          The Canyons.  Two distinct  areas at The Canyons are in the permitting
process for resort village  development.  One area consists of approximately 350
acres in the base area,  150 acres of which are  controlled by the Company.  The
second area is the Company's  High Mountain  Meadows  development  consisting of
approximately  120 acres  located on a  mid-mountain  plateau at an elevation of
over 8,000 feet.  Each of the base area and the  mid-mountain  plateau  area are
under  long-term  leases that provide an option to purchase fee title to parcels
within that area. The base area  development is currently in the master planning
process with county  authorities and now has fully vested rights for significant
portions of the  contemplated  development.  The base  village  will be a mix of
residential  and  commercial  space  arranged in six  neighborhoods  designed to
create an integrated base area community,  anchored by a Grand Summit Hotel. The
master  plan  provides  for  the   integrated   development   of  150  acres  of
Company-controlled  property,  as well as approximately 200 acres of surrounding
property owned by unrelated third parties.

                                       17
<PAGE>

          The High  Mountain  Meadows  development  presents an  opportunity  to
develop a mid-mountain  base area  surrounded by six of the resort's 14 mountain
peaks and will be accessed by a four-mile  scenic drive and an  eight-passenger,
high-speed  heated  gondola.  The village  will serve as the base for skiing the
surrounding  mountains,  creating access to an additional 2,000 vertical feet of
skiable  terrain.  The primary lodge servicing this area, the Red Pine Lodge, is
located within the at the mid-mountain  development and commenced  operations in
the 1997-98 ski season.

     The Company commenced construction of the base village during the summer of
1998, with a Grand Summit Hotel and a 150-unit prototype  condominium hotel. The
village  will  consist of  approximately  two  million  square  feet of compact,
high-density  residential and commercial  development.  The development  will be
principally  a  pedestrian  village  characterized  by  resort  lodging,  luxury
condominiums and ranches and mountain recreation properties.  The zoning for the
base area and High Mountain  Meadows  development  is being revised  pursuant to
replanning provisions of the county's general plan. The proposed revision to the
zoning would permit extensive development in each area. Adequate sewer and water
capacity are available in close proximity to the resort;  however, such capacity
must be purchased  from third party  vendors and the Company must  construct the
necessary infrastructure for transport to both developments.

          Killington Base Area. In December 1997, the Company consummated a land
exchange  with the State of  Vermont  exchanging  approximately  3,000  acres of
essential wildlife habitat owned by the Company for approximately 1,050 acres of
undeveloped  land  centrally  located in the base area. As part of the Company's
proposed  development plan for Killington,  this parcel will be combined with an
existing  400-acre  planned  unit  development  adjacent  to  Killington's  golf
facilities and the resort's primary base area.

     The Company has  retained  IBI, an  internationally  recognized  resort and
mountain-planning  firm,  to assist in the master  planning of the village.  The
400-acre  planned  unit   development  is  specifically   zoned  for  commercial
development.  The village will  integrate  four  "neighborhoods"  into a planned
community containing a variety of real estate uses centering on a resort village
core. The 1,050 acres acquired from the State must be rezoned to accommodate the
planned  development.  The City of Rutland,  Vermont  and certain  environmental
groups  traditionally  active in ski  resort  development  have  entered  into a
memorandum of understanding designating the area as a growth zone to be utilized
for development. The first phase of the village contemplates 1,600 units and 1.8
million square feet of development.

     The Company believes that adequate water is available from nearby wells for
both projects.  Sewer capacity will be provided  through the Company's  recently
completed  connection to the City of Rutland municipal sewer system with 600,000
gallons per day excess capacity.

          Jordan  Bowl at  Sunday  River.  Jordan  Village  will be  located  on
approximately  1,100  acres  of a  4,000-acre  undeveloped  parcel  owned by the
Company  at the  western  end of the  existing  resort  and  the  center  of the
Company's  landholdings.  The village  will rest at the base of the Jordan Bowl,
one of the resort's most popular  skiing areas.  Development  of Jordan  Village
began with the  construction of a scenic four-mile access road from the existing
resort  center to the Jordan  Village area and the  December,  1997 opening of a
ski-in/ski-out  220-unit  Grand  Summit  Hotel.  Construction  of a Robert Trent
Jones, Jr.  championship  golf course is also underway.  The master plan for the
area  also  contemplates  a  high-density   pedestrian   village  surrounded  by
neighborhoods  consisting  of  luxury  townhouses  and  detached  single  family
dwellings.  The Jordan  Bowl area is zoned for village  development.  No density
restrictions apply to the area. The Company believes adequate water is available
for contemplated  development and Sunday River's sewage  treatment  facility has
sufficient  capacity  to allow  completion  of the  planned  development  of the
resort.

                                       18
<PAGE>

     Steamboat Base Area. The 375-room Grand Summit Hotel under  construction at
Steamboat is the first step in creating a new pedestrian  village at the base of
Steamboat.  The Company is working  closely with local  authorities to develop a
comprehensive  village  plan that will  produce up to an  estimated  1.6 million
square feet of development.  A key feature of the plan is the interconnection of
the Company's largest development site at Steamboat with the resort village.

     Heavenly.  Immediately  following the acquisition of Heavenly,  the Company
entered into negotiations for, and acquired,  the development rights to the Park
Avenue  Development  project located in the center of downtown South Lake Tahoe,
California.  That area has all necessary  entitlements to construct a high-speed
gondola  to the  summit  of the  resort,  and two  large  hotel or  quartershare
projects  consisting  of over 1 million  square feet and 724 units.  The Company
also has received all necessary entitlements for a 120-unit condominium hotel to
be constructed in the Stagecoach base area.

Other Resort Development

     Each of the Company's  resorts has the potential for additional real estate
development  involving discrete projects tailored to the  characteristics of the
particular resort.  There can be no assurances,  however,  that the Company will
successfully pursue any of the development opportunities described below.

     Sugarloaf.  Development  plans  have begun for a  high-density  condominium
development with commercial space as an expansion to the existing alpine village
at the Bucksaw area. The first  townhouses will be marketed in the 1998/1999 ski
season.  There are several  additional  planned  developments  including  single
family  homes  around the 18-hole  Robert Trent  Jones,  Jr.  Championship  golf
course. Sugarloaf has over 1,100 acres of land held for development.

     Mount   Snow/Haystack.   There  are  several  undeveloped  sites  at  Mount
Snow/Haystack  with potential for future  projects  including  renovation of the
current base lodge, a 21-acre parcel which could support up to 72  three-bedroom
units  with  direct ski lift  access,  and a  two-acre  parcel for a  convention
center.  Mount  Snow/Haystack also owns an 800-acre parcel slated for a proposed
golf course  expansion,  which could create the opportunity for substantial golf
course frontage real estate development. In addition, there are approximately 30
acres of developable land at the base of Haystack.

     Sugarbush.  Sugarbush has all necessary  entitlements for construction of a
Grand  Summit  Hotel.   The  Company  is  in  the  process  of  positioning  the
re-introduction  of that  product to the  market  with  higher  levels of finish
consistent  with the Company's  vision for Sugarbush,  which is to appeal to the
highest segment of the Eastern market.

     Attitash.  The Company is in the planning  stages of a championship 18-hole
golf course at  Attitash.  together  with that  course will come  golf/slopeside
development  opportunities.  This  area  is well  suited  for  extension  of the
Company's townhouse program.

Leased Properties

     The Company's operations are wholly dependent upon its ownership or control
over  the  real  estate  constituting  each  resort.  The  following  summarizes
non-owned real estate critical to operations at each resort. 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.

                                       19
<PAGE>

     Sunday  River  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 SRSC 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.

     The Sugarbush resort uses  approximately  1,915 acres pursuant to a special
use permit issued by the United States  Forest  Service dated May 17, 1995.  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.

     Mount Snow 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 dated November 29, 1989. 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  Sargent  Inc.  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 July 19, 1994. 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 an  initial  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.

                                       20
<PAGE>

     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  constitutes  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
approximately  2,000 acres of additional skiable terrain in Nevada pursuant to a
special use permit  dated  December 18,  1990.  The permit  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.  The  permit  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.

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) a radio frequency lift
ticket  scanning  system  that  provides  more  accurate  tracking,  control and
information on all ticket  products,  (ii) a  direct-to-lift  access system that
allows skiers to bypass the ticket window and proceed  directly to the lift with
an  individualized  radio  frequency  card that directly  debits their credit or
frequent-skier   card,  (iii)  an  integrated   customer  database  that  tracks
information regarding guest preferences and product purchasing patterns, (iv) an
extensive  data  communications  network  linking most  point-of-sale  locations
through a central  database,  (v) a central  reservations  system for use in the
resort's rental management business and (vi) a skier development reservation and
instructor  scheduling system that simplifies the booking process and allows for
optimal utilization of instructors.

                                       21
<PAGE>

     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's  snowmaking  capability  can be
implemented at its western resorts  resulting in an extended season and reliable
snow  conditions and consistent  quality  surfaces  during  unfavorable  weather
conditions.

     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. 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 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.

Employees and Labor Relations

          The Company employs  approximately  7,826 employees at peak season and
approximately  1,600  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.

                                       22
<PAGE>

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  operations.  Phase  I  environmental  assessments  have  been
completed  on all  nine  resort  properties.  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.  In addition,  the Phase I environmental  assessment for The
Canyons  indicated some soil  contamination in areas where  underground  storage
tanks  have been  removed.  At this  point,  the extent or  significance  of the
contamination at that site is unknown.  The reports did not,  however,  identify
any  environmental  conditions  or  non-compliance  at any of the  resorts,  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 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  recently  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.  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. The Company believes it has all permits, licenses and approvals from
governmental  authorities  material to the operation of the resorts 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 capital programs at the resorts will 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.

                                       23
<PAGE>

     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.  The  Company's  marketing  and sales of  interval
ownership  interests  is  subject  to  extensive  federal  and state  government
regulation. 

                                     Item 2
                                   Properties

     The  Resorts  include  several of the top  resorts  in the  United  States,
including:  (i)  Steamboat,  the  number  two  overall  ski resort in the United
States,  as ranked in the September 1997 Snow Country magazine  survey,  and the
fifth largest ski resort in the United States with over 1.0 million skier visits
in the 1997-98 ski season;  (ii)  Killington,  the fourth  largest resort in the
United  States  with over 1.0  million  skier  visits in the 1997-98 ski season;
(iii) three of the four largest  resorts in the  Northeast  (Killington,  Sunday
River and Mount  Snow/Haystack) in the 1997-98 ski season; (iv) Heavenly,  which
ranked as the second  largest  resort in the Pacific West region for the 1997-98
season with a resort record 888,000 skier visits; and (v) Sugarloaf,  the number
one  resort in the  Northeast  according  to the  September  1997  Snow  Country
magazine survey.

The following table summarizes certain key statistics of the Company's resorts:

<TABLE>
<CAPTION>
                              Skiable    Vertical                          Snowmaking               1997-98
                              Terrain      Drop                 Total       Coverage      Ski        Skier
Resort (Year Acquired)        (acres)     (feet)    Trails      Lifts     (% of acres)   Lodges     Visits
                                                             (high-speed)                           (000s)
<S>        <C>                 <C>         <C>        <C>       <C>          <C>           <C>       <C>  
Killington (1996)              1,200       3,150      205       33(6)        59.8%         8         1,077
Sunday River (1980)              654       2,340      126       18(4)         93.3         4           552
Mount Snow/Haystack (1996)       763       1,700      134       26(3)         66.0         5           602
Sugarloaf (1996)               1,400       2,820      126       14(2)         35.0         1           358
Sugarbush (1995)                 432       2,650      112       18(4)         66.1         5           388
Attitash Bear Peak (1994)        273       1,750       60       13(2)         89.7         2           233
The Canyons (1997)             2,700       3,190       63       13(9)         5.6          2           168
Steamboat (1997)               1,879       3,668      140       24(4)         13.6         4         1,053
Heavenly (1997)                4,800       3,500       82       27(6)          5.7         7           888
                               -----       -----    -----       -----          ---        --         -----
     Total                    14,101                1,048      186(40)                    38         5,319
</TABLE>

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

                                       24
<PAGE>

                                     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 have pending
claims and are 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  provides  liability and workers'
compensation coverage for its resorts located in Vermont.

                                     Item 4
               Submission of Matters to a Vote of Security Holders

          Not applicable.

                                       25
<PAGE>

                                     PART II

                                     Item 5
      Market for the Registrant's Common Stock 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 23, 1998,  30,285,552 shares of common stock were issued
and outstanding,  of which  14,760,530  shares were Class A Common Stock held by
one holder and  15,525,022  shares of Common Stock held by  approximately  5,000
holders.

     The following table sets forth,  for the fiscal quarters  indicated  (ended
January 25, 1998,  April 26, 1998,  and July 26, 1998, the range of high and low
sale prices of the  Company's  common  stock as  reported on the NYSE  Composite
Tape.  Prior to the  offering  on November  6, 1997,  there was no  established
public trading market for the common stock of the Company.

Fiscal 1998                                 Common Stock

                                    High                          Low

1st Quarter                         ---                           ---
2nd Quarter                         $18.25                       $12.00
3rd Quarter                         $17.00                       $12.50
4th Quarter                         $16.00                       $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.  The Indenture  governing the Company's 12%
Senior Subordinated Notes due 2002 contains certain restrictive  covenants that,
among  other   things,   limit  the  payment  of  dividends  or  the  making  of
distributions on equity interests of the Company.

                                     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
PricewaterhouseCoopers  LLP,  independent  accountants as of and for each of the
fiscal  years ended July 30,  1995,  July 28,  1996,  July 27, 1997 and July 26,
1998;  and for the year ended July 31, 1994 have been derived from the financial
statements of the Company audited by Berry,  Dunn, McNeil & Parker,  independent
accountants.

                                       26
<PAGE>



<TABLE>
<CAPTION>

Historical Year Ended (1)
                                                               -----------------------------------------------------------------
                                                                  July 31,      July 30,    July 28,      July 27, July 26,
                                                                  1994          1995        1996          1997       1998
                                                               -----------------------------------------------------------------
                                                                 (in thousands, except per share, real estate units, 
                                                                                and skier visit amounts)
<S>                                                             <C>           <C>        <C>            <C>        <C>     
Consolidated Statement of Operations Data:
Net revenues:

     Resort.................................................... $26,544       $ 46,794   $ 63,489       $166,923   $278,577
     Real estate...............................................   6,682          7,953      9,933          8,468     61,843
                                                                 -------        -------   --------       --------  --------
          Total net revenues...................................  33,226         54,747     73,422        175,391    340,420
                                                                 -------        -------   --------       --------  --------
Operating expenses:
     Resort....................................................  15,787         29,725     41,799        109,774    169,865
     Real estate...............................................   3,179          3,994      5,844          6,813     44,292
     Marketing, general and administrative (2).................   5,940          9,394     11,289         26,126     42,554
     Stock compensation charge..................................     --             --         --             --     14,254
     Depreciation and amortization.............................   2,421          3,910      6,783         18,293     37,966
                                                                 -------        -------   -------        --------   -------
          Total operating expenses.............................  27,327         47,023     65,715        161,006    308,931
                                                                 -------        -------   -------        --------   -------
Income from operations.........................................   5,899          7,724      7,707         14,385     31,489
Other expenses:
     Commitment fee............................................     --             --       1,447            --        --
     Interest expense..........................................   1,026          2,205      4,699         23,730     34,575
                                                                 -------        -------   -------        -------    -------
Income (loss) before provision (benefit) for income taxes and
   minority interest in loss of subsidiary.....................   4,873          5,519      1,561         (9,345)    (3,086)
Provision (benefit) for income taxes...........................      --            400      3,906         (3,613)      (774)
Minority interest in loss of subsidiary................. .....       --             --       (108)          (250)      (445)
                                                                 -------        -------    -------        -------    -------
Income (loss) from continuing operations......................    4,873          5,119     (2,237)        (5,482)    (1,867)
Extraordinary loss, net of income tax benefit ................       --             --         --             --      5,081
                                                                 -------        -------    -------        -------    -------
Net income (loss)..............................................   4,873          5,119     (2,237)        (5,482)    (6,948)
                                                                 -------        -------    -------        -------    -------
Accretion of discount and issuance costs and dividends accrued
  on mandatorily redeemable preferred stock....................      --             --         --            444       5,346
                                                                 -------        -------    -------        -------    -------
Net income (loss) available to common shareholders............. $ 4,873        $ 5,119    $(2,237)       $(5,926)   $(12,294)
                                                                 =======        =======    =======        =======    ========
 
Basic and diluted loss per common share: 
  Continuing operations....................... ................      --             --    $ (2.37)       $ (5.61)    $(0.07)
  Extraordinary loss ..........................................      --             --         --             --      (0.20)

  Net loss available to common shareholders ...................      --             --      (2.37)         (6.06)     (0.48)

Weighted average common shares outstanding ....................      --             --        942            978      25,832
                                                                 -------        -------    -------        -------     ------
Other Data:

Resort:
     Skier visits (000's)(3)...................................       528          1,060      1,290          3,025    5,322
     Season pass holders (000's)...............................       3.7           11.2       13.2           30.9     44.1
     Resort revenues per skier visit...........................  $  50.26        $ 44.15   $  49.22      $   55.18   $52.34
     Resort EBITDA(4)(5).......................................  $  4,817        $ 7,675   $ 10,401      $  31,023  $66,158

Real estate:
     Number of units sold......................................       155            163        177            123    1,009
     Number of units pre-sold(6)...............................       --             --         109            605      861
     Real estate EBIT(5)(7)....................................  $  3,503        $ 3,959   $  4,089      $   1,655  $17,551

Statement of Cash Flows Data:
     Cash flows from operations................................  $  5,483       $ 12,593   $  7,465      $   6,788    3,621
     Cash flows from investing activities......................    (9,041)       (13,843)  (122,583)       (14,070)(384,303)
     Cash flows from financing activities......................     3,764          2,399    116,941         19,655  380,494

Balance Sheet Data:
     Total assets..............................................   $51,784       $ 72,434   $298,732      $ 337,340  780,899
     Mandatorily redeemable preferred stock ...................        --             --         --         16,821   39,464
     Long term debt, including current maturities..............    22,724         35,056    210,720        236,330  383,220
     Common shareholders' equity...............................    26,212         30,502     21,903         15,101  268,204

</TABLE>

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

(2)In the first quarter of fiscal 1998, the Company granted to certain executive
officers and other employees fully vested options to purchase  622,038 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.

