UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                              Washington, DC 20549

                                    FORM 10-K

[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
    OF 1934
                     For the fiscal year ended July 29, 2001
                                       or

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

                         Commission File Number 1-13507

                             American Skiing Company
             (Exact name of registrant as specified in its charter)
         Delaware                                         04-3373730
(State or other jurisdiction of             (I.R.S. Employer Identification No.)
incorporation or organization)
                                  P.O. Box 450
                               Bethel, Maine 04217
                     (Address of principal executive office)
                                   (Zip Code)

                                 (207) 824-8100
              (Registrant's telephone number, including area code)

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

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

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

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

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

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

The aggregate market value of the registrant's  outstanding common stock held by
non-affiliates of the registrant on November 12, 2001,  determined using the per
share closing price thereof on the New York Stock Exchange  Composite  tape, was
approximately  $15.1  million.  As of November  12, 2001,  31,718,123  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 29, 2001

              American Skiing Company and Consolidated Subsidiaries

                                Table of Contents
                                                                            Page
                                     Part I
Item 1 & Item 2 Business and Properties .......................................1

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

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

                                     Part II

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

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

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

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

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


                                    Part III

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

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

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

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

                                     Part IV

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

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

                                       (i)


<PAGE>

                                     PART I
                     Items 1 and 2 - Business and Properties
American Skiing Company

     We  are  organized  as  a  holding  company  and  operate  through  various
subsidiaries.  Refer to Note 2 - "Basis  of  Presentation"  in the  consolidated
financial  statements  included in Item 8 of this report for a discussion of the
general  development of our business,  our  subsidiaries  and  predecessors.  We
believe that we are the largest operator of alpine ski and snowboard  resorts in
the United States. We reinforce and capitalize on this by developing, owning and
operating a range of  hospitality-related  businesses,  including  hotels,  golf
courses,  restaurants and retail locations.  We also develop, market and operate
ski-in/ski-out alpine villages,  townhouses,  condominiums and quarter ownership
hotels. We manage our operations in two business segments, ski resort operations
and  mountainside  real  estate   development.   For  a  complete  breakdown  of
information  by  reportable  segment  refer  to  Note  14  -  "Business  Segment
Information" in the consolidated financial statements included in Item 8 of this
report.

     Our revenues and net loss available to our common shareholders for our year
ended July 29, 2001, or fiscal 2001,  were $425.6 million and ($141.6)  million,
respectively.  Our recurring  earnings  before interest  expense,  income taxes,
depreciation  and  amortization,  or  EBITDA,  excluding  certain  non-recurring
merger,  restructuring  and asset impairment  charges (as discussed in Note 11 -
"Non-recurring  Merger,  Restructuring  and  Asset  Impairment  Charges"  in the
consolidated  financial statements included in Item 8 of this report), was $55.1
million for fiscal 2001.  Resort revenues and recurring resort EBITDA for fiscal
2001 were $328.7 million and $51.7 million,  respectively.  Real estate revenues
and  recurring  real estate  EBITDA for fiscal 2001 were $96.9  million and $3.4
million,  respectively.  Our resort EBITDA and real estate EBITDA,  inclusive of
all non-recurring charges, was ($19.7) million and ($2.3) million, respectively,
in fiscal 2001. For more information  relating to our financial  condition,  see
"Certain  Considerations - Our business is substantially leveraged and we face a
number of financial risks".


<PAGE>

Resort Operations

     Our resort  business is derived  primarily from our ownership and operation
of eight ski  resorts,  several  of which are among the  largest  in the  United
States.  During the 2000-2001 ski season we owned nine resorts,  which generated
approximately 5.3 million skier visits, representing approximately 9.2% of total
skier visits in the United States. The following table summarizes key statistics
of our resorts. The table includes statistics for the Sugarbush resort, which we
sold  following  year end, and  Steamboat,  which we currently plan to sell. See
Note 19 - "Subsequent Events" in the consolidated  financial statements included
in Item 8 of this report.

<TABLE>

-------------------------------------------------------------------------------------------------------------------
<CAPTION>

                                         Skiable    Vertical                        Snowmaking              2000-01
                                         Terrain     Drop            Total Lifts    Coverage      Ski       Skier
  Resort, Location                       (acres)    (feet)    Trails (high-speed)               Lodges      Visits
                                                                                                            (000s)
  ------------------------------------- ---------- ---------- ------ ------------- ------------ -------- ------------

                                      <c>        <c>       <c>      <c>             <c>        <c>       <c>
  Killington, VT                          1,182      3,050     200      32(8)          70%         8        1,085
  Sunday River , ME                        660       2,340     127      18(4)          92%         4         547
  Mount Snow, VT                           765       1,700     132      23(3)          85%         6         558
  Sugarloaf, ME                           1,410      2,820     129      15(2)          92%         2         355
  Attitash Bear Peak, NH                   280       1,750     70       12(2)          97%         2         220
  The Canyons, UT                         3,500      3,190     140      15(6)          5%          3         303
  Steamboat, CO                           2,939      3,668     142      20(4)          15%         4        1,003
  Heavenly, CA/NV                         4,800      3,500     84       29(8)          69%         7         848
  ------------------------------------- ---------- ---------- ------ ------------- ------------ -------- ------------
  Total of resorts we currently own      15,536     22,018    1,024    164(37)                    36        4,919
  Sugarbush, VT                            468       2,650     115      18(4)          61%         5         359
  ------------------------------------- ---------- ---------- ------ ------------- ------------ -------- ------------
  Total of resorts we owned in fiscal
  2001                                   16,004     24,668    1,139    182(41)                    41        5,278
  ------------------------------------- ---------- ---------- ------ ------------- ------------ -------- ------------

</TABLE>

Resort Properties

     Our resorts  include  several of the top resorts in the United States based
on skier visits, such as Killington, the 5th largest resort in the United States
with  approximately  1.1  million  skier  visits  in  the  2000-01  ski  season,
Steamboat, the 6th largest ski resort in the United States with over 1.0 million
skier  visits in the  2000-01  ski season,  Sunday  River and Mount Snow,  which
together  with  Killington  comprised  three of the four largest  resorts in the
Northeast during the 2000-01 ski season,  and Heavenly,  which ranked as the 2nd
largest  resort  in  the  Pacific  West  region  for  the  2000-01  season  with
approximately 848,000 skier visits.

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

<PAGE>

adjacent to the resort,  is scheduled to serve as the venue for the ski jumping,
bobsled and luge events in the 2002 Winter Olympic  Games.  The Canyons has been
selected  to host the NBC Today  show from its Grand  Summit  Hotel  during  the
Olympics  which we expect will further  increase the awareness and appeal of the
resort.

     Since  acquiring  The  Canyons we have  invested  significant  capital  and
created a  substantial  on-mountain  skiing  infrastructure  which we believe is
capable of supporting substantial skier visit growth. During the 1997-98 season,
its first under our management,  the resort generated over 167,000 skier visits.
This number  increased to over  220,000 in 1998-99,  over 248,000 in 1999-00 and
over 300,000 in 2000-2001.  We intend to gradually invest additional  capital to
improve and expand  on-mountain  facilities and skiable  terrain as skier visits
grow. In fiscal 2000, we completed two  significant  real estate projects at The
Canyons,  a Grand  Summit  Hotel and the Sundial  Lodge.  The  Sundial  Lodge is
substantially  sold out and  approximately  70% of the units in the Grand Summit
Hotel have been sold.  We are focused on selling  the  remaining  inventory  and
preparing for new projects.  In November,  1999, we obtained final approval of a
master  development  plan  for  The  Canyons  which  includes  entitlements  for
approximately  5 million  square feet of  development.  Our master plan includes
developments  by us and by third  parties.  Two such  third  party  projects,  a
timeshare hotel being developed by Westgate Resorts (the first phase of which is
scheduled to open in February,  2002) and a  condominium  hotel being  developed
immediately  adjacent to the resort,  are currently under  construction and will
further add to the bed base surrounding the resort.

     Steamboat.  The  Steamboat  ski area is located in the  Medicine  Bow/Routt
National  Forest,  Routt County,  Colorado on the westerly slopes of Mt. Werner,
approximately 2.5 miles southeast of downtown Steamboat Springs,  Colorado.  The
area consists of 3,486 acres of land licensed  under a special use permit issued
by the United  States  Forest  Service  and 245 acres of  private  land owned by
Steamboat located at the base of the ski area.  Steamboat  receives a high level
of natural dry snow,  averaging 330 inches annually the past 10 ski seasons.  In
our 2001 fiscal year,  we completed a 300-room  Grand Summit Hotel at Steamboat,
which has brought both additional  beds and enhanced  amenities to the Steamboat
base area. We recently announced as part of our comprehensive restructuring plan
that we intend to sell Steamboat. We are currently negotiating purchase and sale
terms with a small group of potential purchasers and have executed a non-binding
letter of intent with one of the  parties.  See Part II, Item 7 -  "Management's
Discussion of Financial Condition and Results of Operations".

     Heavenly.  Located  on the south  shore of Lake  Tahoe with three base area
complexes,  one in South Lake Tahoe,  California  and two in Stateline,  Nevada,
Heavenly consists of two peaks with a maximum elevation of approximately  10,060
feet.  Heavenly  ranks as the second  largest  resort in the Pacific West region
with  approximately  848,000 skier visits for the 2000-01 ski season.  Access to
the resort is  primarily  through  the Reno Tahoe  International  Airport and by
automobile via Route 50 from San Francisco and Sacramento,  California. Heavenly
has a well-developed bed base in the greater South Lake Tahoe/Stateline area and
benefits from a substantial  casino hotel and  hospitality  industry in the base
area. In our 2001 fiscal year, we completed  construction on a new gondola which
provides  lift  service to the resort from the center of South Lake  Tahoe.  The
City of South Lake Tahoe has embarked on a substantial redevelopment strategy on
a 34 acre site where the gondola is  located.  In addition to the gondola and as
part of the redevelopment project,  Marriott has begun construction on two large
fractional ownership hotel projects  immediately  adjacent to the gondola.  Both
projects are expected to open in November, 2002 and we believe these facilities,
coupled with the gondola and other elements of the redevelopment  project,  will
provide substantial growth opportunities for Heavenly.

     Killington.  Killington,  located in central  Vermont,  is the  largest ski
resort in the northeast and the fifth largest in the United  States,  generating
over 1 million skier visits in 2000-01.  Killington is a  seven-mountain  resort
consisting of approximately  1,200 acres of skiable terrain. We believe the size
and diversity of skiable  terrain at Killington make it attractive to all levels
of skiers and one of the most widely  recognized  of our resorts with  regional,
national and international clientele.

     During our 2001 fiscal  year,  we  completed  construction  of a $4 million
snowmaking  expansion  project  which  provides  the resort  with up to 30% more
snowmaking  capacity  during certain  periods.  We believe that this  additional
capacity  should lead to higher early  season  trail counts and enhanced  market
confidence in the quality and reliability of the snow surface.


<PAGE>

     Killington  is  a  year-round   resort  offering  complete  golf  amenities
including an 18-hole  championship  golf course,  a golf school, a driving range
and a tennis  school.  Our real estate  strategy at  Killington is to expand the
existing Grand Summit Hotel,  begin the first phases of a new destination resort
village and expand the bed base surrounding the company-owned  golf course in an
area  approved for  development.  We are pursuing a  combination  of  internally
executed  projects as well as joint ventures and third party developer  projects
to accomplish  the build-out of the village  infrastructure.  The current master
plan for the proposed Killington resort village development  includes over 4,450
units in over 5.3 million square feet of total development.

     Sunday River.  Sunday River,  located in the western mountains of Maine and
approximately a three-hour  drive from Boston,  is New England's  fourth largest
ski resort with over 540,000 skier visits during the 2000-01  season.  Extending
across eight interconnected  mountains,  its facilities consist of approximately
660 acres of  skiable  terrain  and an  additional  7,000  acres of  undeveloped
terrain. Over the past several years, we have developed extensive real estate at
Sunday River,  including  whole  ownership  condominiums  and townhouses and two
quarter-share hotels, both of which are substantially sold out. We have plans to
develop a resort village at the Jordan Bowl Area (the most westerly peak), which
eventually  could include over 1,350 units, a golf course and 1.1 million square
feet of total development.

     Mount  Snow.  Mount  Snow,  located in West  Dover,  Vermont,  is the third
largest ski resort in the northeast United States with over 550,000 skier visits
in  2000-01.  Mount Snow is the  southernmost  of our eastern  resorts.  A large
percentage  of the  skier  base  for  Mount  Snow  derives  from  Massachusetts,
Connecticut and New York.  Mount Snow hosted the winter X games for the past two
years as part of an effort to  strategically  position  the property in the fast
growing snow boarding market segment.  We have developed a Grand Summit Hotel at
Mount  Snow and we  expect  all of the  quartershare  units  at the  hotel to be
substantially  sold out by the end of  fiscal  2002.  Mount  Snow  also owns and
operates  an 18-hole  championship  golf course and is the  headquarters  of our
"Original Golf School",  which consists of eight golf schools located throughout
the  east  coast.

     Sugarloaf.  Sugarloaf  is  located  in the  Carrabassett  Valley  of Maine.
Sugarloaf  is a  single  mountain  with a  4,237-foot  summit  and a  2,820-foot
vertical drop. Sugarloaf offers one of the largest  ski-in/ski-out base villages
in the Eastern United States, containing numerous restaurants,  retail shops and
an abundance  of lodging.  Sugarloaf is widely  recognized  for its  challenging
terrain and snowfields  which represent the only  lift-serviced  above-tree line
skiing in the Northeast. As a destination resort,  Sugarloaf has a broad market,
including  areas as distant as New York,  New Jersey,  Pennsylvania,  Washington
D.C. and Canada. Sugarloaf also leases and operates an 18-hole championship golf
course,  designed by Robert Trent Jones Jr. and consistently rated as one of the
top 40 public golf courses in the country.


     Attitash Bear Peak.  Attitash Bear Peak is one of New  Hampshire's  premier
family vacation resorts.  Its 12 lifts (including three quad chairs)  constitute
one of New Hampshire's  largest lift networks.  Attitash Bear Peak is located in
the heart of the Mount  Washington  Valley which boasts over 200 factory  outlet
stores, hundreds of bars and restaurants and a large variety of lodging options,
including a 143-room slopeside Grand Summit Resort Hotel and Conference Center.

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

Leased Properties

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


<PAGE>

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

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

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

     Killington leases  approximately  2,500 acres from the State of Vermont.  A
substantial portion of that property  constitutes  skiable terrain.  The initial
lease was for a 10-year term which  commenced in 1960 but contains  nine 10-year
renewal options. Killington exercised the renewal option in 1970, 1980, 1990 and
2000.  Assuming  continued  exercise  of the  renewal  options,  the lease  will
ultimately  expire 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  2010.  Although  we have  not had  confirmation  from  Vermont  State
officials,  we have no reason to believe that the State  intends to exercise the
buy-out option at that time.

     Sugarloaf  leases the Sugarloaf  Golf Course from the Town of  Carrabassett
Valley,  Maine  pursuant  to a lease dated  November  16,  2000.  The lease term
expires  November  2023.  Sugarloaf  has an  option  to renew  the  lease for an
additional 5-year term.

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


<PAGE>

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

     Steamboat uses approximately 3,486 acres, a substantial portion of which is
skiable  terrain,  pursuant to a special use permit  issued by the United States
Forest  Service which  expires on August 31, 2029.  Under  Steamboat's  existing
master plan, an additional 958 acres of contiguous  National Forest lands can be
added to the permitted area.

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

Resort Revenues

     Our resort  revenues are derived from a wide variety of sources and include
lift ticket sales,  food and beverage sales,  retail sales including ski rentals
and repairs, skier development,  lodging and property management, golf and other
summer activities and miscellaneous  other sources.  Lift ticket sales represent
the single largest source of resort revenues and produced  approximately  44% of
total resort operations  revenue for fiscal 2001. See  "Management's  Discussion
and Analysis of Results of Operations", included in Item 7 of this report, for a
breakdown of the sources of our resort revenues for the last three fiscal years.

     Lift  Ticket  Sales.  We manage the yield and  features  of our lift ticket
programs  and products in order to increase  and  maximize  ticket  revenues and
operating margins.  Lift tickets are sold to customers in packages together with
accommodations  in order to maximize total  revenue.  We offer a wide variety of
incentive-based  lift ticket  programs  designed to maximize skier visits during
non-peak  periods,  to attract  specific  market  segments  and to leverage  the
competitive advantage of our extensive resort network.

     Food and  Beverage.  We own and operate  substantially  all of the food and
beverage facilities at our resorts,  with the exception of the Sugarloaf resort,
which is under a long-term  concession  contract with an unrelated  third party.
Our food and beverage strategy involves providing a wide variety of restaurants,
bars, cafes,  cafeterias and other food and beverage outlets at our resorts.  By
controlling the vast majority of our on-mountain and base area food and beverage
facilities, we are able to capture a larger proportion of guest spending as well
as ensure  product and service  quality.  We  currently  own and operate over 40
different food and beverage outlets. We are considering a variety of performance
enhancement   opportunities,   including   but  not   limited   to,   additional
out-sourcing.

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

     Lodging  and  Property  Management.  Our lodging  and  property  management
departments  manage our properties as well as properties owned by third parties.
During the 2000-01 ski season,  our lodging  departments  managed  approximately
2,300  lodging  units at our  resorts.  The lodging  departments  perform a full
complement of guest services,  which include reservations,  property management,
housekeeping and brokerage operations. Most of our resorts have a welcome center
to which newly arriving guests are directed. The center allocates accommodations

<PAGE>

and  provides  guests with  information  on all of the resort's  activities  and
services. Our property management operation seeks to maximize the synergies that
exist  between  lodging  and lift  ticket  promotions.  In an effort to  further
enhance our lodging  management  capabilities the Company has retained  Meristar
Hotels and Resorts, Inc. to assist in the management of our lodging businesses.

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

Resort Operating Strategy

     Our operating strategies are the following:

     Capitalize on Recent  Facilities  Expansion and Upgrades.  We have invested
over $196 million  expanding and upgrading our  on-mountain  facilities over the
past four fiscal years.  We have  substantially  re-tooled the physical plant at
all of our resorts. As a result of this investment, we believe that we now offer
the  most  modern  on-mountain  facilities  available  in each  of our  markets.
Capitalizing  on this investment is a primary focus of our fiscal 2002 strategic
plan.

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

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

     o Create one of the largest cross-marketing programs in the industry,
     o Achieve  efficiencies  and economies of scale when we purchase  goods and
       services,
     o Strengthen our  distribution  network of travel agents and tour operators
       by offering a range of mountain  resort alternatives, consistent  service
       quality, convenient travel booking and incentive packages,
     o Establish  performance  benchmarks  for  operations  across  all  of  our
       resorts,
     o Utilize  specialized  individuals and cross-resort teams at the corporate
       level as resources for our entire business, and
     o Develop and implement  consumer  information  and technology  systems for
       application across all of our resorts.

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


<PAGE>

     Innovative Marketing Programs.  Our marketing programs are designed to take
advantage of and promote the strong brands and unique characteristics of each of
our  resorts,  optimize  cross-selling  opportunities,  and enhance our customer
loyalty.  We have established joint marketing  programs with major  corporations
such as Sprint,  Nike,  Mobil,  Anheuser-Busch,  BMW, Suunto  American  Express,
Quaker Oats,  Pepsi/Mountain  Dew,  Rossignol,  Vermont Pure,  Kodak,  and Green
Mountain Coffee  Roasters.  We believe these joint marketing  programs give us a
high-quality image and strong market presence as well as marketing  efficiencies
on both a regional and national basis.

     We have established a network of eight  high-quality  ski resorts,  through
which we offer ticket  products to our customers  that are valid at many, if not
all of our resorts.  Examples of these  innovative  programs are the Ski America
Pass,  which  allows  the  purchaser  to ski at any  of our  eight  ski  resorts
nation-wide; the All East Pass, which allows unlimited skiing at any of our five
eastern  resorts;  the mEticket,  which is a flexible  multi-day  ticket good at
seven of our resorts,  with a sliding price schedule offering discounts based on
the number of days  purchased.  The  mEticket  program is the first  nation-wide
program  targeted at retaining  skiers who ski three to twelve days each season,
which our research indicates  represents the majority of the ski population.  By
giving  guests an incentive  to purchase  their skiing for the year early in the
ski season with the special values offered by the Ski America Pass, the All East
Pass and the mEticket  program,  we believe that we can encourage  guests to ski
more often and do the majority of their skiing at our resorts.

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

     Expand Golf and Convention  Business.  We are one of the largest owners and
operators of resort golf courses in New England. We expect that these operations
will increase our off-season revenues. Sugarloaf,  Killington and Mount Snow all
operate  championship  resort golf courses.  The Sugarloaf  course,  designed by
Robert Trent Jones,  Jr., has been rated as one of the top 40 public  courses in
the country  according  to a Golf  Magazine  survey.  Our golf program and other
recreational  activities draw off-season visitors to our resorts and support our
growing off-season  convention business,  as well as our real estate development
operations. We also have opportunities to develop additional golf courses at The
Canyons, Sunday River and possibly Attitash.

     Improve  Hotel  Occupancy  and  Operating  Margins.  We have entered into a
comprehensive  management  consulting  agreement with MeriStar Hotels & Resorts,
Inc.,  under which  MeriStar will support the  management  and operations of our
lodging and property  management  division.  We believe  that,  with  MeriStar's
assistance,  we  can  achieve  operating  efficiencies  and  improved  marketing
strategies which will improve the occupancy levels and operating  margins of our
lodging properties.