(3)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.

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

(5)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.

(6)Presold 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.

(7)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.





                                       27
<PAGE>



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

                                     General

          We are pleased to present to you management's  discussion and analysis
of financial  condition  and results of  operations  for the twelve months ended
July 26, 1998. The results include the Steamboat and Heavenly resorts which were
acquired on November 12, 1997.  As you read the material  below,  we urge you to
carefully  consider the audited  Consolidated  Financial  Statements and related
notes contained elsewhere in this report.

                         Liquidity and Capital Resources

          Short-Term.  The  Company's  primary  short-term  liquidity  needs are
funding  seasonal  working  capital  requirements,  continuing  the real  estate
development,  completing projects initiated in the Company's summer 1998 capital
improvement   program,  and  servicing   indebtedness.   Cash  requirements  for
ski-related  and real estate  development  activities  are  provided by separate
sources.  The Company's  primary  sources of liquidity  for working  capital and
ski-related   capital   improvements  are  cash  flow  from  operations  of  its
subsidiaries  and  borrowings  under the New  Credit  Facility  (as  hereinafter
defined).  Real estate  development  is funded  primarily  through  construction
financing facilities  established for major real estate development projects and
through the mezzanine  facilities  established or to be established  through the
Company's  real estate  development  holding  company,  American  Skiing Company
Resort  Properties,  Inc.  ("Resort  Properties").  The  construction  financing
facility and Resort  Properties  mezzanine  facilities  are without  recourse to
American Skiing Company and its resort operating subsidiaries.

          The Company established a new credit facility on November 12, 1997 (as
amended to date, the "New Credit Facility").  The New Credit Facility is divided
into two  sub-facilities,  $65  million  of which  ($4.5  million  of which  was
available at July 26, 1998) is available for  borrowings  by ASC East,  Inc. and
its subsidiaries  (the "East Facility") and $150 million of which ($15.8 million
of which was  available  at July 26, 1998) is available  for  borrowings  by the
Company excluding ASC East, Inc. and its subsidiaries (the "West Facility"). The
East Facility consists of a six-year  revolving credit facility in the amount of
$35 million and an eight-year  term  facility in the amount of $30 million.  The
West  Facility  consists of a six-year  revolving  facility in the amount of $75
million and an eight-year term facility in the amount of $75 million.

          The  revolving  facilities  are  subject to annual  30-day  clean down
requirements to an outstanding balance of not more than $10 million for the East
Facility  and not more  that $35  million  for the West  Facility.  The  maximum
availability under the revolving facilities will reduce over the term of the New
Credit Facility by certain prescribed amounts. The term facilities amortize at a
rate of approximately  1.0% of the principal amount for the first six years with
the  remaining  portion  of  the  principal  due  in  two  substantially   equal
installments  in years seven and eight.  Beginning in July 1999,  the New Credit
Facility requires mandatory prepayment of 50% of the Company's excess cash flows
during  any  period in which the ratio of the  Company's  total  senior  debt to
EBITDA exceeds 3.50 to 1. In no event,  however, will such mandatory prepayments
reduce either revolving  facility  commitment below $35 million.  The New Credit
Facility contains  affirmative,  negative and financial  covenants customary for
this  type  of  senior  credit  facility,  including  maintenance  of  customary
financial  ratios.  Except  for  a  leverage  test,  compliance  with  financial
covenants is determined on a consolidated basis  notwithstanding the bifurcation
of the New Credit Facility into sub-facilities.  The East Facility is secured by
substantially all the assets of ASC East, Inc. and its subsidiaries,  except its
real estate  development  subsidiaries,  which are not  borrowers  under the New
Credit Facility. The West Facility is secured by substantially all the assets of
the Company and its subsidiaries, except ASC East, Inc. and its subsidiaries.

                                       28
<PAGE>


          The Company retained  approximately $15 million of unexpended proceeds
from its initial  public  offering.  As of July 26, 1998,  these  proceeds  were
invested in Resort  Properties.  In the fourth  quarter of the Company's  fiscal
1998, these proceeds were treated as capital contribution to real estate.

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

          The Company issued $17.5 million of  convertible,  preferred stock and
$17.5  million  convertible  notes  in  July,  1997 to fund  development  at The
Canyons.  These  securities  were  converted on November 12, 1997,  into 10 1/2%
Mandatorily Redeemable Preferred Stock of the Company.

     In the fourth quarter of 1998, the Company  withdrew an offer to holders of
ASC East,  Inc.'s $120 million 12% Senior  Subordinated  Notes to exchange those
obligations  for $120  million of 12% Senior  Subordinated  Notes of the Company
("Exchange Offer"),  and also canceled a planned $100 million bond offering (the
"Bond  Offering").  Each of these  offerings were canceled due to adverse market
conditions.  The Company had planned to use the proceeds of the Bond Offering to
fund Summer  1998  capital  improvements  and make an equity  investment  in the
Company's real estate holding subsidiary, Resort Properties.

          Following  cancellation  of the Exchange  Offer and the Bond Offering,
management of the Company opted to fund Summer 1998 capital improvements through
the  New  Credit  Facility  and a  $31  million  leasing  facility  arranged  by
BancBoston  Leasing,   Inc.  Interim  funding  of  working  capital  for  Resort
Properties  and its planned  1998 real estate  development  program was obtained
through a loan from  BankBoston,  N.A. and Morgan Stanley Capital Funding in the
amount of $30 million,  which  closed on September 4, 1998 (the "Bridge  Loan").
The Bridge Loan bears  interest at a rate of 14% per annum  (payable  monthly in
arrears) and matures on December 4, 1998. The Bridge Loan is secured by security
interests in and mortgages on substantially all of Resort Properties' assets, on
which  security  interests and mortgages will not be perfected or recorded until
and  unless a default  occurs  under the  terms of the loan.  Resort  Properties
expects  to  repay  the  Bridge  Loan  with  the  proceeds  of  an  $85  million
subordinated debt financing ("Mezzanine Facility"), which it is currently in the
process of privately  placing.  No  assurance  can be given that the $85 million
Mezzanine  Facility  will be  successfully  placed  or  that  the  terms  of the
Mezzanine  Facility  will  not be  costly,  restrictive  to  Resort  Properties'
operations or dilutive of the Company's existing shareholders.  Failure to place
the Mezzanine  Facility would require  curtailing a major portion of future real
estate  development  and  refinancing  the Bridge  Loan to provide  longer  term
funding for Resort Properties' existing seven development  projects.  The Bridge
Loan is  non-recourse  to  American  Skiing  Company  and its  resort  operating
subsidiaries.  The Mezzanine Facility is expected to be non-recourse to American
Skiing Company and its resort operating subsidairies.

                                       29
<PAGE>

          The Company runs its real estate  development  through  single purpose
subsidiaries,  each of which is a wholly-owned  subsidiary of Resort Properties.
In its fourth fiscal  quarter of 1998,  the Company  commenced  construction  on
three new hotel  projects  (two at The Canyons in Utah and one at  Steamboat  in
Colorado).  Two of these new hotel  projects are Grand  Summit  Hotels which are
being financed through a $145 million  construction  loan facility between Grand
Summit Resort Properties,  Inc., ("GSRP", the Company's Grand Summit development
subsidiary) and TFC Textron  Financial,  which closed on September 25, 1998 (the
"Textron Facility"). A portion of the proceeds of the Textron Facility were also
used to  refinance  an  existing  facility  with  TFC  Textron  used to  finance
construction  of Grand Summit Hotels at Killington,  Mt. Snow,  Sunday River and
Attitash Bear Peak, which had $31.4 million outstanding as of July 26, 1998. The
Textron  Facility  bears  interest  at the rate of  prime  plus  1.5% per  annum
(payable monthly in arrears), subject to a 9.25% floor, and matures on September
24, 2002.  The  principal is payable  incrementally  as  quartershare  sales are
closed  at the rate of 80% of the net  proceeds  of each  closing.  The  Textron
Facility  is secured by  mortgages  against  the  project  sites,  is subject to
customary   covenants,   representations   and   warranties  for  this  type  of
construction  facility,  and is  non-recourse to American Skiing Company and its
operating  subsidiaries.  The Textron Facility,  together with funds invested by
the  Company,  is  sufficient  to fund all of the  Company's  Grand Summit Hotel
projects for which the Company is currently in pre-sales.

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

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

          Long-Term. The Company's primary long-term liquidity needs are to fund
skiing  related  capital  improvements  at  certain  of its  resorts,  extensive
development of its slopeside real estate, and any future  acquisitions of resort
properties.  The  Company  has  invested  over $130  million  in skiing  related
facilities  in fiscal  years 1997 and 1998  combined.  As a result,  the Company
expects its resort capital programs for the next several fiscal years to be more
limited in size.  The fiscal  1999 resort  capital  program is expected to total
approximately $55 million, with the summer 1999 resort capital program estimated
at between $25  million and $35  million.  The  Company  anticipates  its annual
maintenance capital needs to be approximately $12 million.

                                       30
<PAGE>

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

     There is a  considerable  degree of  flexibility  in the timing  and,  to a
lesser degree,  scope of these capital  improvements.  Although specific capital
expenditures  can be deferred for extended  periods,  continued  growth of skier
visits,  revenues and profitability will require continued capital investment in
on-mountain  improvements.  The  Company's  practice  is to finance  on-mountain
capital  improvements  through resort cash flow and its senior credit  facility.
The  size  and  scope of the  capital  improvement  program  will  generally  be
determined  annually  depending upon future  availability of cash flow from each
season's  resort  operations  and future  borrowing  availability  under the New
Credit Facility.

          The Company's  business plan anticipates the development of both Grand
Summit hotels and condominium hotels at several resorts,  and resort villages at
Sunday River, Killington,  The Canyons,  Steamboat and Heavenly. All real estate
development  is  undertaken   through  the  Company's  real  estate  development
subsidiary, Resort Properties. Recourse on indebtedness incurred to finance real
estate  development  is limited to Resort  Properties  and/or its  subsidiaries.
Resort Properties' seven existing  development  projects are currently funded by
the Bridge Loan,  the Textron  Facility and the  anticipated  Key Facility.  The
Bridge Loan matures December 4, 1998, and is anticipated to be refinanced with a
portion of the proceeds of the Mezzanine Facility.  No assurance can be provided
that the Mezzanine Facility will close prior to the maturity of the Bridge Loan.

     The Company expects to undertake  future real estate  development  projects
through special purpose  subsidiaries with financing  provided  principally on a
limited recourse basis. Required equity contributions for approximately the next
five of these  projects are expected to be made using the remaining  proceeds of
the Mezzanine Facility and sales proceeds from the Company's four existing Grand
Summit Hotel projects.  Financing commitments for future real estate development
do not  currently  exist,  and no  assurance  can be  given  that  they  will be
available or established. The Company will be required to establish construction
facilities or other financing arrangements for these projects before undertaking
each development.

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

                                       31
<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>
<CAPTION>
                                                                           Fiscal Year Ended
                                                            --------------------------------------------
                                                             July 28, 1996  July 27, 1997   July 26, 1998
                                                            --------------------------------------------
<S>                                                              <C>        <C>              <C>  
Revenues:
     Resort ................................................     86.5%          95.2%        81.8%
     Real estate ...........................................     13.5            4.8         18.2
                                                                 -----          -----       -----
          Total revenues ...................................     100.0         100.0        100.0
                                                                 -----          -----       -----
Operating expenses:
   Resort ..................................................      56.9          62.6         49.9
   Cost of real estate sold.................................       8.0           3.9         13.0
   Marketing, general and administrative ...................      15.4          14.9         12.5
   Stock compensation charge................................                                  4.2
   Depreciation and amortization ...........................       9.2          10.4         11.1
                                                                  -----         -----       -----
          Total operating expenses .........................      89.5          91.8         90.7
                                                                  -----         -----       -----
Income from operations .....................................      10.5           8.2          9.3
Commitment fee .............................................       2.0            --          --
Interest expense ...........................................       6.4          13.5         10.2
                                                                  -----         -----       -----
Income (loss) before provision for income taxes
     and minority interest in loss of subsidiary ...........       2.1          (5.3)        (0.9)
Provision (benefit) for income taxes .......................       5.3          (2.1)        (0.2)
                                                                  -----         -----        -----
Income (loss) before minority interest in loss of
     subsidiary ............................................      (3.2)         (3.2)        (0.7)
Minority interest in loss of subsidiary ....................       0.2           0.1          0.1
                                                                  -----         -----         -----
Net income (loss) from continuing operations................      (3.0)%        (3.1)%       (0.6)%
                                                                  -----         -----         -----
Extraordinary expense.......................................                                  1.4
Net Loss ...................................................      (3.0)%        (3.1)%       (2.0)%
Accretion of discount and dividends on
mandatorily redeemable preferred stock......................                                  1.6
                                                                  -----         -----         -----
Net loss available to common shareholders                         (3.0)%        (3.1)%       (3.6)%
</TABLE>

                                       32
<PAGE>


                 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.  Please see the pro
forma  comparisons  elsewhere in this  Management's  Discussion  and Analysis of
Financial Condition and Results of Operations.

          Resort revenues  increased $111.7 million or 66.9% from $166.9 million
for Fiscal 1997 to $278.6  million for Fiscal 1998.  The  Steamboat and Heavenly
resorts  acquired on November 12, 1997, and The Canyons resort  acquired in July
1997,  accounted for $98.3 million of the increase.  The remaining $13.4 million
represents an increase of 8.0% 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  $53.3  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 $60.1 million or 54.7% from $109.8
million to $169.9  million.  The  acquisition  of Steamboat,  Heavenly,  and The
Canyons resorts accounted for $49.6 million of the increase. The remaining $10.5
million  represents an increase of 9.6% 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  $37.5  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 62.9% from
$26.1 million to $42.6  million.  The  inclusion of Steamboat,  Heavenly and The
Canyons accounted for approximately $8.1 million of this increase. The remaining
$8.4  million  represents  a 32.2%  increase  attributable  to  increased  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.

                                       33
<PAGE>

         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 New 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 $.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.

                                       34
<PAGE>

              Pro Forma Results For Fiscal 1998 Versus Fiscal 1997

          The following unaudited pro forma results of operations of the Company
for Fiscal 1998 and Fiscal 1997 assume that the  acquisitions of The Canyons and
of  Steamboat  and  Heavenly  occurred on July 29,  1996 and that the  Company's
initial public  offering and its New Credit  Facility  became  effective on that
date as well.  These  proforma  results are not  necessarily  indicative  of the
actual results that would have been achieved nor are they necessarily indicative
of future results of operations.

          Resort  revenues  increased $26.7 million or 10.5% from $255.5 million
to $282.2 million.  This increase is primarily  attributable to an 8.1% increase
in total  skier  visits,  which  increased  from 4.9 million to 5.3 million on a
proforma  basis,  as well as the acquisition of new retail and food and beverage
outlets and the opening of three new hotels at the Company's eastern resorts.

         Real estate revenues increased $53.3 million from $8.5 million to $61.8
million.  This increase is  attributable  to the completion of the Company's new
quartershare condominium hotels at Killington, Mount Snow and Sunday River, and
the closing of quartershare sales at those projects.

         Cost of resort  operations  increased $14.8 million or 9.0% from $163.7
million to $178.5 million. This increase is primarily  attributable to increased
business  volume and the acquisition of new food and beverage and retail outlets
and the opening of three new hotels at the Company's eastern resorts.

         Cost of real  estate  sold  increased  $37.5  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 $9.5 million
or 25% from $38.0  million to $47.5  million.  This increase is primarily due to
the establishment of public holding company corporate functions including legal,
accounting,  shareholder relations,  financial analysis,  management information
support  functions,  corporate  marketing  initiatives  involving the Edge card,
direct to lift and corporate-wide  sponsorship programs, and the initiation of a
professional management and marketing program at The Canyons.

          Depreciation and amortization  expense increased $4.2 million or 11.9%
from $35.4 million in Fiscal 1997 to $39.6 million in Fiscal 1998. This increase
is attributable to capital  expenditures  which totaled $106.9 million in Fiscal
1998.

         Interest expense  increased $8.7 million or 32.6% from $26.7 million in
Fiscal 1997 to $35.4  million in Fiscal 1998.  This increase is due primarily to
higher levels of debt outstanding  associated with completed  quartershare units
held for sale by the  Company,  and with the  Company's intensive capital
program in the past year.

                                       35
<PAGE>

         The benefit for income taxes  increased  $3.0 million from $2.6 million
in Fiscal 1997 to $5.6 million in Fiscal 1998. This is attributable primarily to
the increase in the loss before income taxes on a pro forma basis.

          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 the acquisition of Sugarbush.

          Accretion of discounts and dividends  accrued on the Company's 10 1/2%
Mandatorily  Redeemable Preferred Stock of $5.3 million represents the accretion
of the exchange  feature,  the amortization of 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.

   Fiscal Year Ended July 27, 1997 Compared to Fiscal Year Ended July 28, 1996

         Resort  revenues  in fiscal 1997 were  $166.8  million,  an increase of
$103.3  million,  or 162.8%,  as compared to resort revenues of $63.5 million in
fiscal  1996.  This  increase  was due  primarily  to the  addition of the S-K-I
resorts in June 1996,  which accounted for $106.6  million,  which was offset by
$3.2 million  attributable  to a decrease in revenues due to the  divestiture of
the  Cranmore  ski resort and an  increase in resort  revenues at the  Company's
other resorts.