Mountainside Real Estate Development

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

     Our real estate development strategy is centered on the creation of "resort
villages" at three of our largest  resorts (The Canyons,  Killington  and Sunday

<PAGE>

River) and to a lesser extent,  at our other resorts.  Development  within these
resort  villages  is focused on  projects  which we believe  will  generate  the
highest  returns.  Each resort  village is  expected to consist of  quartershare
hotels, whole and fractional ownership condominium hotels, townhouses and single
family homes, and retail operations.

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

     Whole Ownership Condominium Hotels. These hotels consist of fully furnished
upscale  condominium  units  operated on a traditional  hotel format.  The whole
ownership  structure satisfies this market segment's desire for traditional real
estate but complements the  traditional  concept with both hotel-type  amenities
and easy access to rental income generated  through the hotel rental  management
program.  We retain  ownership  of the front desk and other  common areas of the
condo/hotels  with the expectation of operating these hotels over the long term.
By integrating the  condo/hotels  with our central  reservation  system,  we are
enhancing  our  revenue   opportunities  through  vertically  integrated  resort
operations,  simplifying guest  reservations,  and the revenue splits associated
with this type of product.  The Sundial Lodge at The Canyons,  as in most of the
resort  village  condominium  products,  also creates retail space on the ground
floor that supports a pedestrian  village,  housing 31,800 square feet of retail
and  commercial  space.  This space  rests at the heart of the  resort's  retail
center.

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

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

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

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

     o Killington:  The  master  plan  for the  Killington  Resort  Village  was
       approved  by local  authorities  in  November 1999 and state  authorities
       in July 2000.  Killington  received partial and  conceptual  approval for
       the ten  criteria  which  are  part  of the  State of  Vermont  land  use
       review  and   approval  process.  Final  approval of each of the criteria
       will be rendered upon submittal of actual construction plans for specific
       projects.


<PAGE>

     o Sunday River: The resort village master plan for Jordan Bowl is complete.
       Individual permits for projects are all that is required for development.

Alpine Resort Industry

     The alpine 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.  In the United States,  approximately  490 ski
areas generated  approximately  57.3 million skier visits during the 2000-01 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 490 in 2001,
although the number of skier visits has remained  relatively  flat.  Despite the
recent  consolidation  trend  overall,  ownership  of the smaller  regional  ski
resorts remains highly fragmented.  We believe that  technological  advances and
rising  infrastructure costs are the primary reasons for the ski resort industry
consolidation,  and that  further  consolidation  is likely as smaller  regional
resorts  are  acquired  by  larger  resort  operators  with  more  sophisticated
management capabilities and increased availability of capital.

     The following  chart shows a comparison of the  industry-wide  skier visits
compared to our skier visits in the U.S. regional ski markets during the 2000-01
ski season:

<TABLE>

-----------------------------------------------------------------------------------------------------------------
<CAPTION>
                                                    Skier
                        2000-01                   Visits at
                      Total Skier   Percentage     Company      Company
                        Visits*      of Total      Resorts     Regional
                          (in          Skier         (in        Market
Georgraphic Region     millions)      Visits      millions)      Share                  Company Resorts
--------------------- ------------- ------------ ------------ ------------ -------------------------------------------
<S>                       <C>         <C>            <C>         <C>        <C>
Northeast                 13.7         23.9%         3.1         22.8%      Killington, Sugarbush**, Mount Snow,
                                                                            Sunday River, Sugarloaf USA, Attitash
                                                                            Bear Peak
Southeast                 5.5          9.5%           -            -
Midwest                   7.6          13.2%          -            -
Rocky Mountain            19.3         33.7%         1.3         6.8%       Steamboat***, The Canyons
Pacific West              11.3         19.7%         0.9         7.5%       Heavenly
--------------------- ------------- ------------ ------------ ------------ -------------------------------------------
U.S. Overall              57.3        100.0%         5.3         9.2%
--------------------- ------------- ------------ ------------ ------------ -------------------------------------------
<FN>
(*) Source:  Kottke National End of Season Survey 2000/01 Final Report
(**) We sold Sugarbush in September 2001.
(***) We plan to sell Steamboat in fiscal 2002.
</FN>

</TABLE>

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

     Since 1985,  the total number of skier visits in the United States has been
relatively flat.  However,  according to the National Ski Area Association,  the

<PAGE>

number of skier visits  represented  by  snowboarders  in the United  States has
increased  from   approximately  9.9  million  in  the  1996-97  ski  season  to
approximately 16.2 million in the 2000-01 ski season, a compounded annual growth
rate of approximately 13.1%. We believe that snowboarding will continue to be an
important source of lift ticket,  skier  development,  retail and rental revenue
growth for us.

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

     o The existence of  approximately  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,

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

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

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

     o A greater focus on leisure and fitness in general, and

     o Expanding demand for second home vacation real estate.

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

Competition

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

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

Employees and Labor Relations

     We currently employ  approximately  1,900 full-time,  year-round  employees
supporting our resort and real estate operations, including corporate personnel.
At peak season last year we employed  approximately 11,500 employees.  Less than
1% of our employees are unionized.  We believe that we enjoy good relations with
our employees.

Government Regulation

     Our resorts are subject to a wide variety of federal,  state,  regional and
local  laws and  regulations  relating  to land  use,  environmental/health  and
safety, water resources, air and water emissions,  sewage disposal, and the use,
storage,  discharge,  emission and disposal of hazardous materials and hazardous
and nonhazardous wastes, and other environmental  matters. While we believe that

<PAGE>

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

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

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

Systems and Technology

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

     Snowmaking  Systems and Technology.  We believe that we operate the largest
consolidated  snowmaking operation in existence,  with approximately 4,500 acres
of snowmaking coverage. Our proprietary snowmaking software program allows us to
produce what we believe is the highest quality man-made snow in the industry. We
refer to this ideal quality  product as "Retail  Snow," a high quality,  durable
skiing surface with top to bottom consistency. All of our snowmaking systems are
operated through computer-based control using industrial automation software and
a variety of state of the art hardware  and  instrumentation.  We use  efficient
ground based, tower based and fully automated snowgun nozzle technology and have
developed  software for  determining  the optimal  snowmaking  nozzle setting at
multiple locations on any particular mountain.  This system monitors the weather
conditions  and system  capacities and  determines  the proper  operating  water
pressure for each nozzle,  eliminating  guesswork  and ensuring  that ideal snow
quality is provided.  All of our  snowmaking  systems are networked to allow the
viewing of  information  from  multiple  locations  within  our resort  network.
Another  unique  feature of our system is the current  display of trail  status,
lift status,  weather  conditions and other various  on-mountain  information at
locations  throughout each resort.  Much of this information is available on the
Internet at our various web sites.


<PAGE>

                             CERTAIN CONSIDERATIONS

     In  addition  to the other  information  contained  in this Form 10-K,  you
should carefully consider the following matters in evaluating our business. This
Form 10-K  contains  forward  looking  statements  and our actual  results could
differ materially from those anticipated by any forward-looking  statements as a
result  of  numerous  factors,  including  those  set  forth  in  the  following
description of considerations and elsewhere in this Form 10-K. See Part II, Item
7 - "Management's  Discussion and Analysis of Financial Condition and Results of
Operations - Forward Looking Statements."

Our  business is  dependent  upon the  completion  of our  previously  announced
strategic plan.

     On May 30, 2001, we announced a comprehensive strategic plan to improve our
capital  structure and enhance future operating  performance.  We have completed
several aspects of this plan to date,  including the  restructuring  of three of
our major credit agreements,  an additional capital infusion by Oak Hill Capital
Partners, L.P. and certain related entities (collectively,  "Oak Hill"), and the
implementation   of  a  staff   reorganization   plan  to  improve   operational
efficiencies.  The  ultimate  success of this  comprehensive  strategic  plan is
dependent on our successful execution of the remaining plan elements,  including
obtaining a $14 million  capital  lease for the Heavenly  gondola as required by
our resort senior credit facility and the sale of Steamboat to reduce  leverage.
We have recently  entered into a non-binding  letter of intent to sell Steamboat
and we are continuing  negotiations with other potential buyers. In addition, we
have a commitment  for the Heavenly  gondola  capital  lease and expect to close
that  transaction  by late  November  or early  December  2001.  Our  failure to
complete these  transactions in a timely manner may adversely affect our ability
to meet any extraordinary cash flow requirements outside of our normal course of
business or meet the financial covenants of our senior credit facility. See Part
II, Item 7 -  "Management's  Discussion and Analysis of Financial  Condition and
Results of Operations - Liquidity and Capital  Resources" and Note 1 - "Business
Environment and  Management's  Plans - Actions in Progress" of the  consolidated
financial  statements  included  in Item 8 of this  report  for a more  detailed
discussion  on the  consequences  of a failure to complete the sale of Steamboat
and the capital lease transaction.

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

     We are highly leveraged.  As of November 1, 2001, we had outstanding $435.5
million of total indebtedness, including $296.1 million of secured indebtedness,
representing 66.3% of our total capital.

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

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

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


<PAGE>

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

     We also have significant  future capital  requirements  with respect to the
retirement  of debt  and  other  securities.  For  example,  we must  retire  or
refinance our senior credit  facility in May 2004,  our 12% senior  subordinated
notes  (the  "Senior   Subordinated  Notes")  in  July  2006  and  our  11.0325%
convertible  subordinated notes (the "Junior  Subordinated  Notes") in July 2007
and we  must  redeem  our  preferred  stock,  such  as our 10  1/2%  mandatorily
redeemable preferred stock (the "Series A Preferred Stock") in November 2002 and
our 12% Series C-1  convertible  participating  preferred stock (the "Series C-1
Preferred  Stock")  and our 15% Series C-2  preferred  stock  (the  "Series  C-2
Preferred  Stock") in July 2007.  There can be no assurance that we will be able
to retire,  redeem,  or refinance our  indebtedness and preferred stock at their
maturities.  Failure  to do so  could  have a  material  adverse  effect  on our
business.  See  Part II,  Item 7 -  "Management's  Discussion  and  Analysis  of
Financial Condition and Results of Operations - Liquidity and Capital Resources"
for a description of such payments.

The  effects of the  September  11,  2001  events may have an adverse  effect on
tourism and  availability of air travel and could decrease  customer  traffic to
our resorts.

     Acts of terrorism, including the on-going effects of the September 11, 2001
terrorist attacks, on potential  customers'  propensity to travel to our resorts
is unclear.  If these events and the continued economic slowdown were to depress
the  public's  propensity  to take  travel  vacations,  it could have an adverse
effect on our results of  operations.  Our  Steamboat  resort in  particular  is
dependent on  customers  arriving via air  transportation,  and any  significant
disruption  in the  public's  willingness  to  travel  by air or the  supply  of
airplane seats could adversely impact financial results of that resort.

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

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

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

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

<PAGE>

skilled labor, labor disputes, unforeseen environmental or engineering problems,
work stoppages, and natural disasters, any of which could delay construction and
result in a substantial increase in our costs.

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

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

     Ski resort operations are highly seasonal. Over the last five fiscal years,
we have realized an average of approximately 88% of our resort revenues and over
100% of resort  EBITDA and net income  during the period from  November  through
April,  and a significant  portion of Resort  revenue and  approximately  18% of
annual skier visits were  generated  during the  Christmas  and  Presidents  Day
vacation weeks. In addition,  our resorts typically  experience operating losses
and negative cash flows for the period from May to October. During the six-month
period from May to October 2000, for example,  we had recurring operating losses
aggregating  $47.2  million and negative cash flow from  operations  aggregating
$96.7  million.  The negative cash flow from  operations  includes $44.0 million
spent developing real estate for resale.  There can be no assurance that we will
be able to finance our capital  requirements  from external  sources during this
period.

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

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

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

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

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

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


<PAGE>

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

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

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

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

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


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

     Our  success  depends to a  significant  extent  upon the  performance  and
continued service of various key management and operational personnel.  The loss
of the services of these key personnel  could have a material  adverse effect on
our business and operations.

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

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


<PAGE>

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

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

Control of our company by principal stockholders.

     As a result of a  stockholders'  agreement  and the terms of the  preferred
stock held by Oak Hill,  Leslie B.  Otten,  the holder of all of the  14,760,530
shares  of our  class A common  stock  ("Mr.  Otten"),  and Oak Hill  control  a
majority of our board of  directors.  Mr. Otten and Oak Hill may have  interests
different from those that hold our common stock.



                                     Item 3
                                Legal Proceedings

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

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

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


<PAGE>

                                     Item 4
               Submission of Matters to a Vote of Security Holders

     Not applicable.

                                     PART II

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

     Our common stock is traded on the New York Stock  Exchange under the symbol
"SKI".  Our  class A  common  stock is not  listed  on any  exchange  and is not
publicly  traded,  but is convertible  into our common stock. As of November 12,
2001,  31,718,123  shares of our common  stock were issued and  outstanding,  of
which  14,760,530  shares  were  class A common  stock  held by one  holder  and
16,957,593 shares of common stock held by approximately 9,000 holders.

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

                   American Skiing Company Common Stock (SKI)

                          Fiscal 2001              Fiscal 2000
                          -----------              -----------
                         High      Low            High      Low
     1st Quarter        $ 2.50  $ 1.88          $  4.69  $ 3.63
     2nd Quarter        $ 2.94  $ 1.19          $  5.06  $ 2.31
     3rd Quarter        $ 1.90  $ 1.06          $  2.88  $ 1.75
     4th Quarter        $ 1.50  $ 0.65          $  2.94  $ 1.63

Market Information

     We have not declared or paid any cash  dividends on our capital  stock.  We
intend to retain earnings,  to the extent that there are any, to reduce our debt
and  to  support  our  capital  improvement  and  growth  strategies.  We do not
anticipate paying cash dividends on our common stock in the foreseeable  future.
The payment of future dividends,  if any, will be at the discretion of our board
of directors after they take into account various factors, such as our financial
condition,  operating results,  current and anticipated cash needs and plans for
capital  improvements and expansion.  Each of the indenture governing our Senior
Subordinated  Notes, the indenture  governing our Junior Subordinated Notes, our
$165 million senior credit facility with FleetBoston,  N.A. and the terms or our
Series A Preferred  Stock,  Series C-1 Preferred  Stock and Series C-2 Preferred
Stock contain certain restrictive  covenants that, among other things, limit the
payment of dividends or the making of distributions on our equity interests. See
Part II, Item 7 - "Management's  Discussion and Analysis of Financial  Condition
and Results of Operations -- Liquidity and Capital Resources."


<PAGE>


                                     Item 6
                             Selected Financial Data

     The following selected historical  financial data has been derived from our
financial  statements  as audited by Arthur  Andersen  LLP,  independent  public
accountants  as of and for the fiscal years ended July 25,  1999,  July 30, 2000
and July 29, 2001,  and data for the years ended July 27, 1997 and July 26, 1998
has   been   derived   from   our    financial    statements   as   audited   by
PricewaterhouseCoopers LLP, independent public accountants.

<TABLE>

<CAPTION>

                                                                            Historical Year Ended (1)
                                             ---------------------------------------------------------------------------------------
                                             July 27, 1997      July 26, 1998      July 25, 1999     July 30, 2000     July 29, 2001
                                                (in thousands, except per share and per skier visit amounts)
<S>                                               <C>                <C>                <C>               <C>               <C>
   Consolidated Statement of Operations
   Data:
   Net revenues:
      Resort (2)                                  $163,310           $277,574           $292,558          $292,077          $328,705
      Real estate                                   10,721             60,992             24,492           132,063            96,864
                                             -------------      -------------      -------------     -------------     -------------
          Total net revenues                       174,031            338,566            317,050           424,140           425,569

   Operating expenses:
      Resort                                       107,230            171,246            198,231           203,902           224,719
      Real estate                                    8,950             43,554             26,808           123,837            93,422
      Marketing, general and administrative         25,173             40,058             51,434            49,405            52,296
      Non-recurring merger, restructuring
        and asset impairment charges (3)                 -                  -                  -                 -            76,045
      Stock compensation charge (4)                      -             14,254                  -                 -                 -
      Depreciation and amortization                 18,293             37,965             44,202            47,028            46,996
                                             -------------      -------------      -------------     -------------     -------------
          Total operating expenses                 159,646            307,077            320,675           424,172           493,478

   Loss before preferred stock dividends,
        extraordinary items and cumulative
        effect of accounting changes               (5,482)            (1,867)           (27,950)          (30,133)         (120,724)
   Accretion of discount and dividends
        accrued on mandatorily redeemable
        preferred stock                                444              5,346              4,372            20,994            23,357
                                             -------------      -------------      -------------     -------------     -------------
   Net loss from continuing operations
       available to common shareholders           ($5,926)           ($7,213)          ($32,322)         ($51,127)        ($144,081)
                                             =============      =============      =============     =============     =============
   Diluted net loss from continuing
       operations per share available to
       common shareholders                         ($6.06)            ($0.28)            ($1.07)           ($1.69)           ($4.72)
                                             =============      =============      =============     =============     =============

   Balance Sheet Data:
   Total assets                                   $337,340           $780,899           $907,502          $926,778          $796,225
   Long term debt and redeemable preferred
       stock, including current maturities         253,151            422,684            546,297           636,700           637,619
   Common shareholders' equity                      15,101            268,204            236,655           185,497            44,826

   Other Data:
   Skier visits (000's)(5)                           3,025              5,319              5,089             5,006             5,278
   Season pass holders (000's)                        30.9               44.1               44.2              47.3              49.1
   Resort revenues per skier visit                  $53.99             $52.19             $57.48            $58.34            $62.28
   Resort EBITDA(6)(8)                             $30,907            $66,270            $42,893           $38,770           $51,690
   Real estate EBITDA(7)(8)                         $1,771            $17,438           ($2,316)            $8,226            $3,442

<FN>
 (1) The historical results of the Company reflect the results of Pico Mountain
since its acquisition in November 1996, the results of operations of The Canyons
resort since its acquisition in July 1997 and the results of operations of the
Steamboat and Heavenly resorts since their acquisition in November 1997.

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


<PAGE>

(3) During Fiscal 2001, we recognized the following non-recurring charges: a
$52.0 million asset impairment charge related to the assets at our Steamboat
resort that are classified as assets held for sale as of July 29, 2001; a $15.1
million asset impairment charge related to the assets at our Sugarbush resort
that are classified as assets held for sale as of July 29, 2001; a $3.6 million
charge related to our terminated merger with Meristar Hotels and Resorts, Inc;
$4.1 million in employee separation, legal and financial consulting charges
related to our strategic restructuring plan; and a $1.3 million write-down to
net realizeable value in the fourth quarter of fiscal 2001 on the remaining
units at the Attitash Grand Summit Hotel.

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

(5) 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.

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

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

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



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

                           Forward-Looking Statements

     Certain  statements  under the heading  Part I, Item 1 & Item 2 - "Business
and  Properties",  this heading Part II, Item 7 -  "Management's  Discussion and
Analysis of Financial Condition and Results of Operations" and elsewhere in this
Annual  Report on Form 10-K  constitute  forward-looking  statements  within the
meaning of Section 27A of the  Securities  Act and  Section 21E of the  Exchange
Act. These  forward-looking  statements are not based on historical  facts,  but
rather reflect our current  expectations  concerning  future results and events.
Similarly, statements that describe our objectives, plans or goals are or may be
forward looking statements.  We have tried,  wherever possible, to identify such
statements by using words such as "anticipate",  "assume", "believe",  "expect",
"intend",  "plan",  and words and terms of similar  substance in connection with
any  discussion  of  operating or financial  performance.  Such  forward-looking
statements involve a number of risks and  uncertainties.  In addition to factors
discussed above, other factors that could cause actual results,  performances or
achievements  to differ  materially from those  projected  include,  but are not
limited  to, the  following:  changes in  regional  and  national  business  and
economic  conditions  affecting  both  our  resort  operating  and  real  estate
segments;  competition and pricing pressures;  negative impact on demand for our

<PAGE>

products  resulting from terrorism and availability of air travel (including the
effect of the September 11th attacks);  inability to complete our  restructuring
plan;  failure to effectively manage growth,  business and financial  condition;
failure of on-mountain  improvements and other capital  expenditures to generate
incremental  revenue;  adverse  weather  conditions  regionally and  nationally;
seasonal  business  activity;  changes to federal,  state and local  regulations
affecting both our resort operating and real estate  segments;  failure to renew
land leases and forest service  permits;  disruptions in water supply that would
impact snowmaking  operations;  the loss of any of our executive officers or key
operating personnel; and other factors listed from time to time in our documents
we filed with the SEC. We caution  the reader that this list is not  exhaustive.
We operate in a changing  business  environment and new risks arise from time to
time. The forward looking statements  included in this document are made only as
of the date of this  document and under  section 27A of the  Securities  Act and
section 21E of the  Securities  Exchange  Act, we do not have or  undertake  any
obligation  to  publicly  update  any  forward-looking   statements  to  reflect
subsequent events or circumstances.

General
     The  following is our  discussion  and analysis of financial  condition and
results of  operations  for the fiscal year ended July 29, 2001. As you read the
material below,  we urge you to carefully  consider our  consolidated  financial
statements and related notes contained elsewhere in this report.