         Revenues from real estate  operations in fiscal 1997 were $8.5 million,
a decrease of $1.4 million,  or 14.7%,  as compared to revenues from real estate
operations  of $9.9 million in fiscal 1996.  This  decrease was due primarily to
all  quartershare  units at the Summit Hotel at Sunday River being fully sold by
July 1996. The Company has completed  construction  of the Grand Summit Hotel at
the Attitash Bear Peak ski resort and began closing on  quartershare  unit sales
at that  Project  on April 6,  1997.  As of July 27,  1997 the  Grand  Summit at
Attitash Bear Peak had $5.0 million in quartershare unit sales.

                                       36
<PAGE>

         Cost of  resort  operations  in  fiscal  1997 was  $109.7  million,  an
increase of $68.0 million,  or 162.5%,  as compared to cost of resort operations
of $41.8 million in fiscal 1996. This increase was due primarily to the addition
of the S-K-I resorts.

         Cost of real  estate  operations  in fiscal 1997 was $6.8  million,  an
increase  of $1.0  million,  or  17.2%,  as  compared  to  cost  of real  estate
operations   of  $5.8  million  in  fiscal  1996.   This  increase  was  due  to
pre-construction activities on the hotel projects that began construction in the
fourth quarter of the year ended July 27, 1997 and costs related to the sales of
quartershares at the Grand Summit at Attitash Bear Peak.

         Marketing,  general  and  administrative  expenses  in fiscal 1997 were
$26.1  million,  an  increase  of $14.8  million,  or  131.0%,  as  compared  to
marketing,  general and administrative expenses of $11.3 million in fiscal 1996.
This increase was due to the addition of the S-K-I resorts, which account for an
increase of $11.9 million.  The remaining difference of $2.9 million is due to a
decrease in expense of $0.5 million due to the  divestiture  of the Cranmore ski
resort and an increase in expense of $3.4  million  due to  increased  marketing
activity at the pre-merger resorts.

         Depreciation  and  amortization  expenses  in fiscal  1997  were  $18.3
million,  an increase of $11.5 million,  or 169.7%,  as compared to depreciation
and amortization  expenses of $6.8 million in fiscal 1996. This increase was due
primarily to the addition of the S-K-I resorts, which account for an increase of
$10.2 million.  The remainder of the increase results from capital  improvements
and the  amortization of goodwill and prepaid loan fees that did not exist prior
to the acquisition of the S-K-I resorts.

         Interest  expense in fiscal  1997 was $23.7  million an increase of $19
million or 505% as compared to interest  expense of $4.7 million in fiscal 1996.
This increase was due to increased indebtedness  associated with the acquisition
of the S-K-I Resorts,  and the Company's  extensive  capital programs during the
summer of 1996.

         Fiscal Year Ended July 28, 1996  Compared to Fiscal Year Ended July 30,
1995.

         Resort revenues in fiscal 1996 were $63.5 million, an increase of $16.7
million,  or 35.7%,  as compared to resort  revenues of $46.8  million in fiscal
1995. This increase was due to (i) $4.0 million  attributable to the acquisition
of Mt.  Cranmore in June 1995,  (ii) an increase of  approximately  19,000 skier
visits,  or  approximately  10%,  at  Attitash  Bear Peak,  (iii) an increase of
approximately  20,000 skier visits, or approximately 13%, at Sugarbush,  (iv) an
increase in lift ticket  prices,  resulting in an increase in revenues per skier
visit from $41.89 in fiscal 1995 to $44.61 in fiscal 1996,  (vi) an  approximate
10%  increase  in season  pass  revenues,  primarily  due to the  addition  of a
multi-resort  season pass, and (vii) $2.8 million  attributable to the inclusion
of the S-K-I resorts for the final month of fiscal 1996.

                                       37
<PAGE>

          Real estate revenues in fiscal 1996 were $9.9 million,  an increase of
$2.0 million,  or 24.3%,  as compared to real estate revenues of $7.9 million in
fiscal 1995. This increase was due to increased  sales of quartershare  units at
the Summit Hotel at Sunday River and the sale of 16 additional  townhouse  units
at Sunday  River in fiscal  1996  compared  to  fiscal  1995,  as well as higher
average sales prices.

          Cost of  operations in fiscal 1996 was $41.8  million,  an increase of
$12.1  million,  or 40.7%,  as compared to cost of operations of $29.7 in fiscal
1995. This increase was due to (i) $1.5 million  attributable to the acquisition
of Mt.  Cranmore,  (ii)  incremental  costs  resulting from the increased  skier
visits,  (iii) operating costs resulting from the increased  snowmaking and lift
capacity and skiable  terrain that  resulted  from the $22.2  million of capital
expenditures  during  fiscal  1996 and (iv)  $2.9  million  attributable  to the
inclusion of the S-K-I resorts for the final month of fiscal 1996.

          Cost of real estate sold in fiscal 1996 was $5.8 million,  an increase
of $1.9  million,  or 48.7%,  as compared to cost of real estate sold of $3.9 in
fiscal 1995. This increase was due to the increased real estate sales volume.

          Marketing,  general  and  administrative  expense in fiscal  1996 were
$11.3 million,  an increase of $1.9 million, or 20.2%, as compared to marketing,
general and  administrative  expenses of $9.4 in fiscal 1995.  This increase was
due to (i)  approximately  $0.7 million  attributable  to the acquisition of Mt.
Cranmore,  (ii)  an  extensive  marketing  campaign  following  the  significant
improvements made at Sugarbush, (iii) expenses resulting from the acquisition of
Mt.  Cranmore and Sugarbush and (iv) $0.9 million  attributable to the inclusion
of the S-K-I resorts for the final month of fiscal 1996.

         Depreciation  and  amortization  in fiscal 1996 were $6.8  million,  an
increase of $2.9 million, or 74.4%, as compared to depreciation and amortization
of $3.9 million in fiscal 1995. This increase was due to depreciation  resulting
from (i) the $24  million  capital  program  completed  prior to the 1995-96 ski
season,  (ii) the  acquisitions  of Mt.  Cranmore and  Sugarbush  and (iii) $0.9
million  attributable  to the  inclusion  of S-K-I resort for the final month of
fiscal 1996.

         Interest  expense in fiscal 1996 was $4.7 million,  an increase of $2.5
million,  or 113.6%,  as compared to interest  expenses of $2.2 in fiscal  1995.
This  increase  was due to (i)  increased  borrowings  to support the  Company's
capital  program,  (ii) the acquisitions of Mt. Cranmore and Sugarbush and (iii)
$0.2 million  attributable  to the  inclusion of the S-K-I resorts for the final
month of fiscal 1996.

                                       38
<PAGE>

         Income tax expense in fiscal 1996 was $3.9 million, an increase of $3.5
million,  or 875%,  as compared to income tax expenses of $0.4 million in fiscal
1995.  The majority of the increase in the Company's  provision for income taxes
was   attributable  to  the  conversion  of  the  former  S  corporations  to  C
corporations,  offset by an $0.8  million  benefit due to inclusion of the S-K-I
resorts for the final month of fiscal 1996.

Year 2000

         The Company has devoted  substantial  resources to year 2000 compliance
(Y2K) in the last two years.  The  Company  has  formed a task  force  which has
developed a comprehensive strategy to systematically evaluate and update systems
as appropriate.

         The Company has made substantial  investments to upgrade to information
systems  which are Y2K  compliant.  The task force has also  identified  systems
which are not Y2k compliant  and has  scheduled  upgrades to these systems which
are to be completed by September of 1999.

         The   task   force   is  also   assessing   internal   non-IS   systems
(telecommunications, security, etc.) for Y2K compliance, This assessment will be
completed  by  December  31,  1998,  and the  recommended  remediations  will be
implemented by September of 1999.

         Furthermore,  the  task  force  is  completing  a risk  assessment  and
contingency  plans in regards to third  party  vendors.  This is  expected to be
completed by March of 1999.

                                       39
<PAGE>

      Cautionary Statement for Purposes of the "Safe Harbor" Provisions of
              the Private Securities Litigation Reform Act Of 1995

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

                                     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 26, 1998, the Company has long term debt
and subordinated  notes outstanding with a carrying value of $383 million and an
estimated fair value of $398 million.  The Company has entered into two interest
rate  protection  agreements.  These  agreements  are  in  connection  with  the
Company's  New Credit  Facility and  effectively  swap  variable  interest  rate
borrowings to fixed rate borrowings. The total amount of the New Credit Facility
that is effected by this agreement is $102.5 million.  The rate for this portion
of the New Credit  Facility is fixed at is 5.68% plus an incremental  rate based
on the Company's leverage, and expires November 17, 2005. Total borrowings under
the New Credit Facility are $194.2 million,  leaving $91.7 million at a variable
rate and, depending on the Company's  leverage,  the interest rate will be LIBOR
plus 2.5% to 3.5%.

          Fixed interest rate debt  outstanding  as of July 26, 1998,  excluding
the New Credit Facility debt, was $190.0 million, carries an average interest
rate of 10.86%,  and  matures as  follows:  $89  million in fiscal  1999,  $11.9
million in fiscal 2000,  $30.9  million in fiscal  2001,  $6.6 million in fiscal
2002, $5.3 million in fiscal 2003, and $127.3 million in fiscal 2004 and after.

          The Company has also entered  into two  noncancellable  interest  rate
swap  agreements.  The notional amount of both  agreements is $120 million.  The
first  swap  agreement  matures  on July  15,  2001.  In  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% 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% and receiving  interest at
a variable  rate.  The variable  rate of interest the Company  would  receive is
based on the six month Libor, as of October 23, 1998 that rate was 4.965%.

                                       40
<PAGE>




                                     Item 8
                              Financial Statements

Selected Quarterly Operating Results

          The following table presents  certain  unaudited  quarterly  financial
information  of the Company for the eight  quarters  ended July 26, 1998. 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 10K 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.

Quarter Ended
<TABLE>
<CAPTION>

                                Oct. 27,    Jan. 26,  Apr. 27,  Jul. 27,     Oct. 26,    Jan. 25,  Apr. 26,  Jul. 26,
                                  1996        1997     1997        1997        1997        1998      1998       1998
                                                                      (in thousands)
<S>                             <C>         <C>       <C>       <C>         <C>        <C>        <C>        <C>    
Revenues:
Resort ......................   $ 11,728    $59,418   $86,601   $  9,176    $13,811    $107,425   $144,641   $12,700
Real estate .................      1,569      1,740     2,674      2,485        810       7,890     40,914    12,229
                                 -------    -------   -------   --------    --------    -------    -------   --------
Total revenues ..............     13,297     61,158    89,275     11,661     14,621      115,315   185,555    24,929
                                 -------    -------   -------   --------    --------    -------    -------   --------

Operating expenses:
  Cost of operations ........     15,034     38,995    42,163     13,583     17,808       64,244    65,413    22,400
  Cost of real estate sold ..      1,032        935     2,913      1,933        925        5,223    28,334     9,810
  Marketing, general and
    administrative ..........      4,792      7,709     9,097      4,528      6,845       13,621    12,623     9,465
  Stock compensation charge..        ---        ---       ---        ---     14,254          ---      ---        ---
  Depreciation and
    amortization ............      1,527      7,344     8,075      1,347      1,506       15,009    17,960     3,491
                                 -------    -------   -------   --------    --------      -------   -------  --------
Total operating expenses ....     22,385     54,983    57,320     21,390     41,338       98,097    124,330   45,166
                                 -------    -------   -------   --------    --------      -------  --------  --------
Income (loss) from operations   $( 9,088)   $ 6,175   $27,027   $ (9,729)  ($26,717)     $17,218  $ 61,225  ($20,237)
                                 -------    -------   -------   --------    --------      -------   -------  --------


</TABLE>


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

None


                                       41
<PAGE>



                                    PART III

                                     Item 10
                        Directors and Executive Officers

          The Charter and the bylaws of the Company  provide that  two-thirds of
the Board of Directors of the Company shall be comprised of directors elected by
the holders of the Class A Common Stock (the "Class A Directors")  and one-third
shall be comprised of directors  elected by the holders of the Common Stock (the
"Common Directors").  The directors are to serve staggered terms, with one-third
of the directors elected for a one year term, one-third of the directors elected
for a two year term,  and  one-third of the  directors  elected for a three year
term.  Currently,  the Board of Directors  is comprised of six members,  four of
which  are  Class A  Directors  and two of which are  Common  Directors.  At the
Company's December 8, 1998 annual meeting four Class A Directors will be elected
by the holders of the Company's Class A Common Stock and three Common  Directors
will be elected by the holders of the Company's Common Stock.

Directors

Nominees for Common Directors

          Joel B. Alvord,  Director.  60. Mr. Alvord was appointed a director of
the Company on February 9, 1998. Mr. Alvord is currently  President and Managing
Director of Shawmut Capital Partners,  Inc. Prior to joining Shawmut in 1996, he
was Chairman of Fleet  Financial  Group for two years,  after it was merged with
Shawmut  National  Corporation.  Mr. Alvord began his banking career in 1963. He
became  President of Hartford  National  Corporation in 1978 and served as Chief
Executive  Officer of Shawmut  National  Corporation  from 1987 to 1995. He is a
director of Hartford  Steam Boiler  Inspection & Insurance  Company (HSB Group),
CUNO,  Inc., and Fleet Financial Group. He has been a member of the Board of the
Federal Reserve Bank of Boston and Swiss  Reinsurance  Company of North America.
He is a trustee of the Wang  Center for the  Performing  Arts,  a trustee of The
A.R.T.,  and an overseer of the Boston Symphony Orchestra and the Museum of Fine
Arts.

          Christopher J. Nassetta,  Director.  36. Mr.  Nassetta was appointed a
director  of the Company on February 9, 1998.  Mr.  Nassetta is  Executive  Vice
President  and Chief  Operating  Officer for Host Marriott  Corporation.  Before
joining  Host  Marriott  in  1995,  Mr.  Nassetta   co-founded   Bailey  Capital
Corporation  in 1991,  where he was  responsible  for the operations of the real
estate   investment  and  advisory  firm.   Prior  to  founding  Bailey  Capital
Corporation,  Mr.  Nassetta  spent  seven  years with The Oliver  Carr  Company,
serving as Chief  Development  Officer and as Development  Director,  as well as
Vice President and Regional Partner. Currently, Mr. Nassetta serves on the Board
of Trustees for Prime Group Realty Trust, and as a member of the McIntire School
of Commerce Advisory Board for the University of Virginia.

                                       42
<PAGE>

          David B. Hawkes. 54. David B. Hawkes is a nominee to join the Board of
Directors of the Company.  He is currently a co-owner,  consultant  and business
advisor of Cloudhawk,  Inc., a management  consulting  firm which has offices in
Maine  and  New  Hampshire.  He is also a part  owner  in New  England  Internet
Services,  Inc. Before founding  Cloudhawk in 1993, Mr. Hawkes served as partner
with KPMG Peat  Marwick  from 1970 to 1993,  in charge of the  firm's  Portland,
Maine tax practice.  Mr. Hawkes is a member of the Board of Directors of several
companies,  including AAA of Northern New England, Bancroft & Martin, Inc., Mark
Stimson Associates and Northland Health Group.

Nominees For Class A Directors

          Leslie B. Otten, Director,  President and Chief Executive Officer. 49.
Mr. Otten has served in his present  capacity since the inception of the Company
in July, 1997. In 1970, Mr. Otten joined Sherburne Corporation,  then the parent
company of Sunday River,  Killington and Mount Snow. Mr. Otten became  Assistant
General  Manager of Sunday  River in 1972 and became  General  Manager of Sunday
River in 1974.  He has been a director  and the  President  and Chief  Executive
Officer of the Company (or its predecessors)  since 1980. Mr. Otten is currently
a director and was  previously  chairman of the  Portland  Museum of Art, and is
also a director  of the Maine  Chamber and  Business  Alliance,  Maine  Handicap
Skiing,  Gould Academy (a private secondary  school) and Project  Opportunity (a
higher education scholarship program).

         Christopher E. Howard,  Director,  Senior Vice President,  Acting Chief
Financial Officer, General Counsel and Clerk. Chief Operating Officer and Senior
Vice President,  American Skiing Company Resort Properties,  Inc. 41. Mr. Howard
has been a director  and officer of the  Company  since its  inception  in July,
1997. Mr. Howard joined the Company's subsidiary,  ASC East, Inc., in 1996 after
serving as its outside counsel. From 1982 to October, 1996, Mr. Howard practiced
with Pierce  Atwood,  northern New  England's  largest law firm,  where he was a
partner and senior member of the firm with a practice  emphasizing  on corporate
and real estate  development.  Mr.  Howard  organized  and was the interim Chief
Executive Officer of Maine's Employer's Mutual Insurance  Company,  Maine second
largest  insurance  company.  He serves  on the Board of the Maine  Governmental
Facilities Authority and is a former member of the Board of the Maine Chamber of
Commerce.
                                       43

<PAGE>

          Gordon M.  Gillies,  Director.  54. Mr.  Gillies  was  appointed  as a
director  of the Company in February  9, 1998.  Mr.  Gillies  retired as a Coast
Guard Officer in 1970,  attended the  University  of New Mexico (M.A.  1972) and
Wake Forest University (J.D. 1976). Mr. Gillies practiced law in Maine from 1976
to 1991, when he retired from practice to join the faculty of Hebron Academy,  a
private boarding-day secondary school in Maine.