Restructuring Plan. On May 30, 2001, we announced a comprehensive strategic plan
to improve our capital structure and enhance future operating  performance.  The
plan includes the following key components:

     o A comprehensive financial restructuring package,  including amendments to
       our senior credit  facilities  and  a new  capital  infusion  to  enhance
       financial flexibility.
     o Intent to sell Steamboat to reduce our debt.
     o Operational  cost  savings and  improved  financial  performance  through
       reorganization  and staff reduction and performance  enhancement programs
       of approximately $5 million.
     o Strategic  redeployment of management and capital  resources to emphasize
       the integration and growth of resort village development and operations.

     We have  completed  several  aspects  of this plan to date,  including  the
restructuring  of three of our major credit  agreements,  an additional  capital
infusion by Oak Hill, and the implementation of a staff  reorganization  plan to
improve  operational  efficiencies.  The ultimate success of this  comprehensive
strategic  plan is dependent on the  execution of the remaining  plan  elements,
including  obtaining a $14 million  capital lease for  equipment  related to the
Heavenly  gondola as  required  by our senior  credit  facility  and the sale of
Steamboat to reduce  leverage.  The tragic events of September 11th have delayed
the completion of these two key plan elements, however, despite these events, we
have made progress on the execution of these elements.  We have recently entered
into a  non-binding  letter of intent to sell  Steamboat  and we are  continuing
negotiations with other potential buyers. In addition,  we have a commitment for
the required capital lease and expect to close that transaction by late November
or early December 2001. Although we are confident that the sale of Steamboat can
be completed by the end of calendar 2001 and that the $14 million  capital lease
can be obtained by early December  2001,  there can be no assurance that we will
be able to fully  implement all elements of the foregoing  strategic  plan.  The
failure to fully implement each of these elements may have  significant  adverse
effects on our future  operating  performance  and results.  For a more detailed
discussion, see "Resort Liquidity" below.

     We have  retained  Credit  Suisse First Boston and Main Street  Advisors to
assist with marketing Steamboat, the sale of which is anticipated to close prior
to the end of calendar  2001.  We are currently  negotiating  terms with a small
group of  potential  purchasers,  including  the party with whom we have entered
into a non-binding letter of intent and are currently negotiating a purchase and
sales agreement.

     As part of our effort to implement the operational  cost savings element of
our restructuring plan, we have converted 160 full-time  year-round positions to
seasonal positions in order to better match our operating cycle. In addition, we
have eliminated  approximately 70 full time year-round positions.  Prior to this
operational  reorganization,  we had approximately  1,600 full time,  year-round

<PAGE>

resort operations  positions.  At peak employment during the 2000-01 ski season,
we  employed  approximately  11,700  people for our resort  operations.  We have
commenced this  operational  reorganization  in order to provide us with greater
flexibility in our cost structure and respond more appropriately to the seasonal
nature of our  business.  We  estimate  that  these  measures,  along with other
organizational changes, cost reduction initiatives,  and performance enhancement
measures should result in approximately $5 million of annual financial benefits.
Early  benefits  from these  steps were  realized  during the fourth  quarter of
fiscal 2001 and are  expected to be more fully  realized  during the 2002 fiscal
year.

Recapitalization:  On July 15,  2001,  we  entered  into a  securities  purchase
agreement  with Oak  Hill.  Pursuant  to the  terms of the  securities  purchase
agreement, which closed on August 31, 2001:

     o    We issued, and Oak Hill purchased, $12.5 million aggregate principal
          amount of Junior Subordinated Notes, which are convertible into our
          shares of series D participating preferred stock (the "Series D
          Preferred Stock"). These Junior Subordinated Notes bear interest at a
          rate of 11.3025%, which compounds annually and is due and payable at
          maturity of the Junior Subordinated Notes in July, 2007. The proceeds
          of the Junior Subordinated Notes were used to fund short-term
          liquidity needs of our real estate subsidiary, American Skiing Company
          Resort Properties, Inc. ("Resort Properties") by way of the purchase
          of certain real estate assets by us from Resort Properties;

     o    Oak Hill funded $2.5 million of the $3.5 million of availability
          remaining under Tranche C of the Resort Properties credit facility to
          facilitate amendments to such credit facility. This was the final
          advance under Tranche C, as the maximum availability under this
          facility has now been reduced from $13 million to $12 million;


     o    Oak Hill agreed to provide a guarantee for a $14 million equipment
          lease for the Heavenly gondola. As described above, we are currently
          negotiating the terms of this lease, which are expected to include a 5
          to 7 year term and other market terms. We will use commercially
          reasonable efforts to negotiate a provision in the lease allowing for
          the release of the guarantee upon a material improvement in our credit
          quality;

     o    Oak Hill purchased one million of our shares of common stock for an
          aggregate purchase price of $1 million;

     o    Oak Hill agreed to cancel an agreement to provide it with warrants for
          6 million shares of our common stock or 15% of the common stock of
          Resort Properties.

     In  consideration  of Oak Hill's  agreements and  commitments in accordance
with the terms set forth above, the following has occurred:

     o The  outstanding  Series B Preferred  Stock that was held by Oak Hill was
       stripped of all of its rights and  preferences with the exception  of the
       right to elect up to six directors;

     o We issued to Oak Hill two new series of Preferred  Stock; (i) $40 million
       of Series C-1  Preferred  Stock, and (ii)  $139.5  million  of Series C-2
       Preferred Stock. The initial face value of the Series C-1 Preferred Stock
       and Series C-2 Preferred  Stock  correspond  to the  accrued  liquidation
       preference of the Series  B  Preferred  Stock  immediately  before  being
       stripped  of  its  right  to such  accrued  liquidation  preference.  The
       Series  C-1  Preferred  Stock  and   Series  C-2  Preferred  Stock  carry
       preferred dividends of 12% and 15%, respectively.  At our option,  we can
       either pay  the  dividends in cash or accrue the dividends in  additional
       shares.  The Series C-1 Preferred Stock is convertible  into common stock
       at a price of  $1.25  per share, subject  to adjustments.  The Series C-2
       Preferred Stock is not convertible.  Both of Series C-1  Preferred  Stock
       and  Series  C-2 Preferred Stock will mature in July, 2007;

     o At Oak Hill's  option,  and subject to the  consent of the other  lenders
       under the Resort  Properties  term  facility,  Tranche  C of  the  Resort
       Properties  term  facility  will be exchangeable in whole or in part into
       our indebtedness when permitted under the existing debt agreements.
<PAGE>

Liquidity and Capital Resources

Short-Term.  Our primary  short-term  liquidity needs involve  funding  seasonal
working capital requirements,  marketing and selling our real estate development
projects,  funding our fiscal 2002 capital improvement program and servicing our
debt. Our cash  requirements  for ski-related and real estate  development/sales
activities are provided from separate sources.  Other than the proceeds from the
recapitalization   described   above,   our  primary  source  of  liquidity  for
ski-related working capital and ski-related capital  improvements are cash flows
from operations of our non-real  estate  subsidiaries  and borrowings  under our
senior  credit  facility.  Other  than the  proceeds  from the  recapitalization
described  above,  real estate  development  and real estate working  capital is
funded primarily through construction financing facilities established for major
real estate development projects, a real estate term facility,  and net proceeds
from the sale of real estate developed for sale after required construction loan
repayments.  These real estate  facilities  are  without  recourse to us and our
resort operating  subsidiaries and are collateralized by significant real estate
assets of American Skiing Company Resort Properties Inc., or Resort  Properties,
and its  subsidiaries,  including  the assets and stock of Grand  Summit  Resort
Properties,  Inc., or Grand Summit, our primary hotel development subsidiary. As
of July 29, 2001, the book value of the total assets that  collateralized  these
facilities and which are included in the accompanying consolidated balance sheet
was approximately $234.1 million.

     Resort  Liquidity.  We maintain a $165 million senior credit  facility with
Fleet National Bank, as agent, and certain other lenders. This facility consists
of a  $100  million  revolving  portion  and a $65  million  term  portion.  The
revolving  portion of the senior credit facility matures on May 30, 2004 and the
term portion matures on May 31, 2006. On July 12, 2001, we created an additional
credit  advance  under the  existing  revolving  portion of the facility for the
purpose of funding the July 15, 2001 interest payment on our Senior Subordinated
Notes.  As  described  below,  we  permanently  reduced the term portion by $2.2
million and the  availability  of the revolving  portion of the facility by $3.3
million in  conjunction  with our sale of  Sugarbush.  On November 7, 2001,  the
outstanding  amount of the term loan was $61.6 million.  As of November 9, 2001,
we have drawn or committed for letters of credit  approximately $91.3 million of
the total $96.7  million  available  under the  revolving  portion of our senior
credit  facility.  We expect to  maximize  borrowings  under the  senior  credit
facility  sometime in November 2001,  consistent with our historical  experience
when we have had little, if any, borrowing  availability under the senior credit
facility.

     As a result of the September  11th events,  we have been unable to complete
the  remaining  elements of our  strategic  plan,  including  obtaining  the $14
million  Heavenly  gondola  capital  lease and selling  Steamboat  to reduce our
leverage. This delay has resulted in a very constrained liquidity position as we
approach  the ski  season.  The  provisions  of our  credit  agreements  and the
indenture  governing our Senior  Subordinated Notes  significantly  restrict our
ability to raise additional capital or incur additional indebtedness. Failure to
manage cash resources or an extraordinary  demand for cash outside of our normal
course of business prior to reaching our historical cash flow positive season or
completing  the Heavenly  gondola  capital lease  transaction  could cause us to
exhaust our cash availability.  There can be no assurance that we will reach our
cash flow positive  season or complete the Heavenly  gondola  lease  transaction
before our cash availability is exhausted.  The failure to complete the Heavenly
gondola capital lease in a timely manner could have a material adverse effect on
our results of operation or financial condition.

     We anticipate that we will be able to complete the sale of Steamboat by the
end of calendar 2001 and substantially  reduce our leverage from the proceeds of
the sale. Should we complete the Steamboat transaction,  we presently anticipate
that we will be able to meet  the  financial  covenants  of the  amended  senior
credit facility for the foreseeable  future.  In the event that we are unable to
complete the Steamboat sale or make the optional prepayment (described below) by
the end of calendar 2001, we presently  anticipate  that under normal  operating
circumstances,  we will  still be able to meet the  financial  covenants  of the
senior credit facility  through the end of fiscal 2002, at which time we will be
required to  renegotiate  the  financial  covenants.  There can be no assurance,
however,  that we will be able to meet  these  covenants  for the  remainder  of
fiscal 2002 if we do not complete  the  Steamboat  sale.  In November  2001,  we
entered into an amendment to the senior credit facility which allows us to raise
an additional $7.2 million through a junior subordinating participating interest
in certain  revolving  credit  advances under the senior credit  facility.  This
participating  interest  would be  purchased  by Oak Hill  (who has  provided  a
commitment for their  participation)  and the proceeds would be used to make the
January 2002 interest payment on the Senior Subordinated Notes. This new advance
will bear  inerest  at a fixed  rate of 17.5%  and would be repaid  first by any
proceeds from the sale of Steamboat. In the event that we do not sell Steamboat,
this junior  participating  interest in the revolver  would only be repaid after
all existing revolving credit advances are paid


<PAGE>

and the construction  loan facility of Grand Summit.  Furthermore,  if we do not
make the optional  prepayment,  the senior credit  facility will only permit the
January 2002 interest payment on the Senior  Subordinated  Notes to be made from
the proceeds of a new issuance of equity or junior debt  securities.  Therefore,
there can be no assurance  that we will make the January 2002  interest  payment
under the Senior Subordinated Notes.

     If we are unable to complete  the  Heavenly  gondola  capital  lease or the
Steamboat sale or to obtain the necessary waivers to our  indebtedness,  we will
be required to pursue one or more alternative strategies,  such as attempting to
renegotiate the terms of the senior credit facility, selling assets, refinancing
or restructuring our indebtedness, selling additional debt or equity securities,
and/or any other alternatives available to us under law while we implement plans
and actions to satisfy our financial obligations.  However, we cannot assure you
that any  alternative  strategies  will be  available or feasible at the time or
prove adequate.  Also, some  alternative  strategies will require the consent of
our lenders before we engage in those strategies.  Our inability to successfully
execute one or more of these alternative strategies would likely have a material
adverse effect on our business and our company.

     On July 12, 2001 we entered into a second  amendment  to our senior  credit
facility, effective as of April 29, 2001, which, among other things, established
a $90 million optional prepayment provision, created the $5.2 million additional
credit advance  described above,  established  monthly maximum  revolving credit
amounts, reduced the annual clean-down requirement,  amended all of the required
financial  covenant  ratios  beginning  with the fourth  quarter of fiscal  2001
through the maturity of the  facility,  increased  the interest rate on all term
and revolving  credit amounts  outstanding and amended our maximum annual resort
capital expenditure amounts. The amended terms of our senior credit facility are
incorporated in the discussions that follow.

     The term  portion of the senior  credit  facility  amortizes in five annual
installments  of  $650,000  payable on May 31 of each year,  with the  remaining
portion of the principal due in two substantially  equal installments on May 31,
2005  and May 31,  2006.  In  addition,  the  senior  credit  facility  requires
mandatory  prepayment  of the term portion and a reduction  in the  availability
under the revolving portion of an amount equal to 50% of the consolidated excess
cash flows (as defined in accordance with the senior credit facility) during any
period in which the excess cash flow  leverage  ratio exceeds 3.50 to 1. We also
have the  option  to make a  prepayment  of at least  $90  million  on or before
December 24, 2001 using the net proceeds  from an issuance of equity  securities
or the sale of a single  asset (or a series of related  assets).  $50 million of
the  optional  prepayment  shall  be used to  repay  existing  revolving  credit
advances,  with the remainder to be applied to the term facility.  We anticipate
that we will  make the  optional  prepayment  using  the net  proceeds  from our
expected sale of Steamboat,  for which we have entered into a non-binding letter
of intent with a potential purchaser.

     The interest  rate on all term and  revolving  credit  amounts  outstanding
(excluding  the $5.2 million  additional  credit  advance) is equal to the Fleet
National  Bank Base Rate plus 3.0%,  until  such time that we make the  optional
prepayment.  Should we make the optional prepayment,  the interest rates will be
reset  to a new  pricing  grid  under  which  the  rates  for  both the term and
revolving  facilities will vary, based on our leverage ratios, from a minimum of
the Fleet National Bank Base Rate plus 1.25% or LIBOR plus 2.50% to a maximum of
the Fleet National Bank Base Rate plus 2.25% or LIBOR plus 3.75%. Should we fail
to make the optional  prepayment,  the interest  rates on both the revolving and
term facilities will increase incrementally to the Fleet National Bank Base Rate
plus 4.25%.  The  additional  credit advance of $5.2 million bears interest at a
fixed rate of 12%.


<PAGE>

     The maximum  availability  of the  revolving  portion of the senior  credit
facility varies between $20.5 million and $98.5 million  following a schedule we
negotiated  with our  lenders.  The  revolving  portion of the  facility is also
subject to an annual 30-day  clean-down  requirement,  which period must include
April 30 of each year, during which the sum of the outstanding principal balance
and letter of credit  exposure  shall not exceed $20 million (which amount shall
be reduced to $5 million if we make the optional prepayment described above). On
April 30, 2001, we successfully  completed our 30-day clean-down requirement for
the current year.

     The senior credit  facility  contains  affirmative,  negative and financial
covenants customary for this type of credit facility, which includes maintaining
certain financial ratios. The senior credit facility is secured by substantially
all of our assets and subsidiaries  except those of our real estate  development
subsidiaries.  The senior credit facility also places an annual maximum level of
non-real  estate  capital  expenditures,  exclusive  of amounts  expended on the
Heavenly  gondola  project.  For fiscal 2001, we satisfied  the maximum  capital
expenditure  requirement,  as our resort capital  expenditures were $8.8 million
for the year (excluding the Heavenly gondola). We are permitted to and expect to
make additional capital expenditures of up to $30 million in connection with the
completion of the Heavenly gondola in Lake Tahoe,  Nevada.  The Heavenly gondola
became  operational,  and began  transporting  skiers in  December  2000.  As of
October 1, 2001,  we have  expended  $23.1  million on the  construction  of the
Heavenly gondola.

     The senior  credit  facility  restricts our ability to pay dividends on our
common stock.  We are prohibited  from paying  dividends in excess of 50% of the
consolidated net income of the non-real estate  development  subsidiaries  after
April  25,  1999,  and  further  prohibited  from  paying  dividends  under  any
circumstances  when the effect of such  payment  would  cause the debt to EBITDA
ratio of the non-real estate development  subsidiaries to exceed 4.0 to 1. Based
upon  these  and  other  restrictions,  we do not  expect to be able to pay cash
dividends  on our common  stock,  Series A preferred  Stock,  Series B Preferred
Stock,  Series C-1 Preferred  Stock and Series C-2 Preferred Stock during fiscal
2002 or fiscal 2003.

     In July 2001, we paid  $700,000 in fees in  connection  with the closing of
the second  amendment to our senior credit  facility and the funding of the $5.2
million  additional  credit  advance.  An  additional  $1.6  million in fees are
payable at the earlier of the date of the  optional  prepayment  or December 27,
2001. Should we fail to consummate the optional prepayment, we will be obligated
to pay up to an additional  $4.4 million in amendment  fees on a periodic  basis
through July 31, 2002.  All of these  contingent  fees have been recorded on our
balance sheet as deferred  financing costs and will be amortized  against income
over the remaining life of the facility.

     On September 28, 2001, we closed on the sale of our Sugarbush ski resort in
Warren,  VT to Summit Ventures NE, Inc. The proceeds from this sale were used to
reduce the revolving  portion of our senior credit facility by $5.2 million,  of
which $3.3 million was a permanent reduction, and to permanently reduce the term
portion by $2.2 million.  In conjunction with this transaction,  we also entered
into a third amendment to our senior credit facility,  dated as of September 10,
2001. This amendment, among other things, provides the consent of the lenders to
sell  the  Sugarbush   resort  and  it  further  reduces  the  maximum  revolver
availability amounts established in the second amendment to the facility by $1.5
million.

     Our high leverage  significantly affects our liquidity.  As a result of our
leveraged  position,  we have significant cash  requirements to service interest
and principal payments on our debt. Consequently,  cash availability for working
capital needs, capital  expenditures and acquisitions is significantly  limited,
outside of any availability under the senior credit facility.  Furthermore,  our
senior credit facility and the indenture governing our Senior Subordinated Notes
each  contain  significant  restrictions  on our  ability  to obtain  additional
sources of capital  and may affect our  liquidity.  These  restrictions  include
restrictions on the sale of assets, restrictions on the incurrence of additional
indebtedness and restrictions on the issuance of preferred stock.

     Real Estate  Liquidity.  To fund  working  capital and fund its fiscal 2002
real estate  development plan, Resort Properties relies on the net proceeds from
the sale of real estate  developed  for sale after  required  construction  loan
repayments,  a $73 million real estate credit  facility and  construction  loans
through special purpose  subsidiaries.  We have revised our real estate business
plan and  completed  discussions  with our senior  lenders  regarding  near-term

<PAGE>

liquidity issues and implemented a package of restructuring initiatives designed
to  significantly   improve  the  capital  structure  and  liquidity  of  Resort
Properties.  As part of these  restructuring  initiatives,  we amended  our real
estate credit  facility in August 2001,  which  substantially  reduced  interest
rates and extended  amortization and maturity dates (discussed in detail below).
We infused $12.5 million in proceeds from the Junior  Subordinated  Notes issued
by us to Oak Hill on August 31, 2001 into Resort  Properties  by way of the sale
of certain real estate assets from Resort Properties to us. $6.25 million of the
proceeds were used to reduce debt under the Tranche A of Resort Properties' real
estate credit facility with the remainder  being retained to provide  liquidity.
We  believe  the  restructuring  of the  real  estate  credit  facility  and the
additional  capital  infusion both address our near-term  real estate  liquidity
needs and enhance our ability to execute on the growth  opportunities within our
existing portfolio of real estate assets.

Real Estate  Credit  Facility:  As amended,  the Resort  Properties  real estate
credit  facility is comprised of three  tranches,  each with  separate  interest
rates and maturity dates as follows:

     o Tranche A is now a revolving  facility which, as of November 1, 2001, has
       a current maximum principal amount of $22 million and bears interest at a
       variable  rate  equal  to  the  Fleet  National  Bank Base Rate plus 2.0%
       (payable monthly in arrears),   a  reduction  in  rate  of  approximately
       6.50%.  Availability  was  increased  approximately  $2.5 million  before
       giving affect to  reductions from  the sale of certain assets.  Mandatory
       principal  payments on Tranche A  of $3.75  million and $2.5 million each
       are  payable  on December 31, 2001  and  January 31, 2002,  respectively.
       Additional  mandatory  principal  reductions  will be required in certain
       prescribed  percentages ranging from 50% to 75% of net proceeds  from any
       future sales of  undeveloped  parcels.   The  remaining  principal amount
       outstanding under Tranche A will be payable in full on June 30, 2003.

     o Tranche B is a term loan facility that has a maximum  principal amount of
       $25  million,  bears  interest  at a fixed rate of 18% per annum, reduced
       from 25%, (10% per annum is payable  monthly in arrears and the remaining
       8% per  annum  accrues,  is added to the  principal  balance of Tranche B
       and bears interest at 18%  per  annum,  compounded  annually).  Mandatory
       principal  payments  on  Tranche  B  of  $10  million  are due on each of
       December  31, 2003  and  June 30,  2004.  The  remaining  $5  millio n in
       principal  and all accrued  and unpaid  interest on  Tranche B are due in
       full on December 31, 2004.

     o Tranche C is now a term loan facility that has a maximum principal amount
       of $12 million, bears interest at an effective  rate of 25% per annum and
       matures on  December 31, 2005.  In July  and August, 2001 Oak Hill funded
       $2.5  million  of  their  remaining  commitment  to   provide  additional
       liquidity  to  Resort  Properties.  Interest  accrues,  is  added  to the
       principal balance of Tranche C and is compounded semi-annually.