          Martel D. Wilson,  Jr.,  Director.  61. Mr.  Wilson was appointed as a
director  of the  Company  in  August,  1998.  Mr.  Wilson  is the  former  Vice
President,  Chief  Financial  Officer and Director of S-K-I Ltd.,  the owner and
operator of the  Killington,  Mount Snow and  Sugarloaf  ski  resorts,  in which
capacities  he served from 1988 to 1996.  He graduated  from the  University  of
Colorado  and  received  an M.B.A.  from  Cornell  University.  Mr.  Wilson is a
Director and Chairman of the Board of Building  Material  Distributors,  Inc. of
Stockton,  California,  a building material  wholesaler in California and Nevada
,and a director of Chittenden Corp., a bank holding company with subsidiaries in
Massachusetts  and Vermont.  He is a past  President and Director of the Rutland
Region  Chamber of  Commerce,  a past  Trustee of the College of St.  Joseph the
Provider,  a past President and Director of the Rutland Regional Medical Center,
and past Chairman of the Board of Trustees of Comprehensive Health Resources,  a
health care holding company.

                                       44
<PAGE>

Executive Officers

         The following  table sets forth the  executive  officers of the Company
and its primary subsidiaries as of the date hereof:

         Name/Age                                 Position


Leslie B. Otten, 49           Director, President and Chief Executive Officer


Christopher E. Howard, 41     Director,  Senior Vice  President,  
                              Acting Chief  Financial Officer,  
                              General  Counsel  and  Clerk of  American  Skiing
                              Company;  Chief Operating Officer and 
                              Senior Vice President of American Skiing Company 
                              Resort Properties, Inc.

G. Christopher Brink, 45      Senior Vice President--Marketing

Warren C. Cook, 53            Chief  Operating  Officer,   
                              Senior  Vice  President--Resort Operations

W. Scott Oldakowski, 35       Senior  Vice  President--Marketing  and  Sales  of
                              American Skiing Company Resort Properties, Inc.


Michael Meyers, 44            Senior Vice  President--Project  Delivery of 
                              American Skiing  Company Resort Properties, Inc.

Gregory Spearn, 45            Senior Vice  President--Planning and Development 
                              of American Skiing Company Resort Properties, Inc.


          For  biographical  information  about  Messrs.  Otten and Howard,  see
"Directors."

         G. Christopher Brink, Senior Vice  President--Marketing.  Mr. Brink has
been with the Company  since 1993 and in his present  capacity  since July 1996.
Prior to joining the Company,  Mr. Brink served from  1991-1993 as a director of
off-site sale centers for Marriott Vacation Ownership, Inc.

          Warren C. Cook, Chief Operating Officer, Senior Vice President--Resort
Operations.  Mr.  Cook  joined  the  Company  in 1996 as  Managing  Director  of
Sugarloaf Mountain Corporation, upon ASC East's acquisition of that Company. Mr.
Cook has served as Senior  Vice  President  - Resort  Operations  of the Company
since January,  1997, and as the Company's  Chief  Operating  Officer since July
1998. Mr. Cook was President and Chief  Executive  Office of Sugarloaf  Mountain
Corporation from 1986 to 1996.

         W.  Scott  Oldakowski,  Senior  Vice  President--Marketing  and  Sales,
American  Skiing  Company  Resort  Properties,  Inc. Mr.  Oldakowski  joined the
Company in 1991 as an independent  consultant on the Summit Hotel project before
being hired as Director of Real Estate in 1993. He became Vice President of Real
Estate Sales for the Company in 1995.  From 1986 to 1991,  he served as Director
of Sales and Marketing at multiple  resorts for Dunes Marketing  Group, a resort
development firm.

                                       45
<PAGE>

         Michael  Meyers,  Senior  Vice  President--Project  Delivery,  American
Skiing  Company Resort  Properties,  Inc. Mr. Meyers joined the Company in April
1995  and  has led the  development  of five  hotels  for  Grand  Summit  Resort
Properties, Inc., a subsidiary of the Company. From 1989 to 1993, Mr. Meyers was
Vice  President  at  Stanmar  Development,   a  real  estate  development  firm.
Immediately  prior to joining the Company,  he was chief operating  officer from
1993 to 1995 for Massachusetts Industrial Finance Agency.

         Gregory  Spearn,  Senior  Vice   President--Planning  and  Development,
American Skiing Company Resort Properties, Inc. Mr. Spearn joined the Company in
the  fall  of  1997,   specializing  in  master   planning,   entitlements   and
on-time/on-budget  project delivery.  From 1995 to 1997, he held the position of
Senior Vice President of Intrawest  Corporation.  Prior to joining  Intrawest he
served as Senior Vice President, Development for the Polygon Group of Companies,
a  large  private  corporation  engaged  in  the  multi-family  development  and
construction business in the Pacific Northwest, beginning in 1993.

                                       46
<PAGE>

Section 16(A) Beneficial Ownership Reporting Compliance

          Section  16(a) of the  Securities  Exchange  Act of 1934  requires the
Company's  executive  officers and  directors  and persons who own more than ten
percent of a registered class of the Company's equity securities to file initial
reports of ownership and changes in ownership  with the  Securities and Exchange
Commission ("SEC") and the New York Stock Exchange. Such officers, directors and
shareholders  are required by SEC regulations to furnish the Company with copies
of all Section 16(a) forms they file.  Based solely on a review of the copies of
such forms  furnished  to the  Company,  all  persons  subject to the  reporting
requirements  of Section 16(a) filed the required  reports on a timely basis for
Fiscal 1998, except that Messrs.  Otten,  Howard,  Brink,  Cook,  Richardson and
Mills each  filed one late  report on Form 3, and Mesrs.  Alvord,  Nassetta  and
Gillies each failed to make one required filing on Form 3.


                                       47
<PAGE>


Item 11. Executive Compensation.


                  Executive Compensation And Other Information
                           Summary Compensation Table

         The following table provides information  concerning  compensation paid
by the Company to the Chief  Executive  Officer and the other four  highest paid
executive  officers of the Company whose  compensation was at least $100,000 for
Fiscal 1998 (collectively, the "Named Executive Officers").

<TABLE>
<CAPTION>
                                                         SUMMARY COMPENSATION TABLE
    Name and Principal      Fiscal               Annual Compensation                        Long-Term Compensation
         Position            Year
                                        Salary        Bonus       Other annual    Restricted      Securities         All other
                                                                  compensation       Stock        underlying       Compensation
                                                                                    Awards       Options/SARs
<S>                          <C>     <C>              <C>        <C>                  <C>         <C>                   <C> 
Leslie B. Otten              1998    $386,538.56      $---       $10,000.00(2)        ---         1,853,197             ---
   President and Chief       1997    $350,000.00      $---            $---            ---            ---                ---
   Executive Officer

                             

Thomas M. Richardson         1998    $218,846.22   $30,000.00    $10,000.00(2)        ---          100,300              ---
   Chief Financial           1997    $170,000.00      $---            $---            ---            ---                ---
   Officer                   

Christopher E. Howard,       1998    $223,076.83   $61,271.25    $10,000.00(2)        ---          150,450              ---
   Chief Administrative      1997    $150,000.00   $      --     $       --           ---            ---                ---
   Officer                   

Burton R. Mills              1998    $191,923.11       $--       $227,955.52(1)       ---           80,240              ---
   Senior Vice President     1997    $170,000.00      $---            $---            ---            ---                ---
   - Mountain Operations     

G. Christopher Brink         1998    $191,923.11       $--            $--             ---           80,240              ---
   Senior Vice President     1997    $170,000.00      $---            $---            ---            ---                ---
   - Marketing

                             

<FN>
(1) Represents  compensation  resulting from cash payment made by the Company to
cover individual Federal and State income tax liability  generated by exercising
stock options.
(2)  Represents  compensation  for  attendance  at  meetings  at  the  Board  of
Directors.
</FN>
</TABLE>
                                       48
<PAGE>

         The following table sets forth information concerning individual grants
of stock  options made under the 1997 Stock  Option Plan during  Fiscal 1998 for
services rendered during Fiscal 1998 by each of the Named Executive Officers.

<TABLE>
<CAPTION>
                        Option Grants During Fiscal 1998

                              Individual Grants                                    Potential realizable value at
                                                                                assumed annual rates of stock price
                                                                                 appreciation for option term (1)

                         NUMBER OF
                         SECURITIES    % OF TOTAL OPTIONS/   EXERCISE
                         UNDERLYING      SARS GRANTED TO        OR
                        OPTIONS/SARS    EMPLOYEES DURING    BASE PRICE   EXPIRATION
        NAME            GRANTED (#)        FISCAL 1998        ($/SH)        DATE         0% ($)         5% ($)         10% ($)

<S>                       <C>                 <C>              <C>        <C>         <C>           <C>             <C>          
Leslie B. Otten          1,853,197            71.7%           $18.00      08/01/07        $---      $20,978,381.00  $53,163,337.00

Christopher E.            150,450             5.8%             $2.00      08/01/07    $2,407,200.00 $4,110,310.00   $6,723,214.00
Howard (2)

Thomas M. Richardson (2)  100,300             3.9%             $2.00      08/01/07    $1,604,800.00 $2,740,206.00   $4,482,143.00

Burton R. Mills (2)        80,240             3.1%             $2.00      08/01/07    $1,283,840.00 $2,192,165.00   $3,585,714.00

G. Christopher Brink (2)   80,240             3.1%             $2.00      08/01/07    $1,283,840.00 $2,192,165.00   $3,585,714.00

<FN>

 (1)  The potential  realizable value uses the  hypothetical  rates specified by
      the  Securities  and Exchange  Commission  and is not intended to forecast
      future appreciation, if any, of the Company's Common Stock price.
 (2)  The  options  granted to these  Named  Executive  Officers  include a cash
      payment on the date that the options  are  exercised  to cover  individual
      Federal  and State  income  tax  liability  generated  by  exercising  the
      options.
</FN>

</TABLE>
                                       49
<PAGE>

      The following  table sets forth  information  concerning  each exercise of
stock options during Fiscal 1998 by each of the Named Executive Officers and the
value of unexercised options at July 26, 1998.

<TABLE>
<CAPTION>
                                             Aggregated Options/SAR Exercises During Fiscal Year Ended
                                             July 26, 1998, and Option/SAR Values as of July 26, 1998

                NAME                   SHARES ACQUIRED       VALUE           NUMBER OF               VALUE OF
                                         ON EXERCISE       REALIZED          SECURITIES             UNEXERCISED
                                             (#)              ($)            UNDERLYING            IN-THE-MONEY
                                                                             UNEXERCISED         OPTIONS/SARS (2)
                                                                          OPTIONS/SARS (2)

<S>                                        <C>           <C>                     <C>                   <C>          
Leslie B. Otten                              N/A              ---                1,853,197/0           $   ---

Christopher E. Howard                        N/A              ---                  150,450/0           $1,589,128.13

Thomas M. Richardson                         N/A              ---                  100,300/0           $1,059,418.75

Burton R. Mills                            20,000        $246,103.40                60,240/0           $  636,285.00

G. Christopher Brink                         N/A              ---                   80,240/0           $  847,535.00


<FN>

(1)       The "Value of Unexercised In-the-Money  Options/SARs at July 26, 1998"
          was calculated by determining the difference between the closing price
          on the New York Stock Exchange of the underlying  Common Stock at July
          24, 1998, of $12 9/16 and the exercise price of the option.  An option
          is "In-the-Money"  when the fair market value of the underlying Common
          Stock exceeds the exercise price of the option.

(2)       All of such Options/SARs are exerciseable.
</FN>
</TABLE>

                                       50

<PAGE>

                              Employment Agreements

         The Company does not currently have any employment  agreements in place
with  its  executive  officers.  The  Compensation  Committee  of the  Board  of
Directors is currently  considering  proposed employment  agreements between the
Company and Messrs. Otten and Howard.

                         Director Compensation and Fees

         The  Company  reimburses  each  member  of the Board of  Directors  for
expenses  incurred in connection  with attending  Board and committee  meetings.
Directors  receive  $5,000 for  attendance at each meeting of the Board,  unless
attendance is via telephone. The Company grants options to purchase 2,500 shares
of Common Stock to non-employee directors upon their election and re-election to
the Board of  Directors.  The  stock  options  are  fully  vested at the time of
granting  and have a term of 10 years with an exercise  price not less than fair
market value as of the date of the grant.

                        Report On Executive Compensation

         The Compensation  Committee of the Board of Directors (the "Committee")
is  comprised  of  Messrs.  Alvord  and  Wilson,  with Mr.  Otten  acting  as an
ex-officio   member.   The  Committee  is  responsible  for   establishing   and
administering  the Company's  executive  compensation  programs and  determining
awards under the Company's 1997 Stock Option Plan.

         The  report  of  the   Compensation   Committee  shall  not  be  deemed
incorporated by reference by any general  statement  incorporating  by reference
this Proxy  Statement  into any filing under the  Securities  Act of 1933 or the
Securities  Exchange  Act  of  1934,  except  to the  extent  that  the  Company
specifically incorporates this information by reference, and shall not otherwise
be deemed filed under such Acts.

                                       51
<PAGE>

                             Compensation Philosophy

         The  Committee's  compensation  philosophy  is  designed to support the
Company's primary  objective of creating long term value for  shareholders.  The
Committee  follows  a  three-prong   compensation  strategy  applicable  to  the
Company's  executive  officers,  including the Chief Executive  Officer ("CEO"),
whereby  each  executive  officer of the Company is  compensated  through  three
separate but related compensation schemes:

                    First,   each  executive  officer  receives  a  base  salary
          consistent with his or her core responsibilities;

                    Second, a short term bonus,  generally  determined annually,
          is  established  to provide  reward and  incentive  for  shorter  term
          productivity;

                    Third,  stock options are awarded  under the Company's  1997
          Stock Option Plan to provide a longer term incentive and reward longer
          term Company loyalty and performance.

         This  strategy  is  intended  to:  (i)  attract  and  retain   talented
executives;  (ii) emphasize pay for performance;  and (iii) encourage management
stock ownership.

         The Internal  Revenue Code imposes a limitation  on the  deduction  for
certain executive officers'  compensation  unless certain  requirements are met.
The  Committee  has  carefully  considered  the impact of these tax laws and has
taken certain  actions  intended to preserve the  Company's  tax deduction  with
respect to any  affected  compensation.  The  Company's  1997 Stock  Option Plan
qualifies for tax  deductibility.  The following are descriptions of the Company
compensation programs for executive officers, including the CEO.

                                   Base Salary

         The Company  generally  establishes  base salary ranges by  considering
compensation     levels    in     similarly     sized     companies    in    the
resort/leisure/hospitality  industry and the real estate  development  industry.
The  base  salary  and  performance  of  each  executive   officer  is  reviewed
periodically  (at least  annually) by his or her  immediate  supervisor  (or the
Committee,  in the case of the CEO) resulting in salary actions as  appropriate.
An executive  officer's  level of  responsibility  is the primary factor used in
determining  base salary.  Individual  performance and industry  information are
also considered in determining any salary adjustment.  The Committee reviews and
approves all executive officer salary adjustments as recommended by the CEO. The
Committee reviews the performance of the CEO and establishes his base salary.

                                       52

<PAGE>

                                   Bonus Plan

         The  Company  has  established  an  incentive   compensation  plan  for
executive  officers of the  Company,  which is  designed to provide  rewards for
shorter term  productivity  by key  employees.  The plan provides for payment of
cash bonuses to executive officers if certain performance objectives established
for each  individual  are  met.  Such  objectives  include  maximization  of the
Company's EBITDA,  development and sale of real estate assets,  and consummation
of strategic acquisitions which are accretive to earnings of the Company.


                                  Stock Option Plan

         The  Company's  1997 Stock Option Plan is designed to align  management
interests with those of  shareholders.  In furtherance  of this  objective,  the
level of stock  option  grants  for  executive  officers  is  determined  by the
Committee each year,  typically in consultation with the CEO except with respect
to the CEO himself.  Awards for all employees (including all executive officers)
are  determined  by  giving  equal  consideration  to  base  salary,   level  of
responsibility and industry long-term compensation information.


                                                     Compensation Committee

                                                         /s/ Joel Alvord
                                                         /s/ Martel Wilson


                                Performance Graph

         The following  graph compares the  performance of the Company's  Common
Stock to the Russell 2000 and the Company's Peer Group Index*.

                                     GRAPHIC


                SKI     Russell 2000       Peer Group*
11/4/97         100         100                100
11/30/97        85           97                 99
12/31/97        88           99                 97
1/31/98         81           97                 97
2/28/98         88          104                108
3/31/98         99          109                116
4/30/98         91          109                114
5/31/98         79          103                109
6/30/98         76          103                113
7/24/98         74           99                102

         *The  Company's Peer Group Index  performance is weighted  according to
market capitalization.

                                       53
<PAGE>

         The total return graphic is presented for the  approximate  eight-month
period since the Company's initial public offering. The total stockholder return
assumes that $100 is invested at the beginning of the period in the Common Stock
of the Company,  The Russell 2000, and the Company's  Peer Group.  The Company's
Peer Group,  as selected by the Company,  is comprised  of Vail  Resorts,  Inc.,
Intrawest Corp.,  Fairfield  Communities,  Inc.,  Vistana Inc., Florida Panthers
Holdings,  Premier Parks,  Inc.,  and Cedar Fair,  L.P. The Company has selected
this    Peer    Group    because    these     companies     operate    in    the
Resort/Leisure/Hospitality  sector or the Resort Real Estate Development sector.
The  Company  included  The  Russell  2000 in the graph  because  the Company is
included in such index and because there is no industry  index for the Company's
business.   Total   shareholder   return  is   weighted   according   to  market
capitalization  so that  companies  with a larger market  capitalization  have a
greater impact on the Peer Group index  results.  Historical  stock  performance
during this period may not be indicative of future stock performance.

                                     Item 12
         Security Ownership of Certain Beneficial Owners and Management.


         Set forth in the  following  table is the  beneficial  ownership of the
Company's  Common Stock and Class A Common Stock as of October 1, 1998,  for all
directors,   nominees  and  the  executive   officers   listed  on  the  Summary
Compensation  Table and all  directors,  nominees  and  executive  officers as a
group.  No  director,  nominee  or  executive  officer  owns more than 1% of the
outstanding  shares  of  Common  Stock  of the  Company  (including  exercisable
options),  with the exception of Mr. Otten who owns  approximately  15.6% of the
total outstanding shares of Common Stock of the Company  (including  exercisable
options)  and all of the  outstanding  shares  of  Class A  Common  Stock of the
Company. All directors and executive officers as a group own approximately 17.6%
of the  total  outstanding  shares  of Common  Stock of the  Company  (including
exercisable  options).  No director or executive  officer of the Company,  other
than Mr. Otten, owns any Class A Common Stock of the Company.

                                       54
<PAGE>

<TABLE>
<CAPTION>


                                                Common Stock               Class A Common          Percent Of Class A
                                             Beneficially Owned       Stock Beneficially Owned      Common Stock And
                                                                                                      Common Stock
                                                                                                   Beneficially Owned

Directors and Named Executive Officers                 Percent of                    Percent of
                                            Shares        Class         Shares          Class


<S>                                       <C>             <C>       <C>                 <C>               <C>  
Leslie B. Otten (1)(6)                    2,716,530       15.6%     14,760,530          100%              54.4%

Christopher E. Howard (2)                    150,450      1.0%           ---             ---                *

Thomas M. Richardson (5)                     101,600        *            ---             ---                *

Burton R. Mills (2)                          60,240         *            ---             ---                *

G. Christopher Brink(2)                      80,240         *            ---             ---                *

Martel D. Wilson, Jr.(4)                    10,500          *            ---             ---                *

Gordon M. Gillies(2)                         2,500          *            ---             ---                *

Christopher J. Nassetta(2)                   2,500          *            ---             ---                *

Joel B. Alvord(4)                            6,500          *            ---             ---                *

David B. Hawkes                               500           *            ---             ---                *

Directors  and  Executive  Officers as a   3,131,560      17.6%       14,760,530        100%              55.0%
Group (10 persons) (3)

-----------------------------------------
* Less than one percent

<FN>

(1)       Includes  1,853,197 shares of Common Stock issuable under  exercisable
          options  granted under the Company's  Stock Option Plan. Also includes
          30,000 shares owned by Albert Otten Trust f/b/o Mildred  Otten,  as to
          which Mr. Otten is trustee and co-beneficiary. Does not include 20,060
          shares of Common Stock  issuable  under  exercisable  options  granted
          under Stock Option Plan to Mr. Otten's spouse,  Christine Otten, as to
          which Mr. Otten disclaims beneficial ownership.

(2)       All  shares of Common  Stock  beneficially  owned by such  person  are
          issuable  under  exercisable  options  granted  under the Stock Option
          Plan.

(3)       Includes  2,254,427 shares of Common Stock issuable under  exercisable
          options granted under the Stock Option Plan. 

(4)       Includes  2,500  shares of Common  Stock  issuable  under  exercisable
          options  granted  under the Stock  Option Plan.  

(5)       Includes  100,300 shares of Common Stock  issuable  under  exercisable
          options  granted  under the Stock Option  Plan.  

(6)       As of October 15, 1998, all of Mr. Otten's Common Shares and 9,200,000
          of Mr.  Otten's  Class A shares  were  pledged to secure a margin loan
          from ING (U.S.) Capital  Corporation,  the proceeds of which were used
          by Mr. Otten to purchase  approximately 833,333 shares of Common Stock
          of the Company in the  Company's  IPO on  November 6, 1997.  A default
          under this loan which is not cured within any applicable  grace period
          would  entitle  ING to  realize on this  pledge and could  result in a
          change in control of the Company.
</FN>
</TABLE>

                                       55
<PAGE>

                     Information As To Certain Shareholders

         Set forth below is certain information with respect to the only persons
known to the Company who owned  beneficially more than five percent of any class
of the Company's voting securities as of October 1, 1998.

<TABLE>
<CAPTION>
                                                Common Stock               Class A Common          Percent Of Class A
                                             Beneficially Owned       Stock Beneficially Owned      Common Stock And
                                                                                                      Common Stock
                                                                                                   Beneficially Owned


Five Percent                                           Percent of                    Percent of
Shareholders___________________           Shares          Class     Shares              Class


<S>                                       <C>             <C>       <C>                 <C>               <C>  
Leslie B. Otten  (1)                      2,716,530       15.0%     14,760,530          100%              53.0%
American Skiing Company
P.O. Box 450
Bethel, ME 04217

Madeleine LLC (2)                         2,348,746       13.1%          ---             ---              7.3%
c/o Cerberus
450 Park  Avenue
New York, NY  10022

State of Wisconsin Investment Board       2,525,000       16.3%          ---             ---              8.3%
 P.O. Box 7842
 Madison, WI 53707

Fusion Capital Management Inc.            1,063,700       6.9%           ---             ---              3.5%
 237 Park Avenue
 Suite 801
 New York, New York 10012


<FN>
(1)  Includes  1,853,197  shares  of Common  Stock  issuable  under  exercisable
     options  granted under the Stock Option Plan.  Also includes  30,000 shares
     owned by Albert Otten Trust f/b/o Mildred  Otten,  as to which Mr. Otten is
     trustee and co-beneficiary.  Does not include 20,060 shares of Common Stock
     issuable under  exercisable  options granted under Stock Option Plan to Mr.
     Otten's spouse, Christine Otten, as to which Mr. Otten disclaims beneficial
     ownership.
(2)  Includes  2,348,746  shares of Common Stock issuable upon the conversion of
     such  holder's  shares of 10 1/4%  Convertible  Preferred  Stock.  Does not
     include up to 1,323,982  additional  shares of Common Stock  issuable  upon
     conversion of the Company's 10 1/2% Convertible Preferred Stock as a result
     of the accrual of cumulative dividends thereon to the scheduled maturity of
     the redemption of such preferred stock.
</FN>
</TABLE>


                                       56
<PAGE>

                                     Item 13
                 Certain Relationships and Related Transactions.


          In June 1996,  Sunday River Skiway  Corporation,  a subsidiary  of the
Company  ("SRSC"),  issued an unsecured demand note to Mr. Otten obligating SRSC
to pay to Mr. Otten a total of $5.2 million.  Interest on the note is calculated
at 5.4% per expected annum. The note was issued to Mr. Otten for an amount equal
to the  income  taxes  to be paid by him in 1996 and 1997  with  respect  to the
income of SRSC as an S corporation  which was converted to a C corporation.  The
remaining  principal amount of such note, as of July 26, 1998, was approximately
$1.8 million.

          Christine Otten, Mr. Otten's spouse, is employed by the Company as its
director  of retail  purchasing  and is actively  involved  in its retail  sales
activities.  During fiscal years 1996,  1997 and 1998,  Ms. Otten received total
compensation of $54,577, $51,600 and $51,600, respectively. In the first quarter
of fiscal 1998,  the Company  granted Ms. Otten options to purchase up to 20,060
shares of Common Stock at a price of $2.00 per share.  Ms. Otten is fully vested
with respect to these  shares.  The options  granted to Ms. Otten include a cash
payment on the date of exercise to cover  Federal and State income tax liability
generated by exercising the options.

         Western  Maine  Leasing Co., a  corporation  wholly owned by Mr. Otten,
presently  leases items of heavy  equipment to SRSC under  short-term  leases on
terms believed by management to be comparable to those that could be obtained by
SRSC from unaffiliated lessors of such equipment. In fiscal 1996, 1997 and 1998,
payments under such leases totaled $37,000, $24,000 and $17,000, respectively.

         SRSC  provides  lodging  management  services  for Ski  Dorm,  Inc.,  a
corporation  owned by Mr.  Otten and his mother,  which owns a ski dorm  located
near the Sunday River resort,  on terms  believed by management to be comparable
to those that would be offered by SRSC to unaffiliated entities. In fiscal 1996,
1997 and 1998, payments by Ski Dorm, Inc., to SRSC totaled $90,000, $258,000 and
$2,000,  respectively.  In addition, Ski Dorm, Inc., issued to SRSC a promissory
note in 1995  in the  principal  amount  of  $265,000,  of  which  $250,000  was
outstanding  at  October 1,  1998.  Such note is  secured by a mortgage  on real
estate and related  improvements owned by Ski Dorm, Inc. 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.

         Mr.  Otten  borrowed  funds  from ING  (U.S.)  Capital  Corporation  to
purchase  Common Stock in the  Company's  IPO, and has pledged  shares of Common
Stock and Class A Common Stock to secure the loan. In connection  with the loan,
the  Company  entered  into a  registration  rights  agreement  with the  lender
containing customary provisions pursuant to which the lender will have the right
to require the Company to register with the Securities and Exchange  Commission,
at the Company's expense, the shares pledged by Mr. Otten to secure the loan.

                                       57
<PAGE>

                                     PART IV

                                     Item 14
<TABLE>
<CAPTION>
         Exhibits, Financial Statement Schedules and Reports on Form 8-K

<S>   <C>                                                                          <C>
(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 Statement of Operations......................................    F-2

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

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

          Consolidated Statement of Cash Flows......................................    F-6

          Notes to Consolidated Financial Statements................................    F-8

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:
</TABLE>

Exhibit
No.                Description



3.1       Articles of Incorporation of the Company, as amended  (incorporated by
          reference to Exhibit 3.1 of the  Company's  Registration  Statement on
          Form S-1, Registration No. 333-33483).

3.2       By-laws of the Company  (incorporated  by  reference to Exhibit 3.2 to
          the Company's  Registration  Statement on Form S-1,  Registration  No.
          333-33483).

4.1       Specimen  Certificate  for shares of Common Stock,  $.01 par value, of
          the Company (incorporated by reference to Exhibit 4.1 to the Company's
          Registration Statement on Form S-1, Registration No. 333-33483).

4.2       Form  of  Statement  of  Resolution  Establishing  Shares  of 10  1/2%
          Repriced  Convertible  Exchangeable  Preferred Stock  (incorporated by
          reference to Exhibit 4.2 to the  Company's  Registration  Statement on
          Form S-1, Registration No. 333-33483).

                                       58
<PAGE>

4.3       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      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).

10.2      Assignment dated May 30, 1997, between Wold 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).

10.3      Loan and  Security  Agreement  dated as of October 1, 1984,  among the
          State  of  Vermont  (acting  by and  through  the  Vermont  Industrial
          Development  Authority),   Sherburne  Corporation,  Proctor  Bank  and
          BankBoston,  N.A.  (incorporated  by reference to Exhibit 10.16 to ASC
          East's Registration Statement on Form S-4, Registration No. 333-9763).

10.4      Loan and  Security  Agreement  dated as of October 1, 1984,  among the
          State  of  Vermont  (acting  by and  through  the  Vermont  Industrial
          Development Authority), Mount Snow, Ltd., Proctor Bank and BankBoston,
          N.A.  (incorporated  by  reference to Exhibit  10.17 to the  Company's
          Registration Statement on Form S-1 Registration No. 333-33483).

10.5      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).

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

10.7      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).

10.8      Purchase  Agreement dated as of April 13, 1994, among Mt. Attitash Lit
          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).
                                       59
<PAGE>

10.9      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).

10.10     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).

10.11     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).

10.12     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).

10.13     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).

10.14     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).

10.15     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).

10.16     Lease  Agreement  dated  as of June  21,  1994,  between  the  Town of
          Wilmington 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).

10.17     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).

10.18     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).

                                       60
<PAGE>

10.19     Agreement  dated  July  26,  1995,   among   Bombardier   Corporation,
          Killington,  Ltd., Mount Snow, Ltd., Waterville Valley Ski Area, Ltd.,
          Bear Mountain, Ltd., and Sugarloaf Mountain Corporation  (incorporated
          by reference to Exhibit 10.55 to ASC East's Registration  Statement on
          Form S-4, Registration No. 333-9763).

10.20     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).

10.21     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).

10.22     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).

10.23     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).

10.24     Loan and Security  Agreement  dated as of August 1, 1997,  among Grand
          Summit Resort Properties, inc., the lenders listed therein and Textron
          Financial  Corporation,   as  Administrative  Agent  for  the  lenders
          (incorporated   by  reference  to  Exhibit   10.71  to  the  Company's
          Registration Statement on Form S-1, Registration No. 333-33483).

10.25     $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).

10.26     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).

                                       61
<PAGE>

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

10.28     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).

10.29     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).

10.30     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).

10.31     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).

10.32     Amended and Restated  Credit  Agreement dated as of November 12, 1997,
          among ASC East, certain Subsidiaries as Borrowers and the Company, ASC
          West  and  certain  Subsidiaries  as  Guarantors,  the  Lenders  party
          thereto,  BankBoston,  N.A.  as Agent for the  Lenders and DLJ Capital
          Funding,  Inc. as Documentation Agent for the Lenders (incorporated by
          reference to Exhibit 1 to the Company's  quarterly report on Form 10-Q
          for the quarter ended October 26, 1997).

10.33     Amended and Restated  Credit  Agreement dated as of November 12, 1997,
          among ASC Utah, ASC West and certain  Subsidiaries  as Borrowers,  the
          Company as Guarantor, the Lenders party thereto,  BankBoston,  N.A. as
          Agent for the Lenders and DLJ Capital  Funding,  Inc. as Documentation
          Agent for the Lenders  (incorporated  by reference to Exhibit 2 to the
          Company's  quarterly report on Form 10-Q for the quarter ended October
          26, 1997).

10.34     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).


                                       62
<PAGE>

10.35     Contract on Sale by and between  Orlando  Resort  Corporation  and ELW
          Golf  Group,  Inc.  (incorporated  by  reference  to  Exhibit 4 to the
          Company's  quarterly report on Form 10-Q for the quarter ended October
          26, 1997).

10.36     First Amendment to Amended and Restated  Credit  Agreement dated as of
          July 20, 1998, among ASC East,  certain  Subsidiaries as Borrowers and
          the Company and certain Subsidiaries as Guarantors,  the lenders party
          thereto and BankBoston, N.A. as agent for the lenders.

10.37     First Amendment to Amended and Restated  Credit  Agreement dated as of
          July  20,  1998,  among  ASC  Utah,  ASC  West,  and  certain  of  its
          Subsidiaries as Borrowers, the Company as Guarantor, the lenders party
          thereto and BankBoston, N.A. as agent for the lenders

10.38     ISDA Master Lease Agreement between  BankBoston,  N.A. and the Company
          dated as of May 12, 1998.

10.39     Credit Support Annex to ISDA Master Agreement between BankBoston, N.A.
          and the Company dated as of May 12, 1998.

10.40     Unlimited  Guaranty  by the  Company in favor of  BancBoston  Leasing,
          Inc., dated as of July 20, 1998.

10.41     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.

10.42     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).

11.1      Computation of earnings per share.

22.1      Subsidiaries of the Company.

23.1      Consent of Berry, Dunn, McNeil & Parker.

23.2      Consent of PriceWaterhouseCoopers, LLP.

24.1      Power of Attorney

27.1      Financial Data Schedule.

(b)  Reports on Form 8-K

          During the Company's  fourth fiscal quarter of 1998, the Company filed
one  report  on Form 8-K  dated  July 27,  1998.  In that  report,  the  Company
announced  the execution of a joint venture  agreement  with Marriott  Ownership
Resort  International  pursuant to which  Marriott is expected to build at least
five 200 unit  timeshare  hotels at the  Company's  resorts.  The joint  venture
agreement  also  includes  collaborative  marketing  provisions  between the two
companies.

                                       63
<PAGE>



                                   SIGNATURES

         Pursuant to the requirements of the Securities Exchange Act of 1934, as
amended,  the Company has duly caused this instrument to be signed on its behalf
by the undersigned,  thereunto duly authorized,  in the Town of Bethel, State of
Maine, on this 26th day of October, 1998.

                                       American Skiing Company


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

                               By:  /s/ Christopher E. Howard
                                  --------------------------------
                                  Christopher E. Howard
                                  Senior Vice President, Chief Administrative
                                  Officer, General Counsel, Clerk and Chief
                                  Financial Officer
                                  (Principal Financial Officer)


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


                                By: /s/ Christopher E. Howard, attorney-in-fact
                                   --------------------------------
                                    Joel B. Alvord

                                By: /s/ Christopher E. Howard, attorney-in-fact
                                   --------------------------------
                                    Gordon M. Gillies, Director

                                By: 
                                   --------------------------------
                                    Christopher J. Nassetta, Director


                                By: 
                                   --------------------------------
                                    Martel D. Wilson, Director


                                       64
<PAGE>

                        POWER OF ATTORNEY AND SIGNATURES

         We, the  undersigned  offices and directors of American  Skiing Company
hereby  severally  constitute  and appoint  Christopher  E. Howard and Leslie B.
Otten, and each of them singly, our true and lawful attorneys with full power to
them, and each of them singly, to sign for us and in our names in the capacities
indicated  below, the Annual Report on Form 10-K filed herewith and generally to
do all such things in our names and on our behalf in our  capacities  as offices
and directors to enable  American Skiing Company to comply with the provision of
the Securities  Exchange Act of 1934, as amended,  and all  requirements  of the
Securities  and  Exchange  Commission,   hereby  ratifying  and  confirming  our
signatures as they may be signed by our said attorneys,  or any of them, to said
Annual Report.

       Signature                 Title                             Date

                     Chairman  of the  Board of  Directors,
/s/ Leslie B. Otten  President and Chief Executive  Officer  October 26, 1998
-------------------  (Principal Executive Officer)
Leslie B. Otten

                            Senior Vice President, Chief
/s/ Christopher E. Howard   Administrative Officer, General
--------------------------  Counsel, Clerk and Chief         October 26, 1998
Christopher E. Howard       Financial Officer,      
                            (Principal Financial  Officer)


/s/ Joel B. Alvord
------------------------    Director                         October 26, 1998
Joel B. Alvord



--------------------------  Director                         October 26, 1998
Martel D. Wilson, Jr.