     As of November  1, 2001,  the  principal  balances  outstanding,  including
accrued and unpaid  interest,  under  Tranches A, B and C of the second  amended
real estate  facility were $19.0  million,  $27.1  million,  and $13.8  million,
respectively.

     Security  interests  in,  and  mortgages  on,  substantially  all of Resort
Properties' assets, which primarily consist of undeveloped real property and the
stock of its real  estate  development  subsidiaries  (including  Grand  Summit)
collateralize  the real estate credit  facility.  As of July 29, 2001,  the book
value of the total assets that  collateralized the real estate  facilities,  and
are included in the accompanying  consolidated  balance sheet, was approximately
$234.1 million.

Construction  Loan  Facility:  We conduct  substantially  all of our real estate
development through single purpose subsidiaries, each of which is a wholly owned
subsidiary  of Resort  Properties.  Grand Summit owns our existing  Grand Summit
Hotel projects, which are primarily financed through a $110 million construction
loan  facility  among Grand Summit and various  lenders,  including  TFC Textron
Financial,  the syndication and administrative agent. Due to construction delays
and cost increases at the Steamboat  Grand Hotel  project,  Grand Summit entered
into a $10 million  subordinated loan tranche with TFC Textron Financial on July
25,  2000.  We have used this  facility  solely for the  purpose of funding  the
completion of the Steamboat Grand Hotel.


<PAGE>

     We have entered into a settlement  memorandum  with the general  contractor
for the Steamboat  Grand Hotel project which resolved all pending claims between
the  parties  and  resulted  in the  removal of  certain  mechanics'  liens.  In
connection  with  these  settlements  and our  restructuring,  we  entered  into
amendments to the construction loan facility.

     As of November 1, 2001, the amount  outstanding under the construction loan
facility was $51.2 million and there was no  availability  remaining  under this
facility.  The  principal is payable  incrementally  as  quartershare  sales are
closed based on a predetermined per unit amount,  which approximates between 65%
and 80% of the net proceeds of each closing. Mortgages against the project sites
(including  the completed  Grand Summit Hotels at Killington,  Mt. Snow,  Sunday
River,  Attitash  Bear Peak,  The  Canyons,  and  Steamboat)  collateralize  the
facility,  which  is  subject  to  covenants,   representations  and  warranties
customary for this type of construction  facility.  The facility is non-recourse
to us and our resort operating  subsidiaries  (although it is  collateralized by
substantial assets of Grand Summit,  having a total book value of $167.7 million
as of July 29, 2001, which in turn comprise substantial assets of our business).
In August 2001, we entered into amendments to our Textron  construction loan and
subordinated loan tranche  facilities,  which,  among other things,  reduced the
effective  interest rates and extended the maturity  dates of these  facilities.
The maturity date for funds advanced  under the Steamboat  portion of the senior
Textron  facility is March 31,  2003 and the  maturity  date for funds  advanced
under the Canyons portion of the senior Textron  facility is September 28, 2002.
The interest rate on funds  advanced  under the Steamboat  portion of the senior
Textron  facility is Prime plus 3.5% and the  interest  rate floor on  Steamboat
advances is 9.0%. The interest rate on funds advanced under the Canyons  portion
of the senior Textron facility is at Prime plus 2.5%, with a floor of 9.5%.

     The amended  subordinated  loan tranche  facility bears interest at a fixed
rate of 20% per annum, payable monthly in arrears, provided that only 50% of the
amount of this  interest  shall be due and  payable in cash and the other 50% of
such interest shall, if no events of default exist under the  subordinated  loan
tranche facility or the  construction  loan Textron  facility,  automatically be
deferred  until the final  payment  date.  As of  November  1, 2001,  the amount
outstanding  under the  subordinated  loan tranche facility was $6.6 million and
there was approximately $900,000 of availability remaining to fund completion of
certain penthouse units at the Steamboat Grand Hotel.

     On October 17,  2000,  we sold our option  rights to certain real estate in
the South Lake Tahoe Redevelopment District to Marriott Ownership Resorts, Inc.,
a wholly owned subsidiary of Marriott International,  for $8.5 million. Pursuant
to the terms of the option sale, Resort Properties received $4.1 million in cash
proceeds on October 17, applied a $0.3 million  previously  received deposit and
received  the  remaining  $4.1  million  from  Marriott  on  January  15,  2001.
Simultaneously  with the closing of the sale of its option rights,  our July 28,
1998  development  agreement with Marriott was  terminated.  We believe that the
termination  of this  agreement  will allow  Resort  Properties  to market  more
aggressively certain developmental real estate at its resorts to other potential
timeshare investors.

     On May 11,  2001,  we sold our 85%  ownership  interest in Heavenly  Resort
Properties,  LLC,  the  entity  that  controls  the  development  rights for the
Heavenly  Grand Summit  quartershare  hotel  adjacent to our Heavenly  resort in
South Lake Tahoe, CA, to Marriott Ownership Resorts,  Inc. Pursuant to the terms
of the sale, Resort Properties received $6.2 million in cash proceeds at closing
on May 11,  2001 and will  receive  an  additional  $5.0  million  payment  from
Marriott on January 15, 2002.  In  addition,  Resort  Properties  will receive a
contingent sales fee equal to 14% of the aggregate gross sales proceeds Marriott
receives for its sales of the quartershare units in excess of $100 million up to
$134 million.  This  contingent  sales fee will be paid quarterly  commencing on
January 15, 2003 and at the end of each calendar quarter  thereafter for as long
as such payments are due.

     Long-Term. Our primary long-term liquidity needs are to fund skiing-related
capital  improvements  at certain of our resorts,  development of our slope side
real estate and the  redemption of our Series A Preferred  Stock on November 15,
2002.  With  respect to capital  needs,  we have  invested  over $185 million in
skiing related  facilities since the beginning of fiscal 1998. As a result,  and
in keeping with restrictions imposed under the senior credit facility, we expect
our resort  capital  programs  for the next  several  fiscal  years will be more
limited in size.


<PAGE>

     For our 2002 and 2003 fiscal years,  we anticipate  our annual  maintenance
capital needs to be  approximately  $10 to $12 million.  There is a considerable
degree of flexibility in the timing and, to a lesser degree, scope of our growth
capital  program.  Although  we can  defer  specific  capital  expenditures  for
extended periods,  continued growth of skier visits,  revenues and profitability
will require continued capital investment in on-mountain improvements.

     We finance  on-mountain  capital  improvements  through  resort  cash flow,
capital leases and our senior credit facility. The size and scope of the capital
improvement  program will  generally be determined  annually  depending upon the
strategic  importance and expected financial return of certain projects,  future
availability  of cash flow from  each  season's  resort  operations  and  future
borrowing  availability  and  covenant  restrictions  under  the  senior  credit
facility.  The amended senior credit facility places a maximum level of non-real
estate capital  expenditures for fiscal 2002 at $13.8 million.  In addition,  we
are permitted to and expect to make additional capital expenditures of up to $30
million in connection with the completion of the Heavenly gondola in Lake Tahoe,
Nevada. The Heavenly gondola became  operational,  and began transporting skiers
in December  2000. As of October 1, 2001, we have expended  $23.1 million on the
construction of the Heavenly gondola.  We believe that these capital expenditure
amounts will be sufficient to meet our non-real estate capital improvement needs
for the near future.

     Our  business  plan  anticipates  the rapid sale of  remaining  real estate
inventory and the development of condominium  hotels and townhouses,  as well as
associated  retail and food and beverage outlets at our resorts.  The timing and
extent of these projects are subject to local and state permitting  requirements
which may be beyond our control,  as well as our cash flow  requirements and the
availability of external capital.  We undertake real estate development  through
our real estate  development  subsidiary,  Resort  Properties.  Recourse on debt
incurred to finance this real estate development is limited to Resort Properties
and  its  subsidiaries,  which  include  Grand  Summit.  This  debt  is  usually
collateralized  by  the  projects  that  it  finances,  which,  in  some  cases,
constitute a significant  portion of our assets.  As of July 29, 2001, the total
assets collateralizing the real estate facilities,  included in the accompanying
consolidated  balance sheet,  totaled  approximately  $234.1  million.  The real
estate credit facility and the construction loan facility  currently fund Resort
Properties' seven existing development projects.

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

     We have 36,626  shares of Series A  Preferred  Stock  outstanding,  with an
accreted  value of $54.1  million as of July 29,  2001.  The Series A  Preferred
Stock is  exchangeable  at the option of the holder  into our common  stock at a
conversion price of $17.10 for each common share. We do not expect to redeem the
Series A Preferred Stock prior to its final  maturity.  On November 15, 2002, we
will be required to redeem the Series A Preferred Stock at a redemption price of
approximately $62 million. We can give no assurance that the necessary liquidity
will be available to effect the redemption on a timely basis.



<PAGE>

                      Results of Operations of the Company

                 Fiscal Year Ended July 29, 2001 ("Fiscal 2001")
             Versus Fiscal Year Ended July 30, 2000 ("Fiscal 2000")

Resort Operations:
     The  components  of resort  operations  for the fiscal years ended July 29,
2001 and July 30, 2000 are as follows:

   -----------------------------------------------------------------------------
                           Year Ended     Year Ended    Increase/(Decrease)
                          July 29, 2001  July 30, 2000  Dollar           Percent
   -----------------------------------------------------------------------------
                           (in millions, except skier visit and per skier
                                          visit amounts)
   Revenue category:
   Lift Tickets           $       146.3  $       131.3  $    15.0          11.4%
   Food and beverage               44.5           40.0        4.5          11.1%
   Retail sales                    42.1           38.3        3.8          10.0%
   Lodging and property            41.5           32.7        8.8          26.8%
   Skier development               28.0           24.8        3.2          12.6%
   Golf, summer activities
     and other                     26.3           25.0        1.3           5.9%
                          -------------  -------------  ---------      ---------
   Total resort revenues  $       328.7  $       292.1  $    36.6          12.5%

   Cost of resort
     operations           $       224.7  $       203.9  $    20.8          10.2%
   Marketing, general and
     administrative                52.3           49.4        2.9           5.9%
   Non-recurring merger,
     restructuring and
     asset impairment
     charges                       71.3              -       71.3            n/a
   Depreciation and
     amortization                  44.2           45.8      (1.6)          -3.5%
   Interest expense                25.8           24.4        1.4           5.7%
                          -------------  -------------  ---------      ---------
   Total resort expenses  $       418.3  $       323.5  $    94.8          29.3%
                          -------------  -------------  ---------      ---------

   Loss from resort
     operations           $      (89.6)  $      (31.4)  $  (58.2)         185.3%
                          -------------  -------------  ---------      ---------
   Loss from resort
     operations,
     excluding
     non-recurring
     merger,
     restructuring and
     asset impairment
     charges              $      (18.3)  $      (31.4)  $    13.1         -41.8%
                          -------------  -------------  ---------      ---------


    Total Skier Visits
     (000's)                      5,278          5,006        272           5.4%
    Total resort revenue
     per skier visit      $        62.3  $        58.3  $     3.9           6.7%
    ----------------------------------------------------------------------------

     The  2000-2001 ski season saw a return to more normal levels of snowfall in
the eastern  United  States,  compared to the well below  normal  amounts in the
prior two seasons. However, natural snowfall totals in the west this season were
below normal levels. As a result of the good ski conditions, natural snow in key
market areas,  and  generally  good weather,  and not  withstanding  a softening
economy,  our eastern resorts performed  substantially  better than last year as
skier visits increased 10% over the 1999-2000 season.  The weakening economy and
its direct effect on  destination  vacations  seriously  impacted  demand at our
western resorts,  which are more heavily reliant on destination visits. The lack
of natural  snowfall in the west this  season also had a negative  impact on our
western  resorts.  The  continued  expansion  of The Canyons in Park City,  Utah
helped to negate some of the negative  trends in the west, as total skier visits
were down only 1% at our western resorts  despite the softening  economy and the
lack of snowfall.  Over our entire  resort  network,  total skier visits were up
more than 5% over the 1999-2000 ski season.


<PAGE>

     Revenues from all of our ski-related  lines of business were up between 10%
and 13% over the prior year,  with the exception of lodging  revenues which were
up 27%.  These  increases  resulted from the  combination  of a 5.4% increase in
skier visits and also a 6.7%  increase in revenue per skier  visit,  which means
that not only did we attract  more  people to our resorts  this year,  but these
visitors  also spent more money  while they were  there.  The large  increase in
lodging  services  revenues was mainly  generated  from the new Steamboat  Grand
Hotel,  which opened in Fiscal  2001,  and a full season of operation of the two
hotels at The  Canyons,  which  opened in the middle of the prior  fiscal  year.
Together,  these hotels  generated a combined  $6.7 million  increase in lodging
revenues over the prior year. Profitability at the new Steamboat Grand Hotel was
hampered, however, by its late opening and normal pre-opening expenses.

     Excluding non-recurring merger,  restructuring and asset impairment charges
of $71.3 million, our Resort segment produced an $18.3 million operating loss in
Fiscal 2001,  compared to a $31.4 million  operating  loss in Fiscal 2000.  This
$13.1 million decrease in the recurring operating loss is derived primarily from
a $12.9 million increase in recurring resort earnings before interest, taxes and
depreciation,  or EBITDA,  exclusive of the non-recurring merger,  restructuring
and asset  impairment  charges.  This  increase in  recurring  resort  EBITDA is
derived from the net effect of:
          (i)   $36.6 million increase in resort revenues,
          (ii)  $20.8 million increase in resort operating expenses, and
          (iii) $2.9 million increase in marketing,  general and  administrative
                expenses.

     This $12.9  million  increase in recurring  resort  EBITDA is a function of
both the  increased  revenues  from skier  visits  described  above and a higher
EBITDA margin on those revenues (16% in Fiscal 2001 vs. 13% in Fiscal 2000).

     The $71.3 million non-recurring merger,  restructuring and asset impairment
charge related to our resort operations includes:
          (i)   $50.0 million valuation allowance to record the  estimated  fair
                value  of  net  assets  held  for  sale in conjunction  with the
                non-binding  letter  of  intent  we entered into for the sale of
                Steamboat;
          (ii)  $14.0  million  allowance  for  loss on the  sale of  assets  at
                Sugarbush  resulting   from  the   agreement  we   entered  into
                subsequent to the end of Fiscal 2001 to sell Sugarbush to Summit
                Ventures, Inc.;
          (iii) $3.6 million charge representing costs we incurred in connection
                with the terminated merger with Meristar Hotels and Resorts; and
          (iv)  $3.7  million in employee severance  and  restructuring  charges
                relating to our reorganization efforts.

     Recent  Trends:  The full  impact  of the  September  11th  attacks  on our
business has not yet been fully  determined  and will be difficult to assess for
some time.  We do however  have some  positive  indicators  for the upcoming ski
season.  Through November 11, 2001, our season pass sales are tracking about 12%
ahead of last year system-wide, 13% in the east and 8% in the west.

     The events of September 11th lead to a sharp drop in call volume and
reservation activity immediately following the attacks. Although still lower
than last year, we have seen a resurgence in call volume over the last several
weeks. Reservations are down about 8% across our entire network, however,
reservations in the east are tracking 8% higher year-over-year. Reservations in
the west have been weaker as the resorts are largely dependent on destination
visitors. Overall, reservations in the west are off about 21% from last year.


<PAGE>

Real Estate Operations:
     Real estate revenues decreased by $35.2 million in Fiscal 2001, compared to
Fiscal  2000,  from  $132.1  million  to $96.9  million.  Detail of real  estate
revenues by project (in thousands) is as follows:

     ---------------------------------------------------------------------------
                              Year ended        Year ended         Increase/
                             July 29, 2001     July 30, 2000       (Decrease)
     ---------------------------------------------------------------------------
     Steamboat Grand Hotel     $    37,507       $         -        $     37,507
     Canyons Grand Summit           21,722            59,420            (37,698)
     Sundial Lodge                   1,646            40,975            (39,329)
     Eastern properties             12,446            20,883             (8,437)
     Land sales                     22,210             9,341              12,869
     Other revenues                  1,333             1,444               (111)
                              ------------       -----------        ------------
     Total                     $    96,864       $   132,063        $   (35,199)
     ---------------------------------------------------------------------------


     Steamboat Grand:  During Fiscal 2001, we commenced delivery of quartershare
units in the new Steamboat  Grand Hotel,  adjacent to Steamboat in Colorado.  We
realized  $37.5 million in revenues from closings of units for the year.  During
our fourth quarter,  disputes with the general contractor  resulted in mechanics
liens being placed on the Steamboat  Grand Hotel,  which caused a temporary halt
in unit closings  beginning in early May, 2001. We have been able to negotiate a
settlement with the general  contractor that became effective  subsequent to the
end of Fiscal 2001. This  settlement  will allow us to complete  construction on
the remaining units of the hotel,  including several luxury penthouse units. The
settlement  also lead to the removal of all mechanics liens against the project,
which  clears  the way for us to begin  closing on  approximately  $5 million in
unclosed sales at this project.

     The  Canyons:  Both the  Sundial  Lodge and the Grand  Summit  Hotel at The
Canyons in Park City,  Utah were  completed  during  Fiscal 2000.  We realized a
combined  $100.4  million in revenues  from unit  closings at these two projects
that year,  which was mainly due to the high  level of  pre-sales  each  project
experienced.  During Fiscal 2001, we realized  $21.7 million in ongoing sales of
quartershare  units at The Canyons  Grand  Summit  Hotel,  and $1.6 million from
remaining  units at the Sundial Lodge. As of the end of Fiscal 2001, the Sundial
Lodge was 99% sold and the Grand Summit at The Canyons was 70% sold.

     Eastern Properties: Revenues from sales at our eastern properties in Fiscal
2001 were down $8.8 million from Fiscal 2000 as our projects at  Killington  and
Sunday River approached sell-out.  Both the Jordan Grand and Killington projects
are  virtually  sold-out,  with  only  a  minor  amount  of  non-standard  units
remaining.  The Mount Snow project continues to sell as we realized $6.1 million
in revenue from unit sales in Fiscal 2001. As of July 29, 2001, 90% of the units
at Mount Snow have been sold.  The Grand Summit at Attitash has realized  slower
absorption in the market and 40% of the units  remained  unsold as of the end of
the  year.  We have  recently  instituted  programs  to bring  about a  complete
sell-out of the units during Fiscal 2002.  One of these  programs was an auction
of Attitash  units that we held on November 3, 2001,  which resulted in the sale
of 147 of the  remaining  167 units.  In addition to revenues  from Grand Summit
Hotel  quartershare  sales, we recognized $2.5 million of revenue in Fiscal 2001
from  closings  of the fully sold  Locke  Mountain  Townhouse  project at Sunday
River.

     Land Sales:  During Fiscal 2001, we realized revenue from the sale of three
separate development parcels, as follows:

     (i)   In August, 2000  we sold our  option rights to certain real estate in
           the South  Lake Tahoe  Redevelopment  District to  Marriott Ownership
           Resorts,    Inc.  for   $8.5   million.    Marriott   has   commenced
           construction  on a  fractional ownership  hotel  located  immediately
           adjacent to  our new gondola  project. This hotel is expected to open
           in time for the 2002 / 2003 ski season;
     (ii)  In May, 2001 we sold our 85%  ownership  interest in Heavenly  Resort
           Properties, LLC, the entity that controls the development  rights for
           the Heavenly Grand Summit quartershare hotel adjacent to our Heavenly
           resort  in  South  Lake  Tahoe,   CA,  to  Marriott   Vacation   Club
           International  for   $11.2 million  (excluding  future  participation
           revenues of an estimated $4.8 million which we  anticipate  receiving
           in Fiscal 2003). Marriott has commenced  construction  on this  hotel
           as well and  expects  it to open in November 2002; and
     (iii) In July,  2001 we sold a development  parcel at Central Park Plaza in
           the vicinity of our Steamboat ski resort for $2.5 million.


<PAGE>

     Our Real  Estate  segment  generated a loss  before  income  taxes of $31.1
million in Fiscal  2001,  compared to a $4.5  million  pre-tax  real estate loss
generated in Fiscal  2000.  This $24.6  million  increase in the pre-tax loss in
Fiscal 2001 is primarily derived from the net effect of the following:

     (i)  $4.8 million decrease in recurring real estate EBITDA,

     (ii) $4.7  million  in  non-recurring  restructuring  and asset  impairment
          charges

     (iii) $15.5 million increase in real estate interest expense, and

     (iv) $1.6 million increase in real estate depreciation.