/s/ Gordon M. Gillies
--------------------------  Director                         October 26, 1998
Gordon M. Gillies



--------------------------- Director                         October 26, 1998
Christopher J. Nassetta



                                       65
<PAGE>



                        Report of Independent Accountants


October 14, 1998

To the Board of Directors and Shareholders of American Skiing Company

In our opinion,  the  accompanying  consolidated  balance  sheet and the related
consolidated statements of operations, of changes in shareholders' equity and of
cash flows present fairly, in all material  respects,  the financial position of
American Skiing Company and its subsidiaries at July 27, 1997 and July 26, 1998,
and the results of their  operations  and their cash flows for each of the three
years in the period ended July 26, 1998 in conformity  with  generally  accepted
accounting principles.  These financial statements are the responsibility of the
Company's  management;  our  responsibility  is to  express  an opinion on these
financial  statements  based on our  audits.  We  conducted  our audits of these
statements  in accordance  with  generally  accepted  auditing  standards  which
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,  assessing the  accounting  principles
used and  significant  estimates made by management,  and evaluating the overall
financial  statement  presentation.   We  believe  that  our  audits  provide  a
reasonable basis for the opinion expressed above.

                                      F-1
<PAGE>


<TABLE>
<CAPTION>
                                     Consolidated Balance Sheet
                         (In thousands, except share and per share amounts)
                                                                                       July 27,        July 26,
                                                                                         1997            1998
<S>                                                                                   <C>              <C>
Assets
Current assets
   Cash and cash equivalents                                                          $     15,558     $    15,370
   Restricted cash                                                                           2,812           4,946
   Accounts receivable                                                                       3,801           7,538
   Inventory                                                                                 7,282          13,353
   Prepaid expenses                                                                          1,579           3,709
   Deferred financing costs                                                                  1,338           1,246
   Deferred income taxes                                                                       422           1,413
                                                                                    --------------- ---------------

    Total current assets                                                                    32,792          47,575

Property and equipment, net                                                                252,346         521,139
Real estate developed for sale                                                              23,540          78,636
Goodwill                                                                                    10,664          76,301
Intangible assets                                                                                -          23,706
Deferred financing costs                                                                     8,093           7,966
Long-term investments                                                                        3,507           7,397
Other assets                                                                                 6,398          16,865
Restricted cash                                                                                  -           1,314
                                                                                    --------------- ---------------

    Total assets                                                                      $    337,340     $   780,899
                                                                                    --------------- ---------------

Liabilities, Mandatorily Redeemable Preferred Stock and Shareholders' Equity
Current liabilities
   Current portion of long-term debt                                                  $     39,748     $    43,698
   Current portion of subordinated notes and debentures                                          -             455
   Accounts payable and other current liabilities                                           25,738          44,372
   Deposits and deferred revenue                                                             4,379           8,895
   Demand note, Principal Shareholder                                                        1,933           1,846
                                                                                    --------------- ---------------

    Total current liabilities                                                               71,798          99,266

   Long-term debt, excluding current portion                                                46,833         211,570
   Subordinated notes and debentures, excluding current portion                            149,749         127,497
   Other long-term liabilities                                                               7,898          10,484
   Deposits and deferred revenue                                                                 -           1,320
   Deferred income taxes                                                                    28,514          22,719
   Minority interest in subsidiary                                                             626             375
                                                                                    --------------- ---------------

    Total liabilities                                                                      305,418         473,231

Commitments, lease contingencies and contingent liabilities (Note 13)

Mandatorily  redeemable  Series A 14%  Exchangeable  Preferred  Stock, par value
  $1,000  per  share,   70,179  shares   authorized;   17,500  shares  issued  and
  outstanding at July 27, 1997;  net of  unaccreted  issuance  costs  and  including  
  accretion  of discount and cumulative dividends in arrears (redemption value of 
  $18,537 at July 27, 1997)                                                                16,821               -
                                                                                   
Mandatorily  redeemable 10 1/2% Repriced Convertible  Preferred Stock, par value
  $1,000  per  share,   40,000  shares   authorized;   36,626  shares  issued  and
  outstanding at July 26, 1998; including cumulative dividends in arrears 
  (redemption value of $39,464) at July 26, 1998                                               -           39,464
                                                                                                 

Shareholders' Equity
Common stock, Class A, par value of $.01 per share; 15,000,000 shares authorized;
  14,760,530 issued and outstanding                                                            10             148
Common stock, par value of $.01 per share; 100,000,000 shares authorized;
  15,525,022 issued and outstanding                                                            -              155

Additional paid-in capital                                                                   2,786        267,890
Retained earnings                                                                           12,305             11
                                                                                    --------------- ---------------

    Total shareholders' equity                                                              15,101         268,204
                                                                                    --------------- ---------------
    Total liabilities, mandatorily redeemable preferred stock and shareholders'       
    equity                                                                            $    337,340     $   780,899
                                                                                    --------------- ---------------

</TABLE>

                                      F-2
<PAGE>

<TABLE>
<CAPTION>

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

                                                                                       Year Ended

                                                                         July 28,        July 27,      July 26,
                                                                           1996            1997          1998
<S>                                                                        <C>             <C>            <C>     
Net revenues:
   Resort                                                                  $ 63,489        $166,923       $278,577
   Real estate                                                                9,933           8,468         61,843
                                                                       -------------   ------------- --------------

    Total net revenues                                                       73,422         175,391        340,420
                                                                       -------------   ------------- --------------

Operating expenses:
   Resort                                                                    41,799         109,774        169,865
   Real estate                                                                5,844           6,813         44,292
   Marketing, general and administrative                                     11,289          26,126         42,554
   Stock compensation charge                                                      -               -         14,254
   Depreciation and amortization                                              6,783          18,293         37,966
                                                                       -------------   ------------- --------------

    Total operating expenses                                                 65,715         161,006        308,931
                                                                       -------------   ------------- --------------

Income from operations                                                        7,707          14,385         31,489
                                                                       -------------   ------------- --------------

Other expenses:
   Commitment fee                                                             1,447               -              -
   Interest expense                                                           4,699          23,730         34,575
                                                                       -------------   ------------- --------------

Income (loss) before provision (benefit) for income taxes and
minority interest in loss of subsidiary                                       1,561         (9,345)        (3,086)


Provision (benefit) for income taxes                                          3,906         (3,613)          (774)
Minority interest in loss of subsidiary                                       (108)           (250)          (445)
                                                                       -------------   ------------- --------------

Loss from continuing operations                                             (2,237)         (5,482)        (1,867)
                                                                       -------------   ------------- ---------------

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

Net loss                                                                    (2,237)         (5,482)        (6,948)
                                                                       -------------   ------------- --------------

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

Net loss available to common shareholders                                  $(2,237)        $(5,926)      $(12,294)
                                                                       -------------   ------------  --------------
                                                                                          
Basic and diluted loss per common share (Note 2):                      
   Continuing operations                                                   $ (2.37)        $ (5.61)      $  (0.07)
   Extraordinary loss                                                             -               -         (0.20)

   Net loss available to common shareholders                               $ (2.37)        $ (6.06)      $  (0.48)
                                                                       
Weighted average common shares outstanding                                      942             978         25,832
                                                                       -------------   ------------- --------------
</TABLE>

                                      F-3
<PAGE>

<TABLE>
<CAPTION>

                                             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 31, 1995                                      116,737  $  116          -  $    -    $ 1,660    $28,726   $30,502

  Net loss                                                         -        -          -       -          -     (2,237)   (2,237)

  Distributions to Principal Shareholder                           -        -          -       -          -     (8,358)   (8,358)

  Contributions                                                    -        -          -       -       1,020        -      1,020

  Conversion of affiliate company common stock to ASC                
  common stock                                                822,431    (106)         -       -         106        -          -

  Issuance of shares of common stock                           39,132       -          -       -         976        -        976
                                                             ---------- -------- -------  ---------- -------- ---------  ----------

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)

  Net loss                                                           -      -            -     -            -      (5,482)  (5,482)
                                                            ----------- -------- ---------- --------   ---------- --------  --------

  Balance at July 27, 1997                                          -      $ -    14,760,530 $  10      $  2,786   $12,305   $15,101

</TABLE>

                                      F-4
<PAGE>

<TABLE>
<CAPTION>

                                          Consolidated Statement of Changes in Shareholders' Equity
                                              (In thousands, except share amounts ) (Continued)
                                                                                    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>         <C>     <C>      
Balance at July 27, 1997                                          -   $  -    14,760,530   $   10      $   2,786   $12,305  $15,101

Shares issued pursuant to initial public offering        14,750,000    148            -         -        244,181        -   244,329

Issuance of Common Stock options                                  -      -            -         -          8,538        -     8,538

Conversion of Class A Common Stock                                -      -            -       138           (138)       -       -

Purchase of minority interest in subsidiary                 615,022      6            -         -          8,648        -     8,654

Original issue discount on Series A 14% Exchangeable              
Preferred Stock and 14% Senior Exchangeable Notes                 -      -            -         -          1,841        -     1,841

Shares issued to purchase subsidiary                        140,000      1            -         -          1,994        -     1,995

Exercise of Common Stock options                             20,000      -            -         -             40        -        40

Accretion of discount and issuance costs and dividends 
accrued on mandatorily redeemable preferred stock                 -      -            -         -             -    (5,346)   (5,346)

Net loss                                                          -      -            -         -             -    (6,948)  (12,294)
                                                       -------------  ------  ----------  ---------    ---------  -------  ---------

Balance at July 26, 1998                                 15,525,022   $ 155   14,760,530   $    148    $  267,890  $   11  $ 268,204
                                                       -------------  ------- ----------  ----------   ---------- -------- ---------


</TABLE>

                                      F-5
<PAGE>


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

                                                                                       Year Ended
                                                                          --------------------------------------
                                                                          July 28,       July 27,       July 26,
                                                                            1996           1997           1998

<S>                                                                        <C>            <C>             <C>       
Cash flows from operating activities:
   Net loss                                                                 $ (2,237)     $ (5,482)        $ (6,948)
   Adjustments to reconcile net loss to net cash provided by operating
   activities:
    Minority interest in loss of subsidiary                                     (108)         (250)            (445)
    Depreciation and amortization                                               6,783        18,293           37,966
    Amortization of discount on subordinated notes and debentures and
    other liabilities                                                             435         3,300            1,520
    Income tax expense on conversion of S Corporation to C corporation          5,552             -                -
    Deferred income taxes                                                     (1,940)       (3,332)          (3,910)
    Series A 14% Exchangeable Preferred Stock and 14% Senior Exchangeable
    Notes original issue discount                                                   -             -            1,639
    Stock compensation charge                                                       -             -           14,254
    Extraordinary loss on write-off of deferred financing costs                     -             -            3,242
    Gain on sale of assets                                                          -             -            (773)
    Decrease (increase) in assets:
      Restricted cash and investments held in escrow                                -        12,587          (3,448)
      Accounts receivable                                                         481       (1,343)          (3,608)
      Inventory                                                                 (373)       (2,257)          (2,088)
      Prepaid expenses                                                          (648)         1,792          (1,644)
      Real estate developed for sale                                            2,523      (21,976)         (25,950)
      Other assets                                                              (836)         (872)         (10,319)
    Increase (decrease) in liabilities:
      Accounts payable and other current liabilities                          (3,601)         6,794            2,413
      Deposits and deferred revenue                                               944           838            (866)
      Other long-term liabilities                                                 490       (1,304)            2,586
                                                                        -------------- ------------- ----------------

    Net cash provided by operating activities                                   7,465         6,788            3,621
                                                                        -------------- ------------- ----------------

Cash flows from investing activities:
   Payments for purchases of businesses, net of cash acquired                (97,079)       (6,959)        (291,773)
   Long-term investments                                                        (450)           836            1,110
   Capital expenditures                                                      (25,054)      (23,267)        (106,917)
   Proceeds from sale of property and equipment                                     -         2,626            7,227
   Cash payments on note receivable                                                 -           250              100
   Proceeds from sale of businesses                                                 -        14,408            5,702
   Other                                                                            -       (1,964)              248
                                                                        -------------- ------------- ----------------

    Net cash used in investing activities                                  $(122,583)     $(14,070)       $(384,303)
                                                                        -------------- ------------- ----------------

</TABLE>

                                      F-6
<PAGE>

<TABLE>
<CAPTION>

                                         Consolidated Statement of Cash Flows
                                               (In thousands) Continued

                                                                                           Year Ended
                                                                              -------------------------------------
                                                                             July 28,      July 27,        July 26,
                                                                               1996          1997            1998
<S>                                                                           <C>           <C>             <C>       
Cash flows from financing activities:
   Net proceeds from (repayment of) Old Credit Facility                       $  40,301     $   14,766      $ (59,623)
   Net borrowings under New Credit Facility                                           -              -         194,227
   Net repayment  of line of credit                                              (5,776)              -               -
   Net repayment  of revolving credit loan                                      (17,101)              -               -
   Proceeds from (repayment of) subordinated notes and debentures, net of
   investments held in escrow                                                   121,126              -        (23,223)
   Proceeds from (repayment of) long-term debt                                 (11,806)        (6,654)          11,686
   Deferred financing costs                                                     (8,485)        (1,567)         (4,355)
   Payments on demand note, Principal Shareholder                                    -         (3,267)            (87)
   Advances to Principal Shareholder                                              (156)              -
   Distributions to shareholder                                                 (3,158)              -               -
   Proceeds from issuance of mandatorily redeemable securities                       -          16,377          17,500
   Capital contribution                                                           1,020              -               -
   Issuance of shares of common stock                                               976              -               -
   Proceeds from initial public offering, net                                         -              -         244,329
   Proceeds from exercise of stock options                                            -              -              40
                                                                           ------------- -------------- ---------------
    Net cash provided by financing activities                                   116,941         19,655         380,494
                                                                           ------------- -------------- ---------------

    Net increase (decrease) in cash and cash equivalents                          1,823         12,373           (188)

Cash and cash equivalents, beginning of year                                      1,362          3,185          15,558
                                                                           ------------- -------------- ---------------

Cash and cash equivalents, end of year                                         $  3,185    $    15,558     $    15,370
                                                                           ------------- -------------- ---------------

Supplemental disclosures of cash flow information:
   Cash paid for interest                                                      $  2,408    $    20,998     $    36,583
                                                                                     
   Cash paid (refunded) for income taxes                                             15         (1,492)             43

Supplemental schedule of noncash investing and financing activities:
   Property acquired under capitalized leases                                  $    435    $     7,824     $     9,832
   Notes payable issued for purchase of assets                                        -              -          14,232
   Liabilities assumed associated with purchased companies                       58,497          1,826          17,205
   Deferred tax asset (liability) associated with purchased companies          (28,372)              -           1,650
   Purchase price adjustments                                                         -          1,541               -
   Purchase price adjustments related to deferred taxes                               -          1,317           1,226
   Note payable issued for distribution to shareholder                            5,200              -               -
   Note payable issued for purchase of a business                                     -          6,500               -
   Note receivable received for sale of businesses                                    -          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
   Exchange of mandatorily redeemable securities for 10 1/2%
     Repriced Convertible Preferred Stock                                             -              -          36,626
   Intangible asset assumed to purchase subsidiary                                    -              -           1,883


</TABLE>
                                      F-7
<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 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 two wholly-owned  subsudairies,  Grand Summit Rsort
Properties,  Inc. ("GSRP") and American Skiing Company 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 Les  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. The minority interest in ASC East
of $626,000 at July 27, 1997 is  comprised of the fair market value of the stock
when issued to the minority shareholders of $976,000, less the minority interest
in the fiscal 1996 and 1997 losses of $100,000 and  $250,000,  respectively.  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, 833,000 shares were purchased by the Principal Shareholder
of the Company.


                                      F-8

<PAGE>


1.       Basis of Presentation (continued)

          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 1996,  1997 and 1998
consisted of fifty-two weeks.

         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 1999.

          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.


                                      F-9
<PAGE>


2.       Summary of Significant Accounting Principles (continued)

         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 1996,  1997,  and 1998  totaled $0,
$473,000, and $2.4 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                  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.

         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
27, 1997 and July 26, 1998. Contractual maturities relating to these investments
range from less than one year to five years at July 26, 1998.  At July 26, 1998,
long-term  investments  also include a 50% interest in a residential real estate
partnership  that was acquired with the purchase of Steamboat.  The  partnership
interest,  which is accounted for under the equity method,  has a carrying value
of $5.2 million at July 26, 1998.

         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

                                      F-10
<PAGE>


2.       Summary of Significant Accounting Principles (continued)

intangibles to be disposed of be reported at the lower of their carrying  amount
or fair value less  estimated  selling  costs.  As of July 26, 1998,  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 1999.
 
        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 1996, 1997 and
1998, the Company  incurred total interest cost of $5.1 million,  $24.3 million,
and $37.5 million  respectively,  of which $444,000,  $575,000 and $2.9 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  rolled 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 1996, 1997 and 1998.  Contributions  to the savings
plans  for 1996 and 1997  totaled  $87,000  and  $301,000,  respectively,  while
contributions to the Plan for 1998 totaled $225,000,  excluding contributions to
the  Steamboat  and Heavenly  plans.  On January 1, 1998,  the  Heavenly  profit
sharing  plan was  merged  into the Plan.  Management  anticipates  merging  the
Steamboat 401(k) plan into the Plan subsequent to year end. Contributions to the
Steamboat  and  Heavenly  plans for fiscal 1998  totaled  $220,000  and $43,000,
respectively.

         Advertising Costs

          Advertising  costs are expensed the first time the  advertising  takes
place.  At July 27, 1997 and July 26,  1998,  advertising  costs of $384,000 and
$407,000,  respectively,  were recorded in prepaid  expenses in the accompanying
consolidated  balance  sheet.  Advertising  expense for the years ended July 28,
1996,  July 27, 1997 and July 26, 1998 was $5.7  million,  $5.2 million and $7.6
million, respectively.


                                      F-11
<PAGE>


2.       Summary of Significant Accounting Principles (continued)

         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 10 1/2% Repriced  Convertible
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 28,  1996,  July 27,  1997 and July 26,  1998,  basic and
diluted loss per share are the same.