     Real estate EBITDA,  exclusive of restructuring and impairment charges, for
Fiscal 2001 and Fiscal 2000 (in thousands) is detailed as follows:

     ---------------------------------------------------------------------------
                                Year ended      Year ended          Increase/
                               July 29, 2001   July 30, 2000        (Decrease)
     ---------------------------------------------------------------------------
     Canyons Grand Summit      $       3,714   $      12,707        $    (8,993)
     Sundial Lodge                       220           (836)               1,056
     Steamboat Grand Hotel             (951)               -               (951)
     Eastern properties                  588           3,301             (2,713)
     Land sales                        5,538           (563)               6,101
     General administration
       and other                     (5,667)         (6,384)                 717
                               -------------   -------------        ------------
     Total                     $       3,442   $       8,225       $     (4,783)
     ---------------------------------------------------------------------------

     Steamboat Grand Hotel: Construction cost overruns and the temporary halt in
closings  during the summer  months  both  contributed  to the  negative  EBITDA
generated by this project in Fiscal 2001.

     Canyons   Grand  Summit:   The  $9.0  million   reduction  in  EBITDA  from
quartershare  closings  at The Canyons  Grand  Summit is mainly due to the $37.7
million  reduction  in sales  revenues  compared  to Fiscal  2000 when the hotel
opened and we closed on a substantial amount of pre-sold  contracts.  Our EBITDA
margin on sales  decreased  slightly in Fiscal  2001 to 17%,  from 21% in Fiscal
2000,  mainly due to an increase in sales and  marketing  costs  related to this
project in Fiscal 2001.

     Eastern  Properties:  The $2.8  million  decrease  in EBITDA at our eastern
properties  was mainly due to the decrease in sales  revenue in Fiscal 2001,  as
both the Jordan Grand and  Killington  projects have  essentially  reached total
sell-out.

     Land  Sales:  In Fiscal 2001 we  recognized  a $7.3  million  gain from the
August 2000 sale of certain  real  estate in the South Lake Tahoe  Redevelopment
District to Marriott Ownership Resorts. This gain was partially offset by EBITDA
losses of $1.0 million from the sale of the Heavenly  Grand Summit site and $0.8
million from the sale of a  development  parcel at  Steamboat.  The $1.0 million
loss  from  the   Heavenly   Grand  Summit  site  does  not  take  into  account
approximately  $4.8 million in participation  revenues that we expect to receive
in Fiscal 2003 when Marriott  Ownership Resorts commences  delivery of completed
units.

     The $4.7 million  non-recurring  restructuring  and asset impairment charge
related to our real  estate  segment is  comprised  of:

     (i)    $2.0 million asset impairment charge related to the intended sale of
            undeveloped  land  at  Steamboat  as part of the letter of intent we
            entered into to sell Steamboat;
     (ii)   $1.3 million write-down to net  realizeable  value on the  remaining
            units at the Attitash Grand Summit Hotel project;
     (iii)  $1.1  million  write-off  of  all  remaining  capitalized  costs  in
            connection with development of a Grand Summit Hotel at  Sugarbush as
            a result of the sale of that resort; and
     (iv)   $231,000 in restructuring charges in  connection  with our strategic
            restructuring and reorganization efforts.

     The $15.5 million  increase in real estate  interest  expense was primarily
due to a $13.2  million  reduction  in the  amount of  interest  capitalized  to
construction  projects in Fiscal 2001.  During Fiscal 2000 we capitalized  $15.3
million of  interest  costs as were  still  completing  construction  on our two
hotels at The Canyons and one at Steamboat.  In Fiscal 2001 we only  capitalized
$2.1 million of interest  costs related to the final stages of  construction  on
the Steamboat Grand.
<PAGE>

     Recent Trends:  Over the past several  months,  we have seen a reduction in
sales volume and sales leads at our  properties  at  Steamboat  and The Canyons,
below anticipated  levels for this period. We believe that this is primarily the
result of weakening economic conditions,  which have impacted destination visits
at both resorts.  In addition,  well  publicized  disputes  with the  contractor
building the Steamboat  Grand Hotel,  coupled with concerns  about our financial
condition,  have had an impact on sales and more  importantly  closings  at this
project. We remain cautiously optimistic about our ability to move a significant
number of units at Steamboat  and The Canyons  this ski season.  We are watching
carefully  the  developing  economic  conditions  and  adjusting our real estate
operations and plans  accordingly.  We do not currently have any new projects in
sales or construction. We are in the development planning stage on several small
projects.

     Benefit from income taxes decreased from $5.8 million in Fiscal 2000 to $0
this year. In conjunction with revisions to our strategic plan, we no longer
expect to recognize any income tax expense or benefit in the foreseeable future.

     Cumulative  effect  of  accounting  changes  of $2.5  million  (net of $1.5
million tax  provision) in Fiscal 2001 resulted from recording the fair value of
non-hedging  derivatives  on our balance  sheet in  connection  with our initial
adoption  of SFAS No. 133  Accounting  for  Derivative  Instruments  and Hedging
Activities,  SFAS No. 137  Accounting  for  Derivative  Instruments  and Hedging
Activities  - Deferral  of the  Effective  Date of FASB  Statement  No. 133 - an
Amendment  of FASB  Statement  No. 133 and SFAS No. 138  Accounting  for Certain
Derivative  Instruments  and Certain  Hedging  Activities - an Amendment of FASB
Statement No. 133 (collectively, SFAS No. 133 as amended).

     The  cumulative  effect of accounting  changes of $0.7 million (net of $0.4
million tax  benefit)  in Fiscal 2000  resulted  from the  write-off  of certain
capitalized  start-up costs relating to our hotel and retail  operations and the
opening of the Canyons resort in fiscal 1998.  The accounting  change was due to
our adoption of AICPA  Statement of Position  98-5,  "Reporting  on the Costs of
Start-up  Activities".  SOP 98-5 requires the expensing of all start-up costs as
incurred,  rather than  capitalizing  and  subsequently  amortizing  such costs.
Initial adoption of this SOP was reported as a cumulative  effective of a change
in accounting principles.  Current start-up costs are being expensed as incurred
and are reflected in their appropriate expense classifications

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

     Accretion  of discount  and  dividends  accrued on  mandatorily  redeemable
preferred  stock  increased $2.4 million,  from $21.0 million for Fiscal 2000 to
$23.4 million for Fiscal 2001.  This increase is primarily  attributable  to the
compounding  effect of  accruing  dividends  on  150,000  shares of the Series B
Preferred  Stock  issued to Oak Hill in the first  quarter  of Fiscal  2000.  On
August 31, 2001, the Series B Preferred  Stock was stripped of all of its rights
and preferences with the exception of the right to elect up to six directors. We
issued to Oak Hill Series C-1 Preferred  Stock with an initial face value of $40
million,  accruing dividends at the rate of 12% per annum. We also issued to Oak
Hill Series C-2 Preferred  Stock,  with an initial face value of $139.5 million,
accruing  dividends at the rate of 15% per annum.  The initial face value of the
Series C-1  Preferred  Stock and Series C-2  Preferred  Stock  correspond to the
accrued  liquidation  preference  of the Series B  Preferred  Stock  immediately
before being stripped of its right to such accrued liquidation preference.



<PAGE>

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

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

     ---------------------------------------------------------------------------
                            Actual Year    Actual Year
                               Ended          Ended         Increase/(Decrease)
                           July 30, 2000  July 25, 1999     Dollar      Percent
     ---------------------------------------------------------------------------

     Revenue category:
     Lift Tickets          $       131.3  $       134.5     $   (3.2)     (2.4%)
     Food and beverage              40.0           38.3           1.7       4.4%
     Retail sales                   38.3           41.5         (3.2)     (7.7%)
     Lodging and property           32.7           31.6           1.1       3.5%
     Skier development              24.8           24.2           0.6       2.5%
     Golf, summer
       activities and
       other                        25.0           22.5            2.5     11.1%
                           -------------  -------------     ----------  --------
    Total resort revenues  $       292.1  $       292.6    $     (0.5)      0.1%
                           -------------  -------------     ----------  --------

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

    Cost of resort
      operations           $       203.9  $       198.2    $       5.7      2.9%
    Marketing, general and
      administrative                49.4           51.4          (2.0)    (3.9%)
    Depreciation and
      amortization                  45.8          43.22            2.6      6.0%
    ----------------------------------------------------------------------------

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

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

     Our Resort  segment  generated a $31.4  million loss before income taxes in
Fiscal 2000,  compared to a $33.4 million pre-tax loss in Fiscal 1999. This $2.0
million decrease in the year-to-date  pre-tax loss is derived  primarily from an
$8.6 million decrease in interest expense,  offset by a $4.1 million decrease in
resort earnings before interest,  taxes and depreciation,  or EBITDA, and a $2.5
million increase in depreciation  expense.  The reduction in interest expense in
Fiscal 2000 is due primarily to the reduced level of debt outstanding  under our
senior  credit  facility  as a result of the paydown on that  facility  from the
proceeds  of the series B  preferred  stock  issuance.  The  decrease  in resort
earnings before interest,  taxes and depreciation is derived from the net effect
of (i) the $0.5 million decrease in resort revenues described above, (ii) a $5.7
million  increase in resort  operating  expenses due mainly to  pre-opening  and
start-up  costs  associated  with  the two new  hotels  at The  Canyons  and the
Steamboat  Grand Hotel,  increased  snowmaking and maintenance  costs,  food and
beverage  and lodging  costs and retail  costs of goods  sold,  and (iii) a $2.0
million  reduction  in  marketing,  general  and  administrative  expenses.  The
increase in resort depreciation  expense is due to the approximately $30 million
in ski-related  capital assets placed in service at our resorts since the end of
the 1998-99 ski season.


<PAGE>

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

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

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

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

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

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

     Cumulative effect of a change in accounting  principle of $0.7 million (net
of $0.4  million tax  benefit) in Fiscal 2000  resulted  from the  write-off  of
certain  capitalized  start-up costs relating to our hotel and retail operations
and the opening of the Canyons resort in fiscal 1998. The accounting  change was
due to our adoption of AICPA Statement of Position 98-5, "Reporting on the Costs
of Start-up  Activities".  SOP 98-5 requires the expensing of all start-up costs
as incurred,  rather than  capitalizing and subsequently  amortizing such costs.
Initial  adoption of this SOP should be reported as a cumulative  effective of a
change in accounting  principles.  Current  start-up costs are being expensed as
incurred and are reflected in their appropriate expense classifications


<PAGE>

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

Recently Issued Accounting Standards

     In July 2001,  the  Financial  Accounting  Standards  Board  (FASB)  issued
Statement of Financial Accounting Standards No. 141 ("SFAS No. 141"),  "Business
Combinations." SFAS No. 141 requires all business  combinations  initiated after
June 30, 2001 to be accounted for using the purchase  method.  This statement is
effective  for all  business  combinations  initiated  after June 30,  2001.  We
believe  the  adoption  of SFAS No. 141 will not have a  material  impact on our
results of operations or financial position.

     In July 2001, the FASB issued SFAS No. 142,  "Goodwill and Other Intangible
Assets." This statement applies to goodwill and intangible assets acquired after
June 30, 2001, as well as goodwill and intangible  assets  previously  acquired.
Under  this  statement  goodwill  as well as  certain  other  intangible  assets
determined to have an infinite life, will no longer be amortized. Instead, these
assets will be reviewed for  impairment on a periodic  basis.  Early adoption of
this  statement is permitted for  non-calendar  year-end  companies  with fiscal
years  beginning  after March 15, 2001 and its first  interim  period  financial
statements  have not been issued.  We plan to early adopt the provisions of SFAS
No.  142  and  are  evaluating  the  potential  impairment  loss.  We  currently
anticipate  recognizing a goodwill  impairment charge of between $15 million and
$20 million in the first quarter of fiscal 2002.

     In July  2001,  the  FASB  issued  SFAS  No.  143,  "Accounting  for  Asset
Retirement  Obligations".  This  statement  addresses  financial  accounting and
reporting for obligations  associated with the retirement of tangible long-lived
assets and the associated asset retirement  costs. SFAS No. 143 is effective for
financial  statements  issued for fiscal years beginning after June 15, 2002. We
believe  the  adoption  of SFAS No. 143 will not have a  material  impact on our
results of  operations  or financial  position and will adopt such  standards on
July 29, 2002, as required.

     In  August  2001,  the  FASB  issued  SFAS  No.  144,  "Accounting  for the
Impairment or Disposal of Long-Lived  Assets." This  statement  supercedes  FASB
Statement No. 121,  "Accounting for the Impairment of Long-Lived  Assets and for
Long-Lived  Assets  to  Be  Disposed  Of,"  and  the  accounting  and  reporting
provisions  of APB  Opinion  No. 30,  "Reporting  the  Results of  Operations  -
Reporting the Effects of Disposal of a Segment of a Business, and Extraordinary,
Unusual and  Infrequently  Occurring  Events and  Transactions."  This statement
requires that one accounting model be used for long-lived  assets to be disposed
of by sale, whether previously held and used or newly acquired,  and it broadens
the   presentation   of   discontinued   operations  to  include  more  disposal
transactions.  The  provisions of this  statement are effective for fiscal years
beginning  after  December 15,  2001,  and interim  periods  within those fiscal
years, with early adoption  permitted.  We are currently  evaluating  whether we
will early adopt the provisions of SFAS No. 144, and management will not be able
to determine the ultimate  impact of this statement on its results of operations
or financial position until such time as its provisions are applied.


<PAGE>



                                     Item 7A
           Quantitative and Qualitative Disclosures about Market Risk

     Our market risk sensitive  instruments do not subject us to material market
risk exposures,  except for risks related to interest rate  fluctuations.  As of
July  29,  2001,  we  had  $219.3   million  in  floating  rate  long-term  debt
outstanding,  including  current portion.  We currently do not have any interest
rate swap agreements in place which would swap variable rate borrowings to fixed
rate borrowings.  Currently,  all of our floating rate debt is indexed to the US
Prime lending rate.  Borrowings  under our senior credit facility can be tied to
the  LIBOR  30 day  rate,  but  only  after  we make  the $90  million  optional
prepayment on that facility in December, 2001.

     The following sensitivity analysis expresses the potential impact on annual
interest  expense  resulting from a hypothetical 100 basis point increase in the
U.S. Prime lending rate on each of our floating rate debt instruments:

<TABLE>
<CAPTION>

     ----------------------------------------------------------------------------------------
                                    Balance            Average
                                  Outstanding          Balance       Hypothetical   Effect on
                                     as of           Outstanding      Change in     Interest
     Variable Rate Debt          July 29, 2001       in FY 2001       Rate Index    Expense
     ----------------------------------------------------------------------------------------
     
                         <c>                 <c>                    <c>     <c>
     Senior credit facility      $     142,848       $   122,746            1.0%    $   1,227
     ASCRP Tranche A facility           27,000            28,735            1.0%          287
     ASCRP Textron facility             49,424            69,525            1.0%          695
                                 -------------       -----------     -----------   ----------
     Total variable rate debt    $     219,272       $   221,006            1.0%    $   2,210
     ----------------------------------------------------------------------------------------

</TABLE>

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

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

<TABLE>
<CAPTION>

------------------------------------------------------------------------------------------------------------------
                       February 9, 1998 - July 15, 2001                      July 16, 2001 - July 15, 2006
                   Notional         Company         Company            Notional         Company         Company
                    Amount           Pays          Receives             Amount           Pays           Receives
------------------------------------------------------------------------------------------------------------------

             <c>               <c>            <c>                <c>              <c>            <c>
Agreement 1     $  120,000,000       9.01%       6-month LIBOR      $  127,500,000      9.01%       6-month LIBOR

Agreement 2     $  120,000,000    6-month LIBOR      12.00%         $  127,500,000   6-month LIBOR       7.40%
------------------------------------------------------------------------------------------------------------------
</TABLE>


     As a result of entering into this interest rate swap  arrangement,  we have
fixed the cash-pay rate on the Notes until their maturity in July 2006. From the
period February 9, 1998 through July 15, 2001, this swap arrangement resulted in
a net cash receipt to us of $1.8 million per settlement,  corresponding with our
interest  payments on the Notes each January 15th and July 15th.  Beginning with
the January  15, 2002  payment  date,  we will now be in a net payment  position
under this swap arrangement of $1.0 million per settlement,  due on January 15th
and July 15th of each year through the  maturity of the Notes in July 2006.  The
net effect of the swap  agreements  will result in a $2.1 million cash  interest
savings over the life of the agreements.  These agreements are non-hedging swaps
which are carried at their fair market value, with fluctuations recorded through
interest expense, in accordance with SFAS No. 133.
<PAGE>



                                     Item 8
                   Financial Statements and Supplementary Data

Selected Quarterly Operating Results

     The  following  table  presents  certain  unaudited   quarterly   financial
information  for the eight  quarters  ended July 29, 2001. In the opinion of our
management,  this  information  has  been  prepared  on the  same  basis  as the
Consolidated  Financial  Statements  appearing  elsewhere  in this Form 10-K and
includes  all  adjustments  (consisting  only of normal  recurring  adjustments)
necessary to present fairly the financial  results set forth herein.  Results of
operations for any previous  quarters are not necessarily  indicative of results
for any future period.

<TABLE>
<CAPTION>

                                                                         Quarter Ended
------------------------------------------------------------------------------------------------------------------------------------
                         Oct.24, 1999  Jan.30, 2000  Apr.30, 2000  Jul.30, 2000  Oct.29, 2000  Jan.28, 2001 Apr.29, 2001 Jul.29,2001
------------------------------------------------------------------------------------------------------------------------------------
                                                                         (in  thousands)
<S>                      <C>           <C>           <C>           <C>           <C>           <C>          <C>          <C>
 Net revenues:
 Resort                  $     20,806  $    104,480  $    149,942  $     16,849  $     20,912  $    125,539 $    164,170 $    18,084
 Real estate                    2,549        22,147        73,153        34,214        27,216        30,725       15,404      23,519
                         ------------  ------------  ------------  ------------  ------------  ------------ ------------ -----------
 Total net revenues            23,355       126,627       223,095        51,063        48,128       156,264      179,574      41,603

 Operating expenses:
 Resort                        29,015        73,523        74,865        26,499        30,343        84,291       84,362      25,723
 Real estate                    3,284        22,486        63,450        34,617        23,578        26,216       16,516      27,112
 Marketing, general
   and administrative          10,753        16,283        13,063         9,306        10,443        17,867       17,274       6,712
 Merger, restructuring
   and asset impairment
   charges                          -             -             -             -             -             -        3,593      72,452
 Depreciation and
   amortization                 3,202        20,924        19,076         3,826         4,002        19,955       18,300       4,739
                         ------------- ------------  ------------  ------------  ------------  ------------ ------------ -----------
 Total operating
   expenses                    46,254       133,216       170,454        74,248        68,366       148,329      140,045     136,738

 Income(loss) from
   Operations            $   (22,899)  $    (6,589)  $     52,641  $   (23,185)  $   (20,238)  $      7,935  $    39,529 $  (95,135)
------------------------------------------------------------------------------------------------------------------------------------
</TABLE>

<PAGE>


                                    PART III

     Pursuant to General  Instruction G of Form 10-K, the information  contained
in Part  III of this  report  (Items  10,  11,  12 and  13) is  incorporated  by
reference from our  Definitive  Proxy  Statement,  which is expected to be filed
with the Securities and Exchange Commission on or before November 26, 2001.

                                     PART IV

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


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

1.    Index  to  financial  statements,   financial  statement  schedules,
      and supplementary data, filed as part of this report:

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

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

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

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

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

          Notes to Consolidated Financial Statements.........................F-6

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

3.    Exhibits filed as part of this report:

Exhibit
No.                Description

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

3.2       Certificate of Designation of 12% Series C-1 Convertible Participating
          Preferred Stock of the Company  (incorporated  by reference to Exhibit
          3.2 to the Company's Form 8K for the report date of September 4, 2001)

3.3       Certificate of  Designation  of 15% Series C-2 Preferred  Stock of the
          Company  (incorporated  by reference  to Exhibit 3.3 to the  Company's
          Form 8K for the report date of September 4, 2001)

3.4       Certificate of Designation of Series D  Participating  Preferred Stock
          of the  Company  (incorporated  by  reference  to  Exhibit  3.4 to the
          Company's Form 8K for the report date September 4, 2001)

3.5       Amended  and  Restated  Bylaws of the  Company  Adopted  July 10, 2001
          (incorporated by reference to Exhibit 3.1 to the Company's Form 8K for
          the report date of September 4, 2001)


<PAGE>

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

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

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

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

4.3       Form of Indenture relating to 11.3025% Convertible  Subordinated Notes
          Due 2007 dated as of August 31, 2001  (incorporated  by  reference  to
          Exhibit 4.1 to the Company's  Form 8K for the report date of September
          4, 2001)

4.4       Specimen  Certificate for Class A Common Stock, $.01 par value, of the
          Company

4.5       Specimen Certificate for Series B Convertible  Participating Preferred
          Stock, $.01 par value, of the Company

4.6       Specimen  Certificates for Series C-1 Preferred Stock, $.01 par value,
          of the Company

4.7       Specimen  Certificates for Series C-2 Preferred Stock, $.01 par value,
          of the Company

4.8       Specimen Certificates for Series D Preferred Stock, $.01 par value, of
          the Company

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

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

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

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

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


<PAGE>

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

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

10.8      Second  Amendment to the Amended,  Restated  and  Consolidated  Credit
          Agreement,  dated as of April 29,  2001 with  respect to the  Amended,
          Restated and  Consolidated  Credit  Agreement  dated as of October 12,
          1999 by and among  American  Skiing  Company  and the other  borrowers
          party thereto, the lenders party thereto and Fleet National Bank, N.A.
          as agent.  (Incorporated by reference from the  Registrant's  Form 8-K
          for the Report date July 16, 2001).

10.9      Amendment to Second  Amendment to Amended,  Restated and  Consolidated
          Credit  Agreement,  dated as of October 15,  2001 with  respect to the
          Amended,  Restated  and  Consolidated  Credit  Agreement  dated  as of
          October 12, 1999 by and among  American  Skiing  Company and the other
          borrowers party thereto,  the lenders party thereto and Fleet National
          Bank, N.A. as agent

10.10     Third  Amendment to the  Amended,  Restated  and  Consolidated  Credit
          Agreement  dated as of September 10, 2001 with respect to the Amended,
          Restated and  Consolidated  Credit  Agreement  dated as of October 12,
          1999 by and among  American  Skiing  Company  and the other  borrowers
          party thereto, the lenders party thereto and Fleet National Bank, N.A.
          as agent


10.11     Second Amended and Restated Credit Agreement dated July 31, 2000 among
          American Skiing Company Resort Properties,  Inc., Fleet National Bank,
          as Agent,  and the  other  Lenders  party  thereto.  (Incorporated  by
          reference from the Registrant's  Form 8K for the report date August 2,
          2000)

10.12     First Amendment to Second Amended and Restated Credit  Agreement Among
          American  Skiing  Company Resort  Properties,  Inc. and Fleet National
          Bank, as agent for the Lenders dated August 20, 2001.

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

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

10.15     Accession,  Loan Sale and  Second  Amendment  Agreement  Re:  Loan and
          Security  Agreement  among Grand Summit  Resort  Properties,  Inc. and
          Textron  Financial Corp. and The Lenders Listed therein dated June 24,
          1999  (incorporated  by  reference to Exhibit  10.22 to the  Company's
          annual report on Form 10-K for the fiscal year ended July 25, 1999).

10.16     Third Amendment  Agreement Re: Loan and Security Agreement Among Grand
          Summit  Resort  Properties,  Inc.,  as Borrower and Textron  Financial
          Corporation, as Administrative Agent dated as of January, 2000

10.17     Fourth Amendment Agreement Re: Loan and Security Agreement Among Grand
          Summit  Resort  Properties,  Inc.,  as Borrower and Textron  Financial
          Corporation, as Administrative Agent dated as of September 15, 2000.

10.18     Fifth Amendment  Agreement Re: Loan and Security Agreement Among Grand
          Summit  Resort  Properties,  Inc.,  as Borrower and Textron  Financial
          Corporation, as Administrative Agent dated as of August 20, 2001

10.19     Statement  of Intention  and Special  Additional  Financing  Agreement
          dated July 25, 2000 between Grand Summit Resort  Properties,  Inc. and
          Textron  Financial  Corporation.  (Incorporated  by reference from the
          Registrant's Form 10-K for the report date July 30, 2000)

10.20     First  Amendment  Agreement to the  Statement of Intention and Special
          Additional Financing Agreement between Grand Summit Resort Properties,
          Inc. and Textron Financial Corporation dated August 20, 2001

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

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

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

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

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

10.26     Securities Purchase Agreement dated as of July 15, 2001 among American
          Skiing Company,  a Delaware  corporation,  Oak Hill Capital  Partners,
          L.P., a Delaware limited partnership, and other entities identified in
          Annex A thereto. (Incorporated by reference from the Registrant's Form
          8-K for the Report date July 16, 2001).

10.27     Amendment No. 1 to Securities Purchase Agreement among American Skiing
          Company, A Delaware  corporation,  Oak Hill Capital Partners,  L.P., A
          Delaware Limited  partnership  dated August 22, 2001  (Incorporated by
          reference  from the  Registrant's  Form 8-K for the Report date August
          31, 2001)

10.28     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).

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


<PAGE>

10.30     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).

10.31     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).

10.32     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).

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

10.34     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).

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

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

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

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

10.39     $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).

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

10.41     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).


<PAGE>

10.42     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).

10.43     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).

10.44     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).

10.45     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).

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

10.47     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).

10.48     Amended  and  Restated  Lease  Agreement  between  Sugarloaf  Mountain
          Corporation and the  Inhabitants of the Town of  Carrabassett  Valley,
          Maine,  concerning  the Sugarloaf  Golf Course dated November 16, 2000
          (incorporated  by  reference  to  Exhibit  10.35  to  American  Skiing
          Company's  Registration  Statement  on Form S-4,  filed on  January 9,
          2001).

10.49     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).

10.50     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).

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

10.52     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).

10.53     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).

10.54     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).

10.55     Terms of Employment  between the  Registrant  and Mark J. Miller dated
          October 7, 1999  (incorporated  by reference  to Exhibit  10.45 to the
          Company's annual report for Fiscal Year ended July 30, 2000)

10.56     Employment  Agreement between the Registrant and William J. Fair dated
          May 17,  2000  (incorporated  by  reference  to  Exhibit  10.46 to the
          Company's annual report for Fiscal Year ended July 30, 2000)


<PAGE>

10.57     Terms of Employment  between the Registrant and Hernan  Martinez dated
          April 28, 2000  (incorporated  by  reference  to Exhibit  10.47 to the
          Company's annual report for Fiscal Year ended July 30, 2000)

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

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

21.1      Subsidiaries of the Company.

23.2      Consent of Arthur Andersen LLP



(b)       Reports filed on Form 8-K.

          The  Company  filed a report on Form 8-K on August 2, 2000,  reporting
the Real Estate Financing dated as of August 2, 2000.

          The Company filed a report on Form 8-K on December 11, 2000, reporting
the Agreement  and Plan of Merger dated as of December 8, 2000 between  American
Skiing Company,  MeriStar Hotels and Resorts, Inc. and a wholly-owned subsidiary
formed by American Skiing Company for purposes of the merger.

          The Company filed a report on Form 8-K on February 23, 2001, reporting
an  Amendment to the  Agreement  and Plan of Merger dated as of December 8, 2000
between  American  Skiing  Company,  MeriStar  Hotels and  Resorts,  Inc.  and a
wholly-owned  subsidiary  formed by American  Skiing Company for purposes of the
merger.

          The Company  filed a report on Form 8-K on March 23,  2001,  reporting
the  termination of its Agreement and Plan of Merger dated December 8, 2000 with
MeriStar Hotels and Resorts, Inc.

          The Company  filed a report on Form 8-K on March 28,  2001,  reporting
the  resignation of our chairman and chief executive  officer,  Leslie B. Otten,
and the promotion of its chief operating  officer,  William Fair, to replace Mr.
Otten as our chief executive officer, effective immediately.

          The Company filed a report on Form 8-K on July 16, 2001, reporting the
Second  Amendment to the Amended,  Restated and  Consolidated  Credit  Agreement
between the Company and Fleet National Bank, N.A.

          The Company filed a report on Form 8-K on September 4, 2001, reporting
that it had closed on the issuance of $12.5 million of its 11.3025%  Convertible
Subordinated  Notes  due  2007,  $40  million  of  its  Series  C-1  Convertible
Participating Preferred Stock and $138 million of its Series C-2 Preferred Stock
to Oak Hill Capital Partners, L.P. and its affiliates.



<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 13th day of November, 2001.

                                           American Skiing Company


                                           By:  /s/ William J. Fair
                                           --------------------------------
                                           William J. Fair
                                           President and Chief Executive Officer
                                           (Principal Executive Officer)


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


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


                                           By: /s/ Leslie B. Otten
                                           --------------------------------
                                           Leslie B. Otten
                                           Director


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


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


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


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



<PAGE>

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


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


                                           By:
                                           --------------------------------
                                           Paul Wachter, Director


                                           By:  /s/ Alexandra Hess
                                           --------------------------------
                                           Alexandra Hess, Director


                                           By:  /s/ Robert Branson
                                           --------------------------------
                                           Robert Branson, Director


<PAGE>





                    Report of Independent Public Accountants


To American Skiing Company:

         We have audited the accompanying consolidated balance sheets of
American Skiing Company and subsidiaries as of July 29, 2001 and July 30,
2000, and the related consolidated statements of operations, changes in
shareholders' equity and cash flows for the years ended July 29, 2001, July 30,
2000 and July 25, 1999. 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 in accordance with auditing standards generally
accepted in the United States. Those standards require that we plan and perform
the audit to obtain reasonable assurance about whether the financial statements
are free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements. An
audit also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.

         In our opinion, the financial statements referred to above present
fairly, in all material respects, the financial position of American Skiing
Company and subsidiaries as of July 29, 2001 and July 30, 2000 and the results
of its operations and its cash flows for the years ended July 29, 2001, July 30,
2000 and July 25, 1999 in conformity with accounting principles generally
accepted in the United States.


                                                     //Arthur Andersen LLP//

Boston, MA
November 13, 2001



<PAGE>

<TABLE>

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

                                                                    July 30, 2000        July 29, 2001
<S>                                                                    <C>                  <C>
Assets
Current assets
        Cash and cash equivalents                                      $    10,085          $    11,592
        Restricted cash                                                      7,424                1,372
        Accounts receivable                                                  8,176               13,825
        Inventory                                                           10,200                7,909
        Prepaid expenses                                                     8,092                5,286
        Assets held for sale (Note 19)                                           -               98,219
        Deferred income taxes                                                1,566                2,137
                                                                    ---------------     ----------------
              Total current assets                                          45,543              140,340

Property and equipment, net                                                534,078              440,594
Real estate developed for sale                                             222,660              137,478
Goodwill                                                                    75,003               23,518
Intangible assets                                                           22,055               10,685
Deferred financing costs                                                    10,844               16,707
Other assets                                                                16,595               26,903
                                                                    ---------------     ----------------
        Total assets                                                   $   926,778          $   796,225
                                                                    ===============     ================

Liabilities, Mandatorily Redeemable Preferred Stock and
Shareholders' Equity
Current liabilities
        Current portion of long-term debt                              $    58,508          $    74,776
        Current portion of subordinated notes and debentures                   525                  549
        Accounts payable and other current liabilities                      70,957               64,872
        Deposits and deferred revenue                                       15,930               11,779
                                                                    ---------------     ----------------
                     Total current liabilities                             145,920              151,976

Long-term debt, excluding current portion                                  249,841              211,362
Subordinated notes and debentures, excluding current portion               126,810              126,564
Other long-term liabilities                                                 17,494               34,992
Deferred income taxes                                                          200                2,137
                                                                    ---------------     ----------------
              Total liabilities                                            540,265              527,031

Mandatorily Redeemable 10 1/2% Series A Preferred Stock par value
        $1,000 per share; 40,000 shares authorized; 36,626 issued
        and outstanding; including cumulative dividends in arrears
        (redemption value of $48,706 at July 30, 2000 and $54,102
        at July 29, 2001)                                                   48,706               54,102

Mandatorily Redeemable 8 1/2% Series B Preferred Stock
        par value $1,000 per share; 150,000 shares authorized, issued and
        outstanding; including cumulative dividends in arrears (redemption
        value of $162,865 at July 30, 2000 and $178,016 at July 29, 2001)  152,310              170,266

Shareholders' Equity
        Common stock, Class A, par value $.01 per share; 15,000,000 shares
              authorized; 14,760,530 issued and outstanding at
              July 30, 2000 and July 29, 2001                                  148                  148
        Common stock, par value of $.01 per share; 100,000,000
        shares authorized; 15,708,633 and 15,957,593 issued and
        outstanding at July 30, 2000 and July 29, 2001, respectively           157                  160
        Additional paid-in capital                                         269,955              270,853
        Accumulated deficit                                                (84,763)            (226,335)
                                                                    ---------------     ----------------
                Total shareholders' equity                                 185,497               44,826
                                                                    ---------------     ----------------
                Total liabilities, mandatorily redeemable preferred
                        stock and shareholders' equity                 $   926,778          $   796,225
                                                                    ===============     ================

</TABLE>

<PAGE>

<TABLE>

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

                                                                         Year Ended
                                                         July 25, 1999    July 30, 2000    July 29, 2001
                                                         ------------    -------------    -------------
<S>                                                      <C>             <C>              <C>
Net revenues:
   Resort                                                $  292,558       $  292,077       $  328,705
   Real estate                                               24,492          132,063           96,864
                                                        ------------    -------------    -------------
      Total net revenues                                    317,050          424,140          425,569
                                                        ------------    -------------    -------------

Operating expenses:
   Resort                                                   198,231          203,902          224,719
   Real estate                                               26,808          123,837           93,422
   Marketing, general and administrative                     51,434           49,405           52,296
   Non-recurring merger, restructuring and asset
        impairment charges (Note 11)                              -                -           76,045
   Depreciation and amortization                             44,202           47,028           46,996
                                                        ------------    -------------    -------------
      Total operating expenses                              320,675          424,172          493,478
                                                        ------------    -------------    -------------

Loss from operations                                         (3,625)             (32)         (67,909)

Interest expense                                             39,382           35,906           52,815
                                                        ------------    -------------    -------------

Loss before benefit from income taxes                       (43,007)         (35,938)        (120,724)


Benefit from income taxes                                  (15,057)           (5,805)                -
                                                        ------------    -------------    -------------

Loss before extraordinary item and cumulative effect
   of accounting change                                    (27,950)          (30,133)        (120,724)

Extraordinary loss, (net of applicable taxes of $396)(Note 6)     -              621                -
Cumulative effect of accounting change  (net of
     applicable taxes of $449 and ($1,538),
     respectively) (Note 13)                                      -              704          (2,509)
                                                        ------------    -------------    -------------

Loss before preferred stock dividends                       (27,950)         (31,458)        (118,215)

Accretion of discount and dividends accrued on
      mandatorily redeemable preferred stock                  4,372           20,994           23,357
                                                        ------------    -------------    -------------

Net loss available to common shareholders                $  (32,322)      $  (52,452)     $  (141,572)
                                                        ============    =============    =============

Basic and diluted loss per share: (Note 3)
Loss before extraordinary items and cumulative effect
     of accounting change                                $   (1.07)       $   (1.69)       $   (4.72)
Extraordinary loss, net of taxes                                  -           (0.02)                -
Cumulative effect of accounting change, net of taxes              -           (0.02)             0.08
                                                        ------------    -------------    -------------
Net loss available to common shareholders                $   (1.07)       $   (1.73)       $   (4.64)
                                                        ============    =============    =============
Weighted average shares outstanding                         30,286            30,393           30,525
                                                        ============    =============    =============

</TABLE>


<PAGE>

<TABLE>

                             American Skiing Company
           Consolidated Statements of Changes in Shareholders' Equity
                      (in thousands, except share amounts)
                                                                                                 Retained
                                                                                    Additional   Earnings/
                                       Class A                                       paid-in    (Accumulated
                                     Common stock              Common stock          capital       Deficit)       Total
                               ------------------------  ------------------------   ----------   ------------  -----------
                                  Shares      Amount       Shares      Amount
                               ------------  ----------  ------------  ----------


<S>                             <C>            <C>        <C>            <C>         <C>             <C>          <C>
Balance at July 26, 1998        14,760,530     $   148    15,525,022     $   155     $ 267,890       $     11     $ 268,204
Exercise of Common Stock options         -           -         1,221           -             -              -             -
Issuance of Common Stock options         -           -             -           -           773              -           773
Accretion of discount and
  issuance costs and
  dividends accrued on
  mandatorily redeemable
  preferred stock                        -           -             -           -             -        (4,372)       (4,372)
Net loss                                 -           -             -           -             -       (27,950)      (27,950)
                               ------------  ----------  ------------  ----------  ------------  -------------  ------------
Balance at July 25, 1999        14,760,530     $   148    15,526,243     $   155     $ 268,663     $ (32,311)     $ 236,655
                               ============  ==========  ============  ==========  ============  =============  ============
Exercise of Common Stock options         -           -       182,390           2           363              -           365
Issuance of Common Stock options         -           -             -           -           929              -           929
Accretion of discount and
  issuance costs and
  dividends accrued on
  mandatorily redeemable
  preferred stock                        -           -             -           -             -       (20,994)      (20,994)
Net loss                                 -           -             -           -             -       (31,458)      (31,458)
                               ------------  ----------  ------------  ----------  ------------  -------------  ------------
Balance at July 30, 2000        14,760,530     $   148    15,708,633     $   157     $ 269,955     $ (84,763)     $ 185,497
                               ============  ==========  ============  ==========  ============  =============  ============
Exercise of Common Stock options         -           -       248,960           3           495              -           498
Issuance of Common Stock options         -           -             -           -           387              -           387
Other paid-in capital                    -           -             -           -            16              -            16
Accretion of discount and
  issuance costs and
  dividends accrued on
  mandatorily redeemable
  preferred stock                        -           -             -           -             -       (23,357)      (23,357)
Net loss                                 -           -             -           -             -      (118,215)     (118,215)
                               ------------  ----------  ------------  ----------  ------------  -------------  ------------
Balance at July 29, 2001        14,760,530     $   148    15,957,593     $   160     $ 270,853    $ (226,335)     $  44,826
                               ============  ==========  ============  ==========  ============  =============  ============


</TABLE>

<PAGE>

<TABLE>

                             American Skiing Company
                      Consolidated Statements of Cash Flows
                                 (in thousands)

                                                                                Year Ended
                                                            -------------------------------------------------
                                                              July 25, 1999      July 30, 2000    July 29, 2001
                                                              -------------      -------------   --------------
<S>                                                             <C>             <C>             <C>
Cash flows from operating activities
Net loss                                                        $(27,950)       $   (31,458)    $   (118,215)
Adjustments to reconcile net loss to net cash provided by
 (used in) operating activities:
     Depreciation and amortization                                44,202             47,028           46,996
     Discount on convertible debt                                    333                368              992
     Deferred income taxes                                       (15,517)            (7,155)           1,366
     Stock compensation charge                                       773                929              387
     Extraordinary loss                                                -              1,017                -
     Cumulative effect of accounting change                            -              1,153           (4,047)
     (Gain) loss from sale of assets, net                          2,426             (1,449)           66,746
     Decrease (increase) in assets:
          Restricted cash                                           (368)              (796)            6,052
          Accounts receivable                                      1,090             (1,702)          (7,539)
          Inventory                                                2,516                637              574
          Prepaid expenses                                        (1,600)            (3,098)            2,757
          Real estate developed for sale                        (125,331)           (43,406)           48,639
          Other assets                                            (5,000)             2,318          (3,941)
     Increase (decrease) in liabilities:
          Accounts payable and other current liabilities          33,579             (6,994)          (1,375)
          Deposits and deferred revenue                           10,635             (4,920)          (2,583)
          Other long-term liabilities                              2,977              3,637            7,767
                                                            -------------      -------------   --------------
Net cash (used in) provided by operating activities              (77,235)           (43,891)          44,576
                                                            -------------      -------------   --------------
Cash flows from investing activities
     Payments for purchases of businesses, net of cash
     acquired                                                          -               (345)            (171)
     Capital expenditures                                        (46,007)           (27,229)         (23,842)
     Long-term investments                                         1,222                  -                -
     Proceeds from sale of assets                                  7,198             10,175              623
     Other, net                                                      101                 (4)               -
                                                            -------------      -------------   --------------
Net cash used in investing activities                            (37,486)           (17,403)         (23,390)
                                                            -------------      -------------   --------------
Cash flows from financing activities
     Net borrowings (repayment) under Senior Credit
     Facility                                                      7,308            (82,448)          19,612
     Proceeds from long-term debt                                 20,145                139            5,200
     Proceeds from real estate debt                              115,909            139,026           28,658
     Repayment of long-term debt                                 (10,466)           (11,105)          (7,149)
     Repayment of real estate debt                               (23,088)          (113,353)         (60,787)
     Deferred financing costs                                     (1,438)            (4,604)          (7,721)
     Net proceeds from issuance of mandatorily redeemable
     securities                                                        -            136,186                -
     Payments on demand note                                         (16)            (1,830)                -
     Proceeds from issuance of warrants                                -                  -            2,000
     Proceeds from exercise of stock options                           -                365              498
     Other, net                                                        -                  -               10
                                                            -------------      -------------   --------------
Net cash provided by (used in) financing activities              108,354             62,376         (19,679)
                                                            -------------      -------------   --------------
Net (decrease) increase in cash and cash equivalents              (6,367)             1,082            1,507
Cash and cash equivalents, beginning of period                    15,370              9,003           10,085
                                                            -------------      -------------   --------------
Cash and cash equivalents, end of period                      $    9,003       $     10,085          $11,592
                                                            =============      =============   ==============


Supplemental disclosures of cash flow information
 Cash paid for interest                                         $ 41,295           $ 48,754         $ 54,385
 Cash refunded for income taxes                                       10                 60               37

 Supplemental schedule of noncash investing
 and financing activities
 Property acquired under capital leases                          $ 7,425             $    -           $    -
 Non-cash transfer of real estate developed for sale to
      property and equipment                                           -             27,758           26,904
 Notes payable issued for purchase of assets                       1,395                  -                -
 Accretion of discount and issuance costs and dividends
   accrued on Mandatorily redeemable preferred stock               4,372             20,994           23,357

</TABLE>


<PAGE>


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

1.       Business Environment and Management's Plans

Existing Situation

         American Skiing Company (ASC) and its subsidiaries (collectively, "the
Company") have adopted a comprehensive plan designed to improve financial
performance and address issues related to its high leverage.