         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 14).

         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 26,  1998.  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.


                                      F-12

<PAGE>


2.       Summary of Significant Accounting Principles (continued)

          The estimated fair values of the Senior  Subordinated  Notes and other
subordinated debentures at July 26, 1998 are presented below (in thousands):

                                                     Carrying           Fair
                                                      amount           value

12% Senior Subordinated Notes                     $   117,002      $   134,400
Other subordinated debentures                     $    10,950      $     8,667



         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.

          As described in Note 10,  certain of the  Company's  subsidiaries  had
previously  elected to be taxed  under the  provisions  of  Subchapter  S of the
Internal  Revenue  Code of 1986,  as  amended,  with  income or loss and credits
passed through to the Principal Shareholder.  Concurrent with the acquisition of
S-K-I, the subsidiaries' election to be treated as S Corporations terminated.

          Reclassifications

          Certain  amounts in the prior year  financial  statements  and related
notes have been reclassified to conform with the fiscal 1998 presentation.

                                      F-13
<PAGE>


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.

                                      F-14
<PAGE>


3.       Business Acquisitions and Divestments (continued)

          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 $375 at July 26, 1998 is  comprised  of the
balance of $364 as of the Kamori  Acquisition date and the minority  interest in
the income of the subsidiary of $11 for fiscal 1998.  This amount is included in
the minority  interest in loss of  subsidiary in the  accompanying  consolidated
statement of operations.

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

          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):

                                           Year             Year
                                           ended           ended
                                         July 27,         July 26,
                                           1997             1998
                                        (unaudited)       (unaudited)

Revenues                                 $   263,923      $   344,026
                                       --------------  ---------------
Loss from continuing operations          $    (3,874)     $    (9,416)
Net loss                                 $    (4,318)     $   (19,843)
                                       --------------  ---------------

Basic and diluted loss per common share:
  Continuing operations                  $     (0.13)     $     (0.31)
  Extraordinary loss                               -            (0.17)
  Net loss available to                    
  common shareholders                    $     (0.15)     $     (0.66)
                                        --------------  ---------------



          These pro forma  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.

         S-K-I Acquisition

     On June 28, 1996, the Company acquired all the outstanding shares of common
stock of S-K-I (the  "S-K-I  Acquisition")  for  approximately  $104.6  million,
including  direct costs and liabilities  assumed  (excluding  deferred taxes) of
$58.5 million.  The  significant  companies  purchased in the S-K-I  Acquisition
included SKI  Insurance  and the  Killington,  Mount  Snow/Haystack,  Waterville
Valley and  Sugarloaf  ski resorts.  Subsequent  to the S-K-I  Acquisition,  all
companies  were  wholly-owned,  except for Sugarloaf,  which was 51% owned.  The
S-K-I Acquisition was accounted for using the purchase method of accounting and,
accordingly,  the results of operations subsequent to June 28, 1996 are included
in the accompanying consolidated financial statements.
        

                                      F-15
<PAGE>


3.       Business Acquisitions and Divestments (continued)

          Amortization  of goodwill  charged to  depreciation  and  amortization
amounted  to  $14,000,   $217,000  and   $274,000  for  1996,   1997  and  1998,
respectively.  Accumulated  amortization  of goodwill  amounted to $231,000  and
$505,000 at July 27, 1997 and July 26, 1998, respectively.

          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.

          The following unaudited pro forma financial  information  presents the
consolidated results of operations as if the S-K-I Acquisition, the divestitures
of Mt.  Cranmore  and  Waterville  Valley,  the  purchase of the  remaining  49%
minority interest of Sugarloaf,  and the termination of the S Corporation status
of certain of the Company's  wholly-owned  subsidiaries had occurred on July 31,
1995 (in thousands except per share amounts):

                                                                Year ended
                                                                  July 28,
                                                                   1996
                                                                 (unaudited)

Revenues                                                    $     171,666
                                                           --------------------

  Net loss                                                  $      (3,785)
                                                           --------------------

  Net loss per share                                        $      (3.87)
                                                           --------------------



          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 for $2.0 million  cash.  In connection  with the purchase,
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  1998,  the  Company  paid  contingent  consideration  of  $331,000.  The
remaining  balance of the  liability at July 26, 1998 of $161,000 is included in
other long-term  liabilities in the accompanying  consolidated balance sheet. 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.

          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-16
<PAGE>


4.       Property and Equipment

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

<TABLE>
<CAPTION>
                                                                              July 27,   July 26,
                                                                                 1997     1998

<S>                                                                          <C>        <C>     
Buildings and grounds ....................................................   $ 69,635   $159,841
Machinery and equipment ..................................................     61,218    108,046
Lifts and lift lines .....................................................     60,769    158,074
Trails ...................................................................     11,667     36,072
Land improvements ........................................................     18,096     24,612
                                                                             --------   --------

                                                                              221,385    486,645

Less - accumulated depreciation and amortization .........................     36,940     69,817
                                                                             --------   --------

                                                                              184,445    416,828

Land .....................................................................     49,160     73,755
Construction-in-process ..................................................     18,741     30,556
                                                                             --------   --------

Property and equipment, net ..............................................   $252,346   $521,139
                                                                             --------   --------

</TABLE>


          Property and equipment includes  approximately $10.7 million and $19.3
million of machinery and  equipment and lifts held under capital  leases at July
27, 1997 and July 26,  1998,  respectively.  At July 27, 1997 and July 26, 1998,
related accumulated  amortization on property and equipment under capital leases
was  approximately  $2.3 million and $3.8  million,  respectively.  Amortization
expense for  property  and  equipment  under  capital  leases was  approximately
$493,000,  $1.6 million and $2.2 million for 1996, 1997 and 1998,  respectively.
Total  depreciation  and  amortization  expense  relating  to all  property  and
equipment was $6.7 million,  $16.6 million and $34.0 million for 1996,  1997 and
1998, respectively.


5.       Note Receivable

          In connection with the sale of Mt.  Cranmore and Waterville  Valley in
November  1996,  the Company  received a  promissory  note in the amount of $2.8
million.  Interest  on the note is  charged  at a rate of 12% per  annum  and is
payable  semi-annually on December 31 and June 30. The note is payable in annual
installments ranging from $100,000 to $350,000 beginning in January 1997 through
January 2003, with the remaining balance to be paid in June 2004. The balance of
the note at July 27, 1997 and July 26, 1998 was $2.5  million and $2.4  million,
respectively  and is included in other assets in the  accompanying  consolidated
balance sheet.


                                      F-17
<PAGE>


6.       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 26, 1998 of $1.8  million will remain  payable  until all
related open tax years are closed.

7.       Long-Term Debt

<TABLE>
<CAPTION>
         Long-term debt consists of (dollar amounts in thousands):

                                                                                      July 27,        July 26,
                                                                                        1997            1998

<S>                                                                                    <C>            <C>     
Senior Credit Facility (Note 9) ....................................................   $55,067        $194,227
                                                                                                      
Real estate  development  note  payable  with a face value of $55,000.  The note
bears interest at 10% 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  January 2001. The note is
collateralized by the real estate developed for sale of GSRP .......................      --            31,411

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

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 is
due in June 1999. The remaining principal and
accrued interest are due in June 2000  .............................................     --              2,000

Subordinated  debentures  issued  with an  original  face value of $2,151.  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, net 
debentures mature in April 2002 ...................................................     1,777           1,844

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

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

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

                                      F-18
<PAGE>


7.       Long-Term Debt (continued)

                                                                                 July 27,      July 26,
                                                                                   1997          1998



Vermont Industrial Development Bonds, with interest rates that fluctuate between
4.03% and 4.50%.  Principal is due in varying  installments  through 1999 and is
secured by certain machinery, equipment and real estate. .....................      $1,005      $  520

Note  payable  in an  aggregate  principal  amount  of  $6,500  to  finance  the
acquisition of The Canyons  resort.  The note bore interest at 12% per annum and
was payable monthly. The principal was payable in two installments:  $4,200 upon
the effective date of the Company's Offering and $2,300 in January 1998. .....       6,500          -

Note payable with a face value of $8,500 to finance the  acquisition of land for
a hotel at the Attitash  Bear Peak resort.  The note bore  interest at a rate of
9.5% per annum. The debt was paid in full in fiscal 1998......................       4,250          -

Note  payable  with an  original  face  value of  $6,120  (a  discount  has been
reflected  based on an imputed  interest  rate of 9.5%) and an interest  rate of
6.25%.  Interest  was  payable  quarterly  beginning  in June 1995.  A principal
payment  of $620  was made in  November  1995 and the  remaining  principal  and
accrued   interest   outstanding  were  due  in  December  1999.  The  note  was
collateralized by certain assets as defined in the loan agreement. In connection
with the prepayment of this debt,  the Company  recorded an  extraordinary  loss
before income tax benefit of $325 representing the unamortized original issue
discount......................................................................       5,128         -

Note  payable  in the  amount of  $2,311. The note bore  interest at the greater 
of 9% or prime plus 1%, which was due in June of each year  beginning  in 1995.  
Principal  payments  of $154 were due in June beginning  in 1997 and the balance 
was due in June 2003.  The Company  paid this debt in full in fiscal 1998 prior 
to its maturity. ......................... ...................................       2,158         -

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: $300
in August  1998;  $200 in August  1999;  $200 in August  2000 and $300 in August
2001. .....................................................................             -       1,000

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


Obligations under capital leases ..........................................          7,840     12,664

Other notes payable .......................................................          2,856      2,777
                                                                                -----------    ---------

                                                                                $   86,581   $ 255,268
                                                                                            
                                                                                -----------   ---------

Less: current portion ....................................................          39,748      43,698
                                                                                -----------   ----------

Long-term debt, excluding current portion ................................      $   46,833   $ 211,570
                                                                                            
                                                                                -----------  -----------



</TABLE>
                                      F-19
<PAGE>


7.       Long-Term Debt (continued)

          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 26, 1998.

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

           2000                                              $       12,263
           2001                                                      31,336
           2002                                                       6,042
           2003                                                       4,177
           2004 and thereafter                                      159,860
           Interest related to capitalized leases                    (1,768)
           Debt discount                                               (340)
                                                           --------------------

                                                              $     211,570
                                                           --------------------

         At July 26,  1998,  the  Company  had  letters  of  credit  outstanding
totaling $4.3 million.


8.       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"),  $39.1
million of 13.75%  Subordinated  Discount Notes (the  "Subordinated  Notes") and
39,132  shares  of its  common  stock  in a  private  placement.  Pursuant  to a
registration  rights  agreement,  ASC East filed a  registration  statement with
respect to an offer to exchange the Notes and Subordinated 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
and  Subordinated   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 and  Subordinated  Notes  mature July 15,  2006 and January 15,  2007,
respectively,  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  $7.9 million in  connection  with the issuance of the Notes and
Subordinated  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 28,  1996,  July 27, 1997 and July 26, 1998
amounted to $58,000, $781,000 and $ 712,600, respectively.

          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
$1.1 million in 1996 and $14.6 million in both 1997 and 1998.


                                      F-20
<PAGE>


8.       Subordinated Notes and Debentures (continued)

          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 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 $1.6 million for the period from the Effective  Date
through  July  26,  1998 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.

          The Subordinated  Notes were issued with an original issue discount of
$19.0 million.  Under the terms of the indenture,  interest on the  Subordinated
Notes was not to accrue  prior to July 15,  2001;  thereafter,  interest  was to
accrue at the rate of 13.75%  per annum and was to be payable  semi-annually  on
January 15 and July 15 of each year,  commencing  on January 15, 2002.  Interest
expense on the  Subordinated  Notes amounted to $206,000,  $2.9 million and $1.4
million in 1996, 1997 and 1998, respectively.  The shares of common stock issued
with the Subordinated Notes represented 4% of the total common stock outstanding
of ASC East and were valued at $976,000 as of June 28, 1996.

          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 for the year ended July 26, 1998.

                                      F-21
<PAGE>


8.       Subordinated Notes and Debentures (continued)

          A portion of the proceeds from the New Credit  Facility  (Note 9) were
used to redeem all of the outstanding 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  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 26, 1998 are
due as follows (in thousands):

                                  Interest       Principal
Year                                Rate           Amount

1999                                 6%           $      455
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
                                                    ------------
                                                   $  10,950
                                                    ------------


9.       Senior Credit Facility

          In connection with the Offering, the Company entered into a new credit
facility (the "New 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.  On November  13, 1997,  BankBoston,  as agent,  syndicated  the New
Credit Facility to a group of participating lenders (the "Banks").

          The New Credit  Facility  is divided  into two  sub-facilities,  $75.0
million of which is available for  borrowings  by ASC East and its  subsidiaries
(the "East Facility") and $140.0 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
$45.0 million and an eight-year


                                      F-22
<PAGE>


9.       Senior Credit Facility (continued)

term facility in the amount of $30.0  million.  The West Facility  consists of a
six-year  revolving  facility in the amount of $75.0  million and an  eight-year
term facility in the amount of $75.0 million.

          The  revolving  facilities  are  subject to an annual  requirement  to
reduce the outstanding  debt to a balance of not more than $10.0 million for the
East Facility and not more that $45.0 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 New Credit Facility by certain prescribed amounts. The term
facilities  amortize at a rate of approximately 1.0% of the principal amount for
the first six years  with the  remaining  portion  of the  principal  due in two
substantially equal installments in years seven and eight.  Beginning July 1999,
the New 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
New 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 New Credit Facility into sub-facilities.

          At  July  26,  1998,  the  revolving  portion  of the  East  and  West
Facilities  had  outstanding  borrowings  of $28.0  million  and $54.0  million,
respectively  under LIBOR  contracts  which bear  interest at rates ranging from
8.09% to 8.48% per annum.  At July 26, 1998,  both the East and West  Facilities
had  outstanding  borrowings of $1.0 million in Money Market accounts which bear
interest at rates  ranging  from 8.06% to 8.47%.  The balance of the  borrowings
outstanding  at year end  under the East and West  Facilities  of  $537,000  and
$895,000,  respectively,  bear interest at the greater of BankBoston's base rate
or the Federal Funds Rate plus 1% per annum. At July 26, 1998, the LIBOR,  Money
Market and Base  rates were  8.16%,  8.06% and 9.5%,  respectively.  At July 26,
1998,  the  term  portion  of the  East  and  West  Facilities  had  outstanding
borrowings of $30.0 million and $75.0 million,  respectively,  and bear interest
at rates  ranging from 8.59% to 8.98%.  Both the  revolving and term portions of
the New Credit  Facility accrue  interest daily and pay interest  quarterly,  in
arrears, commencing January 31, 1998. At July 26, 1998, accrued interest for the
East and West Facilities were $1.2 million and $2.6 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 New  Credit  Facility.  The West  Facility  is  secured  by
substantially all the assets of ASC West and its subsidiaries.

          In November  1997, the Company paid financing fees with respect to the
New Credit  Facility of 1.75% of the total  commitment,  or $3.8  million to the
Banks.  The Company has  capitalized  these fees and certain  other debt related
costs and is  amortizing  them over the term of the New Credit  Facility.  Total
unamortized  financing  fees  relating  to the New Credit  Facility  recorded in
deferred  financing costs in the  accompanying  consolidated  balance sheet were
$3.9 million at July 26, 1998.



                                      F-23
<PAGE>


10.      Income Taxes

          Prior to June 28, 1996,  certain  subsidiaries  of the Company (the "S
Corporations")  had elected to be taxed under the  provisions of Subchapter S of
the  Internal  Revenue  Code of 1986,  as  amended.  Accordingly,  no income tax
provision or liability was made for these companies for the period July 31, 1995
to June 28, 1996.  For federal and state income tax  purposes,  taxable  income,
losses,  and tax credits were passed through to the Principal  Shareholder,  who
was individually  responsible for reporting his share of such items. The Company
distributed to the Principal  Shareholder amounts sufficient to pay his personal
income taxes based on the S Corporations' earnings.

          In conjunction with the S-K-I Acquisition,  the S Corporations changed
from S Corporation  status to C Corporation  status. As a result,  the income or
loss of the  former  S  Corporations  from  June 29,  1996  will be  subject  to
corporate  income tax. The income tax  provisions  described  below  include the
income taxes related to the S Corporations since June 29, 1996.

          At the time of the conversion of the S  Corporations  to C Corporation
status,  a net deferred tax  liability of $5.6 million was recorded  through the
income tax provision. This deferred tax liability was primarily comprised of the
tax effect of the  cumulative  book and tax basis  differences  of property  and
equipment at the time of the conversion.

          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 provision (benefit) represents the change
in the net deferred tax asset or liability balance.