Strategic Plan

         The Company has recently undertaken a number of initiatives to improve
its financial condition and ongoing operations. The plan includes the following
key components:

         o        A comprehensive financial restructuring package, including
                  amendments to our senior credit facilities and a new capital
                  infusion to enhance financial flexibility.

         o        Operational cost savings and improved financial performance
                  through reorganization and staff reduction and performance
                  enhancement programs of approximately $5 million.

         o        Intent to sell Steamboat ski resort to reduce the debt of the
                  company and make the optional prepayment allowed for under the
                  second amendment to the senior credit facility.

         o        Strategic redeployment of management and capital resources to
                  emphasize the integration and growth of resort village
                  development and operations.

         Management has completed several aspects of this plan to date,
including the restructuring of three of the Company's major credit agreements,
an additional capital infusion by Oak Hill, and the implementation of a staff
reorganization plan to improve operational efficiencies. The ultimate success of
this comprehensive strategic plan is dependent on the execution of the remaining
plan elements, including obtaining a $14 million capital lease for equipment
related to the Heavenly gondola as required by the Senior Credit Facility and
the sale of Steamboat to reduce leverage. The tragic events of September 11th
have delayed the completion of these two key plan elements, however, despite
these events, management has made progress on the execution of these elements.
Management has entered into a non-binding letter of intent with a potential
buyer for Steamboat and continues to negotiate with other interested parties. In
addition, management has received a commitment for the capital lease. Management
is confident that the sale of Steamboat can be completed by the end of calendar
2001 and that the $14 million capital lease can be obtained by the end of
November or early December 2001.

Actions in Progress

         On July 12, 2001 the Company entered into a Second Amendment to its
Senior Credit Facility, effective as of April 29, 2001, which, among other
things, amended the financial covenant ratios beginning in the fourth quarter of
fiscal 2001, and set monthly maximum borrowing limitations on the revolving
portion of the Senior Credit Facility. (See Note 6 - Senior Credit Facility).

         The Second Amendment to the Senior Credit Facility provides an
incentive to the Company to make an optional prepayment of $90 million on or
before December 24, 2001. If the Company makes the optional prepayment by
December 24, 2001, it would avoid the following events:

         (i)      incremental increases in the rate of interest on all
                  outstanding borrowings under the facility, up to prime plus
                  4.25%;
<PAGE>

         (ii)     the payment of 2.0% default interest on all outstanding
                  borrowings under the facility, retroactive to May 1, 2001;
         (iii)    an additional $4.4 million in amendment fees payable
                  periodically through July 31, 2002;
         (iv)     requirement of the Company to raise an additional $7.2 million
                  by December 31, 2001, through the issuance of equity
                  securities or junior subordinated debt for the purpose of
                  meeting the January 15, 2002 interest payment on its Senior
                  Subordinated Notes, due 2006 (See Note 19 - Subsequent
                  Events); and
         (v)      requirement of the Company to renegotiate all of the financial
                  covenants of the Senior Credit Facility on or before August 1,
                  2002.

         The Company has retained Credit Suisse First Boston and Main Street
Advisors to assist with marketing the Steamboat Ski and Resort Corporation in
Steamboat Springs, Colorado, the sale of which is anticipated to close prior to
the end of calendar 2001. Management is currently negotiating terms with a small
group of potential purchasers, including the party with whom the Company has
entered into a non-binding letter of intent and is currently negotiating a
purchase and sales agreement.

         In addition, as part of the financial restructuring, the Company has
entered into a securities purchase agreement with Oak Hill to assist the Company
in meeting its current financing needs. Also, the Company has completed
amendments to it key real estate financing facilities (See Note 19 - Subsequent
Events for details regarding this agreement).

         As part of its effort to implement the operational cost savings element
of its plan, the Company has converted 160 full-time year-round positions to
seasonal positions in order to better match its operating cycle. In addition, 70
full-time, year-round positions have been eliminated. Prior to this operational
reorganization, the Company had approximately 1,600 full time, year-round resort
operations positions. At peak employment during the 2000-01 ski season, the
Company employed approximately 11,700 people for its resort operations.
Management has commenced this operational reorganization in order to provide
greater flexibility in its cost structure and respond more appropriately to the
seasonal nature of its business. Management estimates that these measures, along
with other organizational changes, cost reduction initiatives, and performance
enhancement measures should result in approximately $5 million of annual
financial benefits. Early benefits from these steps were realized during the
fourth quarter of fiscal 2001, which were partially responsible for the Company
achieving record performance on lower revenues for the quarter, and are expected
to be more fully realized during the 2002 fiscal year.

         Further supporting the Company's strategy to reallocate resources to
our highest growth opportunities and reducing debt, subsequent to the end of
fiscal 2001 the Company entered into a purchase and sales agreement to sell
substantially all of the operating assets of its Sugarbush ski resort in Warren,
VT to Summit Ventures NE, Inc. This sale closed on September 28, 2001 and the
proceeds from this sale were used by the Company to permanently pay down the
revolving and term portions of its Senior Credit Facility, on a pro-rata basis,
in accordance with the mandatory prepayment requirements of the facility (See
Note 19 - Subsequent Events).

         Management anticipates that the Company will be able to complete the
sale of Steamboat by the end of calendar 2001 and substantially reduce its
leverage from the proceeds of the sale. Management is currently negotiating
purchase and sale terms with a small group of potential purchasers and has
executed a non-binding letter of intent with one of the parties. Should the
Company complete the Steamboat transaction, management anticipates that the
Company will be able to meet the financial covenants of the Senior Credit
Facility, as amended, for the foreseeable future. In the event that the Company
is unable to make the optional prepayment, management presently anticipates that
under normal operating circumstances, the Company will still be able to meet the
financial covenants of the Senior Credit Facility, as amended, through the end
of fiscal 2002, at which time the Company will be required to renegotiate the
financial covenants.

<PAGE>

2.       Basis of Presentation

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

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

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

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

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

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


<PAGE>

3.       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 2001 and 1999
consisted of fifty-two weeks. The period for 2000 consisted of fifty-three
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 related to pre-sales of real estate
developed for sale held in escrow and guest advance deposits for lodging
reservations. The cash will be available to the Company when the real estate
units are sold or the lodging services are provided.

     Inventories
         Inventories are stated at the lower of cost (first-in, first-out) or
market, and consist primarily of retail goods, food and beverage products and
mountain operating supplies.

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

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

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

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

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


<PAGE>

    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 No. 121"). SFAS No.
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 No. 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 No. 121 also requires
that long-lived assets and certain identifiable intangibles to be disposed of be
reported at the lower of their carrying amount or fair value less estimated
selling costs. As of July 29, 2001, management believes that there has not been
any significant impairment of the Company's long-lived assets, real estate
developed for sale, goodwill or other identifiable intangibles, except for
assets for which an impairment charge was recognized as reported in Note 11 -
Non-recurring Merger, Restructuring and Asset Impairment Charges.

    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 restricted cash
and deposits and deferred revenue in the accompanying consolidated balance sheet
until the revenue is recognized.

   Interest
         Interest is expensed as incurred except when it is capitalized in
connection with major capital additions and real estate developed for sale. The
amounts of interest capitalized are determined by applying current interest
rates to the funds required to finance the construction. During 1999, 2000 and
2001, the Company incurred total interest cost of $46.5 million, $51.5 million
and $55.7 million, respectively, of which $7.1 million, $15.6 million, 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 merged
the previously existing plans into the Plan. The Plan allows employees to defer
up to 15% of their income and provides for the matching of participant
contributions at the Company's discretion. Matching contributions to the savings
plans for 1999, 2000 and 2001 totaled $395,000, $439,000 and $447,000.

    Advertising Costs
         Advertising costs are expensed the first time the advertising takes
place. At July 30, 2000 and July 29, 2001, advertising costs of $220,000 and
$255,000, respectively, were recorded in prepaid expenses in the accompanying
consolidated balance sheets. Advertising expense for the years ended July 25,
1999, July 30, 2000 and July 29, 2001 was $9.5 million, $7.3 million and $9.3
million, respectively.

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

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


<PAGE>

    Earnings Per Share
         SFAS No. 128, "Earnings Per Share" requires presentation of "basic"
earnings per share (which excludes dilution as a result of unexercised stock
options and the Mandatorily Redeemable Preferred Stock) and "diluted" earnings
per share. The Company adopted SFAS No. 128 in fiscal 1998 and all prior periods
presented were retroactively restated. For the years ended July 25, 1999, July
30, 2000 and July 29, 2001, basic and diluted loss per share are as follows:

<TABLE>

                                                                             Year Ended
                                                              ------------------------------------------
                                                                July 25, 1999  July 30, 2000  July 29, 2001
                               Loss                               (in thousands, except per share amounts)
      <S>                                                       <C>           <C>           <C>
      Loss before preferred stock dividends and
          accretion, extraordinary items and cumulative
          effect of accounting change                           $  (27,950)   $  (30,133)   $  (120,724)
      Accretion of discount and dividends accrued on
          mandatorily redeemable preferred stock                     4,372        20,994         23,357
                                                              -------------  ------------  -------------
      Loss before extraordinary items and cumulative effect
      of accounting change                                         (32,322)      (51,127)      (144,081)
      Extraordinary loss, net of taxes                                   -           621              -
      Cumulative effect of accounting change, net of taxes               -           704        (2,509)
                                                              -------------  ------------  -------------
      Net loss available to common shareholders                $  (32,322)    $ (52,452)    $ (141,572)
                                                              =============  ============  =============
                             Shares
      Total weighted average shares outstanding (basic and
      diluted)                                                     30,286        30,393         30,525
                                                              =============  ============  =============
              Basic and diluted loss per common share
      Loss before extraordinary items                           $   (1.07)     $  (1.69)      $  (4.72)
      Extraordinary loss, net of taxes                                  -         (0.02)             -
      Cumulative effect of accounting change, net of taxes              -         (0.02)          0.08
                                                              -------------  ------------  -------------
      Net loss available to common shareholders                 $   (1.07)     $  (1.73)      $  (4.64)
                                                              =============  ============  =============
</TABLE>
         The Company has outstanding 36,626, 186,626 and 186,626 shares of
convertible preferred stock (represented by two separate classes) at July 25,
1999, July 30, 2000 and July 29, 2001, respectively. These shares are
convertible into shares of the Company's common stock. However, the common stock
shares into which these securities are convertible have not been included in the
dilutive share calculation as the impact of their inclusion would be
anti-dilutive. The Company also has 2,746,048, 1,359,963 and 2,626,069
exercisable options outstanding to purchase shares of its common stock under the
Company's stock option plan as of July 25, 1999, July 30, 2000 and July 29,
2001, respectively. These shares are also excluded from the dilutive share
calculation as the impact of their inclusion would also be anti-dilutive.

    Stock Compensation
         The Company's  stock option plan is accounted  for in  accordance  with
Accounting  Principles  Board  Opinion No. 25,  "Accounting  for Stock Issued to
Employees." The Company has adopted the disclosure requirements of SFAS No. 123,
"Accounting for Stock-Based Compensation" (See Note 17 - Stock Option Plan).

    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 approximate their recorded
values in all material respects, as determined by discounting future cash flows
at current market interest rates as of July 29, 2001. The fair value of the
Company's Senior Subordinated Notes has been estimated using quoted market
values. The fair value of the Company's other subordinated debentures have been
estimated using discounted cash flow analyses based on current borrowing rates
for debt with similar maturities and ratings.

         The estimated fair values of the Senior Subordinated Notes and other
subordinated debentures at July 30, 2000 and July 29, 2001 are presented below
(in thousands):
<PAGE>
<TABLE>

                                                            July 30, 2000             July 29, 2001
                                                        Carrying       Fair       Carrying       Fair
                                                         amount       value        amount       value
                                                        --------      ------      --------     -------
               <S>                                     <C>         <C>          <C>           <C>
               12% Senior Subordinated Notes           $ 117,512   $  102,300   $  117,816    $  81,000
               Other subordinated debentures           $   9,823    $   8,616    $   9,297     $  8,261


</TABLE>

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

    Reclassifications
         Certain amounts in the prior year financial statements and related
notes have been reclassified to conform to the Fiscal 2001 presentation.

Recently Issued Accounting Standards

         In July 2001, the Financial Accounting Standards Board (FASB) issued
SFAS No. 141, "Business Combinations." SFAS No. 141 requires all business
combinations initiated after June 30, 2001 to be accounted for using the
purchase method. This statement is effective for all business combinations
initiated after June 30, 2001. The Company believes the adoption of SFAS No. 141
will not have a material impact on its future results of operations or financial
position.

         In July 2001, the FASB issued SFAS No. 142, "Goodwill and Other
Intangible Assets." This statement applies to goodwill and intangible assets
acquired after June 30, 2001, as well as goodwill and intangible assets
previously acquired. Under this statement goodwill as well as certain other
intangible assets determined to have an infinite life, will no longer be
amortized. Instead, these assets will be reviewed for impairment on a periodic
basis. Early adoption of this statement is permitted for non-calendar year-end
companies with fiscal year beginning after March 15, 2001 and its first interim
period financial statements have not been issued. The Company intends to early
adopt the provisions of SFAS No. 142 and management is currently evaluating the
potential impairment loss. The Company anticipates recognizing a goodwill
impairment charge of between $15 million and $20 million in the first quarter of
Fiscal 2002.

         In July 2001, the FASB issued SFAS No. 143, "Accounting for Asset
Retirement Obligations". This statement addresses financial accounting and
reporting for obligations associated with the retirement of tangible long-lived
assets and the associated asset retirement costs. SFAS No. 143 is effective for
financial statements issued for fiscal years beginning after June 15, 2002. The
Company believes the adoption of SFAS No. 143 will not have a material impact on
its results of operations or financial position and will adopt such standards on
July 29, 2002, as required.

         In August 2001, the FASB issued SFAS No. 144, "Accounting for the
Impairment or Disposal of Long-Lived Assets." This statement supercedes FASB
Statement No. 121, "Accounting for the Impairment of Long-Lived Assets and for
Long-Lived Assets to Be Disposed Of," and the accounting and reporting
provisions of Accounting Principles Board Opinion No. 30, "Reporting the Results
of Operations - Reporting the Effects of Disposal of a Segment of a Business,
and Extraordinary, Unusual and Infrequently Occurring Events and Transactions."
This statement requires that one accounting model be used for long-lived assets
to be disposed of by sale, whether previously held and used or newly acquired,
and it broadens the presentation of discontinued operations to include more
disposal transactions. The provisions of this statement are effective for
fiscal years beginning after December 15, 2001, and interim periods within those
fiscal years, with early adoption permitted. The Company is currently evaluating
whether it will early adopt the provisions of SFAS No. 144, and management will
not be able to determine the ultimate impact of this statement on its results of
operations or financial position until such time as its provisions are applied.


<PAGE>

4.      Property and Equipment

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

<TABLE>
                                                     July 30, 2000      July 29, 2001
                      ---------------------------------------------------------------
                      <S>                              <C>              <C>
                      Buildings and grounds            $ 195,847        $ 183,121
                      Machinery and equipment            171,037          145,263
                      Lifts and lift lines               162,283          156,172
                      Trails                              38,061           26,744
                      Land improvements                   18,708            8,417
                                                    -------------    -------------
                      Less: accumulated                  585,936          519,717
                      depreciation                       146,973          152,005
                                                    -------------    -------------
                                                         438,963          367,712

                      Land                                78,486           69,850
                      Construction-in-process             16,629            3,032
                                                    -------------    -------------
                      Property and equipment, net      $ 534,078        $ 440,594
                      ------------------------------------------------------------
</TABLE>

         Property and equipment includes approximately $53.3 million and $42.9
million of machinery and equipment and lifts held under capital leases at July
30, 2000 and July 29, 2001, respectively. At July 30, 2000 and July 29, 2001,
related accumulated amortization on property and equipment under capital leases
was approximately $13.1 million and $14.7 million, respectively. Amortization
expense for property and equipment under capital leases was approximately $4.4
million, $4.2 million and $3.1 million for 1999, 2000 and 2001, respectively.
Total depreciation and amortization expense relating to all property and
equipment was $40.4 million, $41.9 million and $40.8 million for 1999, 2000 and
2001, respectively.

5.       Long-Term Debt

<TABLE>
         Long-term debt consists of (dollar amounts in thousands):
    ------------------------------------------------------------------------------------------------------------------
                                                                                         July 30, 2000   July 29, 2001
    ------------------------------------------------------------------------------------------------------------------
    <S>                                                                                    <C>           <C>
    Senior Credit Facility (See Note 6 - Senior Credit Facility)                           $118,037      $142,848

    Real Estate Term Facility (See Note 7 - Real Estate Term Facility) (See Note 19 -
    Subsequent Events).                                                                      53,892        62,093

    Real estate development note payable with a face value of $110,000. The note
    bears interest at a variable rate of prime plus 2.5% per annum, which is
    accrued monthly. Principal and interest on the note are payable as real
    estate quartershares are sold. Any remaining principal and accrued interest
    is due in March 2002. The note is collateralized by the real estate
    developed for sale of GSRP. (See Note 19 - Subsequent Events).                           92,083        49,424

    Real estate development note payable with a face value of $10,000 to provide
    additional funds for the completion of the Steamboat Grand Hotel. The note
    bears interest at 20% per annum, half of which is payable monthly in arrears
    and the remainder is deferred until final payment is made. The stated
    maturity date is August 1, 2003. (See Note 19 - Subsequent Events).                      2,588         5,180

    Note payable in an aggregate principal amount of $3,530 for forbearance fees
    for the amended and restated real estate development term loan facility
    described above. The note bears interest at 12% per annum and is payable at
    maturity. This note was paid off in Fiscal 2001 as part of the restructuring
    of the real estate term loan facility.                                                   3,530             -

    Real estate mortgage note payable with a face value of $2,427 secured by an
    employee housing complex at the Company's Steamboat resort. The note is on a
    15-year amortization schedule, maturing in July,2020 and principal and
    interest are payable monthly. The interest rate is reset on January 1 of
    each year to the prime rate of the lending institution. The $2.3 million
    balance outstanding as of July 29, 2001 has been reclassified to Assets Held
    for Sale in accordance with FAS 121 due to the pending sale of Steamboat resort.         2,397             -

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


<PAGE>
    ------------------------------------------------------------------------------------------------------------------
                                                                                         July 30, 2000   July 29, 2001
    ------------------------------------------------------------------------------------------------------------------

    Subordinated debentures issued with an original face value of $2,101. The
    initial coupon rate is 6% per annum and is adjusted annually in accordance
    with the agreement. Interest is payable annually in May beginning in 1995.
    The debentures mature in April 2002.                                                     1,800         1,867

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

    Obligations under capital leases                                                         28,630        19,876
    Other notes payable                                                                       1,542         1,000
                                                                                        ------------   -----------
                                                                                            308,349       286,138
    Less: current portion                                                                    58,508        74,776
                                                                                        ------------   -----------
    Long-term debt, excluding current portion                                           $   249,841    $  211,362
    --------------------------------------------------------------------------------------------------------------

</TABLE>

         The carrying values of the above debt instruments approximate their
respective fair values in all material respects, determined by discounting
future cash flows at current market interest rates as of July 29, 2001.

         At July 30, 2000 and July 29, 2001, the Company had letters of credit
outstanding totaling $5.9 million and $0.6 million, respectively.

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

---------------------------------------------------------------------------
                                                  Subordinated
                                   Long-Term        Notes and      Total
                                     Debt          Debentures       Debt
---------------------------------------------------------------------------
2003                                $ 55,824       $  1,074       $ 56,898
2004                                  66,203          1,466         67,669
2005                                  47,374              -         47,374
2006                                  40,083        120,000        160,083
2007 and thereafter                    3,974          6,208         10,182
Interest related to capitalized
leases                                (2,096)              -        (2,096)
Debt discount                              -        (2,184)        (2,184)
                                 -----------    -----------     ----------
Non-current portion of long-term
    debt                            $211,362      $ 126,564       $337,926
---------------------------------------------------------------------------


6.       Senior Credit Facility

         In connection with the Offering, the Company established a senior
credit facility on November 12, 1997 and repaid the indebtedness under the
Company's then existing credit facility. On October 12, 1999, this senior credit
facility was amended, restated and consolidated from two sub-facilities totaling
$215 million to a single facility totaling $165 million (the "Senior Credit
Facility"). The Senior Credit Facility consists of a revolving credit facility
in the amount of $100 million and a term facility in the amount of $65 million.
The revolving portion of the Senior Credit Facility matures on May 31, 2004, and
the term portion matures on May 31, 2006. The Senior Credit Facility is secured
by substantially all the assets of ASC and its subsidiaries, except the real
estate development subsidiaries, which are not borrowers under the Senior Credit
Facility (collectively, the borrowing subsidiaries are referred to as the
"Restricted Subsidiaries"). In conjunction with the restructuring of the Senior
Credit Facility, the Company wrote-off a pro-rata portion of its existing
deferred financing costs in the amount of $1.0 million, or $621,000 net of
income taxes, which is included in the accompanying consolidated statement of
operations for the year ended July 30, 2000 as an extraordinary loss.