                                      F-24

<PAGE>


10.      Income Taxes (continued)

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

                                                    Year ended
                                    July 28,         July 27,        July 26,
                                      1996             1997            1998

Current tax provision
   Federal                          $    -            $   -           $   -
   State                                 -                -               -
                                 --------------   --------------  --------------

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

Deferred tax provision (benefit)
   Federal                            (1,330)          (2,815)             580
   State                                (316)            (798)         (1,354)
                                 --------------   --------------  --------------

                                      (1,646)          (3,613)           (774)
                                 --------------   --------------  --------------

Change in tax status from S Corporation
  to C Corporation                      5,552                -               -
                                 --------------   --------------  --------------

      Total provision (benefit)    $    3,906     $    (3,613)        $  (774)
                                 --------------   --------------  --------------



                                      F-25
<PAGE>


10.      Income Taxes (continued)

         Deferred tax  liabilities  (assets) are  comprised of the  following at
July 27, 1997 and July 26, 1998 (in thousands):

<TABLE>
<CAPTION>
                                                                             July 27,         July 26,
                                                                               1997             1998

<S>                                                                         <C>              <C>         
Property and equipment basis differential .........................         $     40,040     $     43,992
Other .............................................................                  907              880
                                                                           --------------   --------------

Gross deferred tax liabilities ....................................               40,947           44,872
                                                                           --------------   --------------

Tax loss and credit carryforwards .................................             (16,766)         (15,017)
Capitalized cost ..................................................                (543)          (1,042)
Original issue discount on Subordinated Notes .....................              (1,212)                -
Stock option compensation .........................................                    -          (4,939)
Reserves and accruals .............................................              (1,361)          (3,527)
Other .............................................................                (228)          (1,488)
                                                                           --------------   --------------

Gross deferred tax assets .........................................             (20,110)         (26,013)

Valuation allowance ...............................................                7,255            2,447
                                                                           --------------   --------------

                                                                            $     28,092     $     21,306
                                                                           --------------   --------------

</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 28,       July 27,         July 26,
                                                                       1996           1997             1998

<S>                                                                 <C>             <C>               <C>      
Income tax provision (benefit) at the statutory U.S. tax rates ...  $     546       $ (3,271)         $ (1,080)
Increase (decrease) in rates resulting from:
   Change in tax status from S Corporation to C Corporation ......      5,552              -               -
   Income from S Corporations not taxable for corporate
     income tax purposes .........................................     (2,371)             -               -
   State taxes, net ..............................................          -           (798)         (1,354)
   Change in valuation allowance .................................          -             71             250
   Stock compensation ............................................          -              -           1,019
   Nondeductible items ...........................................         41            243             634
   Other .........................................................        138            142            (243)
                                                                    -------------- --------------   -------------

Income tax provision (benefit) at the effective tax rates .......    $  3,906        $(3,613)        $ (774)
                                                                    -------------- --------------   -------------

</TABLE>


                                      F-26

<PAGE>


10.      Income Taxes (continued)

          At July 26, 1998,  the Company has federal net operating  loss ("NOL")
carryforwards  of  approximately  $29.8 million which expire in varying  amounts
through the year 2013 and a federal  capital  loss  carryover  of $900,000  that
expires in the year 2003. Internal Revenue Code Section 382 limits the amount of
net operating  loss  carryforwards  incurred  before a change in  ownership,  as
defined,  that can be used annually against income generated after the change in
ownership. In November 1997 as a result of the Offering, the Company experienced
a change in ownership. The Company's overall annual limitation under Section 382
is approximately $15.0 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 limitations in future years.

          In addition to the limitations under Section 382,  approximately $11.4
million of the federal NOL  carryovers  are from the 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)
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 $2.5  million  at July 26,  1998 is
appropriate  because,  due to the change of ownership and the  resulting  annual
limitations,  the Company will not be able to use all the potential tax benefits
from existing NOLs and investment tax credits as of July 26, 1998.

          The  Company has  elected to treat a  substantial  portion of the loss
carryforwards  acquired in the acquisition of Sugarloaf as expiring  immediately
prior to its purchase of Sugarloaf. Due to the limitations on loss carryforwards
discussed  above,  the Company did not expect to utilize any of the tax benefits
associated  with these loss  carryforwards  and a full  valuation  allowance was
established.  In computing the deferred tax liabilities  (assets) as of July 26,
1998,  both the asset  related to the loss  carryforward  and the  corresponding
valuation  allowance  have been  eliminated.  This  election was made to avoid a
reduction  in the tax basis of  Sugarloaf's  stock  when the loss  carryforwards
expire.


11.      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.  These amounts
were recorded as a reduction of the carrying value of the Preferred Stock in the
accompanying consolidated balance sheet at July 27, 1997.

                                      F-27
<PAGE>


11.      Mandatorily Redeemable Securities (continued)

          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.  These  costs  were
recorded as deferred  financing costs in the accompanying  consolidated  balance
sheet at July 27, 1997.  The  Exchangeable  Notes bore interest at a rate of 14%
per annum and mature on July 28,  2002.  Inteest 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 10 1/2% Repriced  Convertible  Preferred Stock. The total number of 10
1/2% Repriced Convertible  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 10 1/2% Repriced Convertible Preferred Stock
shares are exchangeable at the option of the holder into shares of the Company's
Common Stock at a conversion price of $17.10 for each common share. In the event
the 10 1/2% Repriced Convertible 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 10 1/2% Repriced  Convertible  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 10 1/2%  Repriced  Convertible  Preferred  Stock  ranks  senior in
liquidation  preference to all Common Stock and Class A Common Stock outstanding
at July 26, 1998 as well as any Common  Stock and Class A Common Stock issued in
the future.

12.      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 1996, 1997 and 1998, the Principal Shareholder's
wife received total compensation of $55,000, $52,000 and $52,000,  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.

Western  Maine  Leasing  Co.,  a  corporation   wholly-owned  by  the  Principal
Shareholder,  leases heavy equipment to Sunday River under short-term leases. In
fiscal 1996, 1997 and 1998, payments under such leases totaled $37,000,  $24,000
and $17,000, respectively.

                                      F-28
<PAGE>


12.      Related Party Transactions (continued)
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 1996,  1997
and 1998,  payments by Ski Dorm to Sunday River  totaled  $90,000,  $258,000 and
$2,000, 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 26, 1998.  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  Principal  Shareholder  borrowed  funds from ING  (U.S.)  Capital
Corporation  to purchase  Common Stock in the Offering and has pledged shares of
Common Stock and Class A Common Stock to secure the loan. In connection with the
loan, the Company entered into a registration  rights  agreement with the lender
containing  customary  provisions  pursuant to which the lender has the right to
require the Company to register with the Securities and Exchange Commission,  at
the Company's expense, the shares pledged by the Principal Shareholder to secure
the loan.


13.      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 1996, 1997 and 1998
was $744,000, $2.2 million and $2.5 million, respectively.

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

          In connection  with the purchase of The Canyons,  the Company  entered
into an  operating  lease  arrangement  with the seller for the lease of certain
land to be used in the  operation  of the  resort  and for  future  real  estate
development.  The  arrangement  provides for an initial  lease term of 50 years,
with the option to extend for three additional 50 year periods for a fee of $1.0
million for each

                                      F-29
<PAGE>


13.      Commitments, Lease Contingencies and Contingent Liabilities (continued)

          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 and
1998 was $0 and $473,000,  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 $20.6 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 27, 1997 and July 26, 1998 were
$0 and $7.6  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 $994,000,  $4.2 million
and $6.4 million for the years ended 1996, 1997 and 1998, respectively.

         Future  minimum lease  payments for lease  obligations at July 26, 1998
are as follows (in thousands):

                               Capital         Operating
                                leases          leases

1999 ...................      $  4,073    $     11,234
2000 ...................         3,944           9,789
2001 ...................         3,419           3,716
2002 ...................         2,255           1,325
2003 and thereafter.....         1,679          11,259
                           ---------------  --------------

Total payments .........      $ 15,370    $     37,323
                                            --------------

Less interest ..........         2,706
                           ---------------

Present value of net 
minimum payments .......        12,664

Less current portion ...         4,862
                           ---------------

Long-term obligations ..       $ 7,802
                           ---------------

          In the fourth quarter of fiscal 1998,  the Company began  construction
on two hotel  projects at The Canyons and one at Steamboat.  Total  construction
costs under these three  projects  are  estimated to be $190.0  million.  Two of
these hotel  projects are being financed  through a $145.0 million  construction
loan facility with TFC Textron and a $30.0 million bridge financing  arrangement
(See Note 18).  The Company  expects to finance  substantially  all of the third
hotel project through an additional  construction loan facility with the balance
financed under a bridge loan arrangement.  The Company anticipates  repaying the
bridge loans with the proceeds from an $85.0 million  subordinated debt, private
placement  financing  arrangement  ("Private  Placement  Financing")  which  the
Company is currently pursuing.  In the event the Company is unable to obtain the
Private  Placement  Financing,  the Company will seek  alternative  financing or
reduce its future real estate development, and will be required to refinance the
bridge loans.

          On July 22, 1998, the Company  entered into an agreement with Marriott
Ownership Resorts,  Inc. ("Marriott") for the future sale of land parcels at the
Company's Killington,  Sunday River, The Canyons, Steamboat and Heavenly resorts
(the "Marriott  Agreement").  Under the Marriott Agreement,  Marriott intends 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,  the Company will receive  proceeds for the sale of the land parcels and
will receive a percentage of

                                      F-30
<PAGE>


13.      Commitments, Lease Contingencies and Contingent Liabilities (continued)

          the Marriott sales of the luxury vacation  ownership  properties.  The
land parcels to be sold had not been  identified  as of July 26, 1998.  Prior to
year end, the Company  received a cash  deposit of $1.6  million  from  Marriott
relating  to the future land  sales.  The  deposit is  recorded as deposits  and
deferred  revenue in the  accompanying  consolidated  balance  sheet at July 26,
1998.

          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.


14.      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 Company  accounts for  stock-based  compensation  using the method
prescribed in Accounting  Principles Board Opinion No. 25, "Accounting for Stock
Issued to  Employees".  During  fiscal 1998,  the Company  granted  nonqualified
options  under the Plan to certain key members of senior  management to purchase
501,500  shares of common  stock with an exercise  price of $2.00 per share when
the fair  market  value of the  stock was  estimated  to be  $18.00  per  share.
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  grant  agreements,  the Company  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.  In  addition,  the
Company  granted  options  under the Plan to certain  members of  management  to
purchase  160,480  shares of common  stock with an  exercise  price of $2.00 per
share when the fair market value of stock was  estimated to be $18.00 per share.
These options vested 20% on the date of grant and will vest ratably to 100% over
the following four years.  For fiscal 1998, the Company  recognized  $500,000 of
stock  compensation   expense  relating  to  these  options.   The  total  stock
compensation  charge  including the tax bonus  recorded for fiscal 1998 of $14.3
million is reflected in the accompanying  consolidated  statement of operations.
The  liability  of  $5.7  million  for the  fixed  tax  bonus  to be paid to the
optionees is reflected in accounts payable and other current  liabilities in the
accompanying consolidated balance sheet at July 26, 1998.

                                      F-31
<PAGE>


14.      Stock Option Plan (continued)

          Immediately following the Offering,  the Company granted the Principal
Shareholder  and certain  employees  incentive  stock  options under the Plan to
purchase  1,853,197 and 168,350  shares,  respectively,  of common stock with an
exercise price equal to the fair market value on the date of grant of $18.00 per
share.  Also during fiscal 1998, the Company  granted to members of the Board of
Directors  nonqualified  options to purchase 22,500 shares of common stock under
the Plan with an exercise  price  equal to the fair market  value on the date of
grant of $14.19 per share.  These incentive and nonqualified  stock options were
all 100% vested on the date of grant.  As all these options were granted with an
exercise  price  equal  to the  fair  market  value  at the  date of  grant,  no
compensation  expense  has  been  recorded  in  the  accompanying   consolidated
statement of operations for fiscal 1998.

<TABLE>
<CAPTION>
                                                                                          Weighted
                                                                                          average
                                                                         Exercise         exercise
                                                        Number of          price           price
                                                         options         per share       per share

<S>                                                       <C>         <C>              <C>      
Granted .............................................     2,706,027   $   2.00-$18.00  $   14.05
Exercised                                                  (20,000)   $      2.00      $    2.00
 ....................................................  -------------

Outstanding at July 26, 1998 ........................     2,686,027   $   2.00-$18.00   $  14.14
                                                       -------------                    -------------

Exercisable at July 26, 1998 ........................     2,557,643                     $  14.75
                                                       -------------                    -------------

Available for future grants .........................     2,982,672
                                                       -------------

</TABLE>

         The  following  table  summarizes  information  about the stock options
outstanding under the Stock Plan at July 26, 1998:

<TABLE>
<CAPTION>
                                                     Options Outstanding                      Options
                                                                                            Exercisable
                                   -----------------------------------------  ---------------------------
                                     Number        Weighted                      Number
                                   outstanding      average      Weighted     exercisable      Weighted
                                       at          remaining      average          at          average
                                    July 26,      contractual    exercise       July 26,       exercise
Exercise Prices                       1998           life          price          1998          price
                                                    (years)
---------------------------------------------------------------------------------------------------------

<S>                                    <C>             <C>         <C>            <C>        <C>        
$2.00 .....................            641,980         9           $ 2.00         513,596    $      2.00

$14.19 ....................             22,500         9           $14.19          22,500    $     14.19

$18.00 ....................          2,021,547         9           $18.00       2,021,547    $     18.00
                                   ------------                               -------------
                                     2,686,027                                  2,557,643
                                   ------------                               -------------

</TABLE>


                                      F-32
<PAGE>


14.      Stock Option Plan (continued)

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 the fiscal 1998 option grants consistent with the provisions
of SFAS 123, the  Company's  net loss and loss per share for the year ended July
26, 1998 would have been  increased  to the pro forma  amounts  indicated  below
(dollar amounts in thousands):

                                                                     July 26,
                                                                      1998

Net loss - as reported ...................................       $   (12,294)
Net loss - pro forma .....................................           (36,984)
Basic and diluted loss per share as reported .............              (.48)
Basic and diluted loss per share pro forma ...............             (1.43)



         The fair value of options  granted at date of grant was estimated using
the Black-Scholes model with the following weighted average assumptions:

                                                          July 26,
                                                            1998

Expected life (years) ..................................    10.0
Interest rate ..........................................     5.6%
Volatility .............................................    47.1%
Dividend yield .........................................       -



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.


15.      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.


                                      F-33
<PAGE>


16.      Business Segment Information

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


                                                                               Year ended
                                                                July 28,       July 27,        July 26,
                                                                  1996           1997            1998
<S>                                                              <C>            <C>             <C>      
Net revenues:
   Resorts ...........................................           $  63,489      $ 166,923       $ 278,577
   Real estate .......................................               9,933          8,468          61,843
                                                              -------------  -------------   -------------

                                                                 $  73,422      $ 175,391       $ 340,420
                                                              -------------  -------------   -------------

Income from operations:
   Resorts ...........................................          $    3,680     $   19,782      $   40,698
   Real estate .......................................               4,089          1,655          17,551
   Corporate .........................................                (62)        (7,052)        (26,760)
                                                              -------------  -------------   -------------

                                                                $    7,707     $   14,385      $   31,489
                                                              -------------  -------------   -------------

Depreciation and amortization:
   Resorts ...........................................          $    6,678     $   16,934      $   35,579
   Real estate .......................................                   -              -             385
   Corporate .........................................                 105          1,359           2,002
                                                              -------------  -------------   -------------

                                                                $    6,783     $   18,293      $   37,966
                                                              -------------  -------------   -------------

Capital expenditures:
   Resorts ...........................................          $  25,054      $   23,267       $ 106,917
   Real estate .......................................               3,321         28,789          70,242
                                                              -------------  -------------   -------------

                                                                $  28,375      $   52,056       $ 177,159
                                                              -------------  -------------   -------------

Identifiable assets:
   Resorts ...........................................                         $  272,541       $ 621,633
   Real estate .......................................                             30,249         120,957
   Corporate .........................................                             34,128          36,896
                                                                             --------------   -------------

                                                                                $ 336,918       $ 779,486
                                                                             -------------   -------------



</TABLE>
                                      F-34

<PAGE>


17.      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
Year ended July 27, 1997:

<S>                                                   <C>           <C>            <C>             <C>     
Net sales                                             $  13,297     $   61,158     $   89,275      $ 11,661
Income (loss) from operations ..................        (9,088)          6,175         27,027       (9,729)
Income (loss) from continuing operations .......       (10,293)            383         13,079       (8,651)
Net income (loss) available to common shareholders     (10,293)            383         13,079       (9,095)

Basic and diluted earnings (loss) per common share:
   Continuing operations .......................        (10.52)           0.39          13.37        (8.85)
   Net income (loss) available to common shareholders   (10.52)           0.39          13.37        (9.30)

Year ended July 26, 1998:

Net sales ......................................         14,621        115,315        185,555        24,929
Income (loss) from operations ..................       (26,717)         17,218         61,225      (20,237)
Extraordinary loss, net of income tax benefits .              -          5,081              -             -
Income (loss) from continuing operations .......       (20,995)          4,955         32,781      (18,608)
Net income (loss) available to common 
   shareholders ................................       (23,426)          (866)         31,690      (19,692)

Basic earnings (loss) per common share:
   Continuing operations .......................         (1.59)          0.18            1.08        (0.61)
   Extraordinary loss ..........................            -           (0.18)              -             -
   Net income (loss) available to common shareholders    (1.59)         (0.03)           1.05        (0.65)
                                                                        

Diluted earnings (loss) per common share:
   Continuing operations ......................          (1.59)          0.17            1.07        (0.61)
   Extraordinary loss .........................             -           (0.18)             -             -
   Net income (loss) available to common shareholders    (1.59)         (0.03)           1.03        (0.65)
                                                                        

</TABLE>




                                      F-35
<PAGE>


18.      Subsequent Event (Unaudited)

         Real Estate Development Financing

          On September 25, 1998,  GSRP entered into a $145 million  construction
loan  facility with TFC Textron (the "Textron  Facility).  The Textron  Facility
bears  interest  at the rate of prime  plus 1.5% per annum,  payable  monthly in
arrears,  subject to a 9.25%  floor,  and matures on  September  24,  2002.  The
principal  is payable  based on 80% of the net  proceeds  from the sales of GSRP
quartershare units at the time of each closing.  The Textron Facility is secured
by mortgages  against the project  sites and is subject to customary  covenants,
representations and warranties for this type of construction facility.

          On September 30, 1998,  the Company  entered into a $30 million credit
arrangement  with  BankBoston  and Morgan Stanley  Capital  Funding (the "Bridge
Financing").  The Bridge  Financing  bears  interest at a rate of 14% per annum,
payable monthly in arrears and matures on December 4, 1998. The Bridge Financing
is collateralized by security interests in, and mortgages on,  substantially all
assets financed under the credit  arrangement.  Management  expects to repay the
Bridge Financing with the proceeds from an $85 million subordinated debt private
placement financing arrangement, which the Company is currently pursuing.

                                      F-36