        The maximum availability under the revolving portion of the Senior
Credit Facility reduces over its term by certain prescribed amounts. The term
portion of the Senior Credit Facility amortizes in five annual installments of
$650,000 payable on May 31 of each year, with the remaining portion of the

<PAGE>

principal due in two substantially equal installments on May 31, 2005 and May
31, 2006. As of July 29, 2001, the outstanding balance of the term portion had
been reduced by $1.3 to $63.7 million. In addition, the Senior Credit Facility
requires mandatory prepayment of the term portion and a reduction in the
availability under the revolving portion of an amount equal to 50% of the
consolidated excess cash flows (as defined in accordance with the Senior Credit
Facility) during any period in which the excess cash flow leverage ratio exceeds
3.50 to 1.

        The Senior Credit Facility contains affirmative, negative and financial
covenants customary for this type of credit facility, which includes maintaining
certain financial ratios. The revolving portion of the facility is subject to an
annual 30-day clean-down requirement, which period must include April 30 of each
year, during which the sum of the outstanding principal balance and letter of
credit exposure shall not exceed $35 million. On April 30, 2001, the Company
successfully completed the 30-day clean-down requirement for the current year.

        The Senior Credit Facility also places an annual maximum level of
non-real estate capital expenditures, exclusive of amounts expended on the
Heavenly gondola project. The Company is permitted to and expects to make
capital expenditures of up to $30 million for the purchase and construction of a
gondola at its Heavenly resort in Lake Tahoe, Nevada. The Heavenly gondola
became operational, and began transporting skiers in December 2000. As of July
29, 2001, the Company has expended $23.1 million on the construction of the
Heavenly gondola and it continues to evaluate the design and construction of
additional related amenities of the gondola facilities.

        The Senior Credit Facility restricts the Company's ability to pay
dividends on its common stock. The Company is prohibited from paying dividends
in excess of 50% of the consolidated net income of the non-real estate
development subsidiaries after April 25, 1999, and further prohibited from
paying dividends under any circumstances when the effect of such payment would
cause the debt to EBITDA ratio of the non-real estate development subsidiaries
to exceed 4.0 to 1.

        On July 12, 2001 the Company entered into a second amendment to the
Senior Credit Facility, effective as of April 29, 2001, which contained the
following provisions:

         o        Established an optional prepayment provision whereby the
                  Company can make a prepayment of at least $90 million on or
                  before December 24, 2001 using the net proceeds form an
                  issuance of equity securities or the sale of a single asset
                  (or a series of related assets). $50 million of the optional
                  prepayment shall be used to repay existing revolving credit
                  advances, with the remainder to be applied to the term
                  facility. See Note 1 - Business Environment and Management's
                  Plans, for a discussion of the ramifications to the Company
                  should it fail to make this optional prepayment.

         o        Created an additional credit advance under the existing
                  revolving portion of the facility for the purpose of funding
                  the July 15, 2001 interest payment on the Company's 12% senior
                  subordinated notes, due 2006. This additional credit advance
                  of $5.2 million bears interest at a fixed rate of 12% and may
                  only be repaid in conjunction with the optional prepayment
                  provision of the amendment.

         o        Established the following maximum revolving credit amounts for
                  all revolving advances, including the additional credit
                  advance and amounts allocated to cover outstanding letters of
                  credit:

                         Effective Date - July 1, 2001         $72,000,000
                         July 2, 2001 - August 1, 2001         $87,000,000
                         August 2, 2001 - December 29, 2001    $100,000,000
                         December 30, 2001 - January 26, 2002  $87,000,000
                         January 27, 2002 - February 23, 2002  $67,000,000
                         February 24, 2002 - March 30, 2002    $47,000,000
                         March 31, 2002 - April 28, 2002       $22,000,000
                         April 29, 2002 - June 2, 2002         $52,000,000
                         June 3, 2002 - June 30, 2002          $67,000,000
                         July 1, 2002 - July 28, 2002          $77,000,000


<PAGE>

                  Should the Company make the optional prepayment, the maximum
                  revolving credit advance amount will be reduced to $50 million
                  for the remainder of the facility. All above amounts are still
                  subject to the mandatory reduction requirements established
                  under the original credit facility. As of July 29, 2001, total
                  borrowings under the revolving credit were $79.1 million
                  (which includes the $5.2 million additional credit advance),
                  and $0.6 million of availability was allocated to cover
                  outstanding letters of credit.

         o        Reduced the annual clean-down requirement from $35 million to
                  $20 million, starting in Fiscal 2002. Should the Company make
                  the optional prepayment, the annual cleandown requirement will
                  be further reduced to $5 million.

         o        Amended all of the required financial covenant ratios
                  beginning with the fourth quarter of Fiscal 2001 through the
                  maturity of the facility. However, should the Company fail to
                  make the optional prepayment it will be required to amend all
                  financial covenant ratios beginning in the first quarter of
                  Fiscal 2003. The Company successfully satisfied all of the
                  amended covenant requirements for the quarter ended July 29,
                  2001.

         o        Increased the interest rate on all term and revolving credit
                  amounts outstanding (excluding the $5.2 million additional
                  credit advance) to the Fleet National Bank Base Rate plus
                  3.0%, until such time that the Company makes the optional
                  prepayment. Should the Company make the optional prepayment,
                  the interest rates will be reset to a new pricing grid under
                  which the rates for both the term and revolving facilities
                  will vary, based on the Company's leverage ratios, from a
                  minimum of the Fleet National Bank Base Rate plus 1.25% or
                  LIBOR plus 2.50% to a maximum of the Fleet National Bank Base
                  Rate plus 2.25% or LIBOR plus 3.75%. Should the Company fail
                  to make the optional prepayment, the interest rates on both
                  the revolving and term facilities will increase incrementally
                  to the Fleet National Bank Base Rate plus 4.25%.

         o        Amended the maximum annual resort capital expenditure amount
                  to $13.8 million per year (excluding expenditures on the
                  Heavenly gondola), beginning with Fiscal 2001. Should the
                  Company make the optional prepayment, it will also be
                  permitted to make additional expenditures in connection with
                  the completion of the second phase of the Heavenly gondola, in
                  an aggregate amount not to exceed $30 million. For Fiscal
                  2001, the Company satisfied the maximum capital expenditure
                  requirement, as its capital expenditures subject to this
                  covenant were $8.7 million for the year (excluding the
                  Heavenly gondola). As of July 29, 2001, the Company has
                  expended an aggregate amount of $23.1 million on the Heavenly
                  gondola project.

         Subsequent to the end of fiscal 2001, the Company has entered into a
third and fourth amendment to the Senior Credit Facility (See Note 19 -
Subsequent Events for a detailed discussion of these amendments).

7.        Real Estate Term Facility

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

         The Amended Real Estate Term Facility is comprised of three tranches,
each with separate interest rates and maturity dates. Tranche A has a maximum
principal amount of $35 million, bears interest at a variable rate equal to the
Fleet National Bank's Base Rate plus 8.25% (payable monthly in arrears) and
matures on December 31, 2002. Tranche B has a maximum principal amount of $25
million, bears interest at a fixed rate of 25% per annum and matures on December
31, 2003. Interest calculated at 18% per annum for Tranche B is payable monthly

<PAGE>

in arrears. The remaining 7% per annum accrues, is added to the principal
balance of Tranche B and bears interest at 25% per annum, compounded annually.
Tranche C has a maximum principal amount of $13 million, bears interest at an
effective rate of 25% per annum and matures on December 31, 2005. Interest
accrues, is added to the principal balance of Tranche C and compounds
semi-annually.

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

         As of July 29, 2001, the amounts outstanding, including accrued and
unpaid interest, under Tranches A, B and C of the Amended Real Estate Term
Facility were $27.0 million, $26.8 million, and $12.1 million, respectively. The
Amended Real Estate Term Facility and the Securities Purchase Agreement with Oak
Hill were restructured subsequent to the end of Fiscal 2001 (See Note 19 -
Subsequent Events).

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

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

         The Company incurred financing costs of $6.7 million in connection with
the issuance of the Notes and an additional $2.5 million in costs related to the
amendments made in connection with the Series B Preferred Stock sale. These
amounts are recorded as deferred financing costs, net of accumulated
amortization, in the accompanying consolidated balance sheets. Amortization
expense included in the accompanying consolidated statements of operations for
the years ended July 25, 1999, July 30, 2000 and July 29, 2001 amounted to
$668,600, $1.0 million and $1.0 million, respectively.


<PAGE>

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

--------------------------------------------------------------------------------------------------------------------
                       February 9, 1998 - July 15, 2001                      July 16, 2001 - July 15, 2006
                   Notional         Company         Company            Notional         Company         Company
                    Amount           Pays          Receives             Amount           Pays           Receives
--------------------------------------------------------------------------------------------------------------------

<S>               <C>            <C>             <C>                  <C>            <C>             <C>
Agreement 1       $120,000,000       9.01%       6-month LIBOR        $127,500,000       9.01%       6-month LIBOR

Agreement 2       $120,000,000   6-month LIBOR      12.00%            $127,500,000   6-month LIBOR       7.40%
--------------------------------------------------------------------------------------------------------------------
</TABLE>

         As a result of entering into this interest rate swap arrangement, the
Company has fixed the cash-pay rate on the Notes until their maturity in July
2006. The net effect of the swap agreements will result in a $2.1 million cash
interest savings over the life of the agreements. These agreements are
non-hedging swaps which are carried at their fair market value, with
fluctuations recorded through interest expense, in accordance with SFAS No. 133.

         Other subordinated debentures owed by the Company at July 29, 2001 are
due as follows (in thousands):

                                   ------------------------------
                                            Interest  Principal
                                     Year     Rate     Amount
                                   ------------------------------
                                     2002      8%            549
                                     2003      8%          1,074
                                     2004      8%          1,466
                                     2010      8%          1,292
                                     2012      6%          1,155
                                     2013      6%          1,065
                                     2015      6%          1,500
                                     2016      6%          1,196
                                                     ------------
                                                         $ 9,297
                                                     ============

9.     Mandatorily Redeemable Securities

     Series A Preferred Stock
         Pursuant to a Securities Purchase Agreement (the "Series A Agreement")
dated July 2, 1997 (as amended July 16, 1997), the Company issued 17,500 shares
of its Series A 14% Exchangeable Preferred Stock (the "Series A Preferred
Stock") in a private offering to an institutional investor. Pursuant to the
Series A Agreement, the Company issued $17.5 million aggregate principal amount
of its 14% Senior Exchangeable Notes Due 2002 (the "Exchangeable Notes") on July
28, 1997 in a private offering to an institutional investor. On November 15,
1997, subsequent to the completion of the Offering, each share of Series A
Preferred Stock and the Exchangeable Notes were converted into shares of
Mandatorily Redeemable 10 1/2% Preferred Stock. The total number of Mandatorily
Redeemable 10 1/2% Preferred Stock shares issued in association with the
exchange were 36,626 and have a face value of $1,000 per share.

         Under the Series A Agreement, the Mandatorily Redeemable 10 1/2%
Preferred Stock shares are exchangeable at the option of the holder into shares
of the Company's Common Stock at a conversion price of $17.10 for each common
share. In the event the Mandatorily Redeemable 10 1/2% Preferred Stock is held
to the maturity date of November 15, 2002, the Company will be required to pay
the holder in cash the face value of $36.6 million plus approximately $25.3
million of cumulative dividends in arrears.

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

         The Mandatorily Redeemable 10 1/2% Preferred Stock ranks senior in
liquidation preference to all Common Stock and Class A Common Stock outstanding
at July 29, 2001 as well as any Common Stock and Class A Common Stock issued in
the future.


<PAGE>

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

         The Series B Preferred Stock is convertible into shares of the
Company's common stock at an initial conversion price of $5.25 per share of
common stock. The initial conversion price is subject to an antidilution
adjustment. Assuming all shares of the Series B Preferred Stock are converted
into the Company's common stock at the initial (and current) conversion price,
Oak Hill would own approximately 52.5% of the Company's outstanding common stock
and Class A common stock as of July 29, 2001. Oak Hill is entitled to vote its
shares of Series B Preferred Stock on matters (other than the election of
Directors) as if its shares were converted into the Company's common stock. In
addition, Oak Hill as the holder of Series B Preferred Stock has class voting
rights to elect Directors to the Company's Board of Directors. Furthermore,
under the Series B Agreement, Oak Hill and Mr. Otten have agreed to use best
efforts and to vote their shares in order to ensure that each of them is able to
appoint up to four Directors to the Board (depending on their shareholdings).
Therefore, under the Series B Agreement and the Company's certificate of
incorporation, Oak Hill and Mr. Otten together elect eight of the eleven members
of the Company's Board of Directors.

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

         The Series B Agreement, dated August 9, 1999, was amended as of July
31, 2000 to provide, among other things: (i) that Oak Hill will have the right
to elect six members of the Company's Board of Directors, provided that Oak Hill
maintains certain ownership levels; (ii) that Mr. Otten will have the right to
elect two members to the Board, provided that he maintains certain ownership
levels; and (iii) that Mr. Otten will have the right to serve on the executive
committee of the Board and on the boards of directors of material subsidiaries
of ASC.

         In early Fiscal 2002, the Series B Preferred Stock was stripped of all
of its rights and preferences, with the exception of its right to elect up to
six directors. The Company issued Series C-1 and Series C-2 Preferred Stock with
an aggregate initial face value equal to the accrued liquidation preference of
the Series B Preferred Stock immediately before being stripped of it right to
such accrued liquidation preference. (See Note 19 - Subsequent Events).

10.      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
Stock 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

<PAGE>

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

11.    Non-recurring Merger, Restructuring and Asset Impairment Charges

         During Fiscal 2001, the Company recognized certain non-recurring
charges as follows (in thousands):

                     ------------------------------------------------------
                                                                Year Ended
                                                               July 29, 2001
                     ------------------------------------------------------
                  Write down of Steamboat assets held for sale  $   52,000
                  Write down of Sugarbush assets held for sale      15,111
                  Costs associated with failed merger                3,593
                  Restructuring charges                              4,011
                  Write-down of Attitash Grand Summit units          1,330
                                                              -------------
                  Total non recurring charges                   $   76,045
                     ------------------------------------------------------

         Subsequent to the end of Fiscal 2001, the Company entered into an
non-binding letter of intent to sell its Steamboat resort in Steamboat Springs,
CO. In accordance with SFAS No. 121, the Company has recognized an estimated
$52.0 million impairment loss on the net assets held for sale as of July 29,
2001. See Note 19 - Subsequent Events for more detail on this transaction.

         Also subsequent to the end of Fiscal 2001, the Company entered into an
agreement to sell its Sugarbush resort in Warren, VT. In accordance with SFAS
No. 121, the Company has recognized an estimated $15.1 impairment loss on these
assets as of July 29, 2001. See Note 19 - Subsequent Events for more detail on
this transaction.

         On December 8, 2000, the Company and MeriStar Hotels & Resorts, Inc.
("MeriStar") entered into a merger agreement (the "Merger Agreement"), whereby a
wholly-owned subsidiary of the Company, ASC Merger Sub, Inc., would have merged
with and into MeriStar (the "MeriStar Merger"). The Boards of each of the
Company and MeriStar met separately on March 22, 2001 and voted to terminate the
proposed merger due to changes in economic conditions and the combined
companies' inability to effect the capital markets transactions required to
consummate the merger. The companies each executed a letter terminating their
existing Merger Agreement without liability to the other. The Company recorded a
$3.6 million charge in the third quarter of fiscal 2001 representing all costs
incurred in conjunction with the terminated MeriStar Merger.

         On May 30, 2001, the Company announced a comprehensive strategic plan
to improve its capital structure and enhance future operating performance. The
plan includes the following key components:

         o        Strategic redeployment of management and capital resources to
                  emphasize the integration and growth of resort village
                  development and operations.
         o        Intent to sell Steamboat ski resort and use the net proceeds
                  to reduce the debt of the Company.
         o        Operational cost savings of approximately $5 million through
                  reorganization and staff reduction and performance enhancement
                  programs.
         o        A comprehensive financial restructuring package, including
                  amendments to senior credit facilities and an anticipated new
                  capital infusion to enhance financial flexibility.

         As of July 29, 2001, the Company has incurred $4.0 million in charges
related to the implementation of its strategic restructuring plan. These costs
consisted mainly of employee separation costs and legal, consulting and
financing costs incurred in connection with the Company's credit facility
amendments and anticipated capital infusion. (See Note 19 - Subsequent Events).


<PAGE>

         The Grand Summit at Attitash has realized slower absorption in the
market than previously anticipated, and 40% of the units remained unsold as of
July 29, 2001. The Company has recently instituted programs to bring about a
complete sell-out of the units during Fiscal 2002. In accordance with SFAS No.
121, the Company recognized a $1.3 million write-down to net realizeable value
in the fourth quarter of fiscal 2001 on the remaining units at the Attitash
Grand Summit Hotel project.

12.    Income Taxes

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

                                                                Year ended
                                             ------------------------------------------------
                                             July 25, 1999     July 30, 2000    July 29, 2001
             ---------------------------------------------------------------------------------
             <S>                               <C>                 <C>              <C>
             Deferred tax provision (benefit)
                  Federal                      $ (11,939)          $ (7,728)        $  1,203
                  State                           (3,118)             1,923           (1,203)
                                             -------------     --------------     -------------
             Total provision (benefit)         $ (15,057)          $ (5,805)        $    -
             ------------------------------- ------------- --- -------------- --- -------------
</TABLE>

         Deferred income taxes reflect the tax impact of temporary differences
between the amounts of assets and liabilities for financial reporting purposes
and such amounts as measured by tax laws and regulations. Under SFAS No. 109,
the benefit associated with future deductible temporary differences and
operating loss or credit carryforwards is recognized if it is more likely than
not that a benefit will be realized. Deferred tax expense (benefit) represents
the change in the net deferred tax asset or liability balance.

         Deferred tax liabilities (assets) are comprised of the following at
July 30, 2000 and July 29, 2001 (in thousands):
<TABLE>

             -------------------------------------------------------------------------
                                                      July 30, 2000      July 29, 2001
             -------------------------------------------------------------------------
             <S>                                         <C>                <C>
             Property and equipment basis differential   $   57,407         $   54,581
             Other                                            1,002              1,130
                                                       -------------      -------------
             Gross deferred tax liabilities                  58,409             55,711

             Tax loss and credit carryforwards              (57,272)           (80,098)
             Capitalized  costs                              (3,849)            (6,321)
             Deferred revenue and contracts                  (2,506)            (1,822)
             Stock compensation  charge                      (1,740)              (486)
             Reserves and accruals                           (4,390)           (24,148)
                                                       -------------      -------------
             Gross deferred tax assets                      (69,757)          (112,875)

             Valuation allowance                              9,982             57,164
                                                       -------------      -------------
             Net deferred tax liability (asset)          $   (1,366)        $        -
                                                       =============      =============
</TABLE>

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

                                                                    Year ended
                                                       ------------------------------------------------
                                                       July 25, 1999     July 30, 2000    July 29, 2001
        -----------------------------------------------------------------------------------------------
        <S>                                              <C>              <C>               <C>
        Income tax benefit at the statutory U.S.
        tax rates                                        $ (15,052)       $ (12,578)        $ (42,254)
        Increase (decrease) in rates resulting from:
              State taxes, net                              (3,118)            1,923           (4,166)
              Change in valuation allowance                      -            3,000            47,182
              Stock option compensation                      1,623              761                 -
              Nondeductible items                              848              498               350
              Other                                            642              591            (1,112)
                                                      --------------    -------------    --------------
        Income tax benefit at the effective tax rates    $ (15,057)       $  (5,805)         $      -
                                                      ==============    =============    ==============
</TABLE>


<PAGE>

         At July 29, 2001, the Company has federal net operating loss ("NOL")
carryforwards of approximately $239.6 million which expire in varying amounts
though the year 2020, a federal capital loss carryover of approximately $5.0
million that expires in the years 2003 and 2004, and approximately $928,000 in
general business credit carryforwards which expire in varying amounts through
2020. Internal Revenue Code Section 382 limits the amount of NOL carryforwards
incurred before a change in ownership, as defined, that can be used annually
against income generated after the change in ownership. The Company experienced
a change in ownership both in November of 1997 as a result of the Offering and
in August of 1999 as a result of the Oak Hill Transaction. The use of
approximately $84.9 million of the federal NOL carryovers are subject to
limitation under Section 382 as a result of the Oak Hill Transaction. In
addition, approximately $27.3 million of the federal NOL carryforwards are
subject to an additional limitation under Section 382 as a result of the
Offering. Because of recent acquisitions, the limitation for both ownership
changes is required to be allocated to the various subsidiaries based on their
relative fair market values. In addition, certain subsidiaries have separate
pre-change in ownership losses, which are subject to additional annual
limitations as a result of previous changes in ownership. Subsequent changes in
ownership could further affect the limitations in future years.

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

         A valuation allowance is provided when it is more likely than not that
some portion or all of the deferred tax assets will not be realized. During
Fiscal 2001, the valuation allowance was increased by approximately $47.2
million, from $10.0 million at July 30, 2000 to $57.2 million at July 29, 2001.
As a result of the Oak Hill Transaction, the realization of the tax benefit of
certain of the Company's NOL carryovers and other tax attributes is dependent
upon the occurrence of certain future events. It is the judgement of management
that a valuation allowance of $57.2 million against its deferred tax assets for
NOL carryforwards and other tax attributes is appropriate because it is more
likely than not that the benefit of such losses and attributes will not be
realized.

13.    Cumulative Effect of Accounting Changes

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

         In accordance with SFAS No. 137, "Accounting for Derivative Instruments
and Hedging Activities - Deferral of the Effective Date of FASB Statement No.
133," the Company adopted SFAS No. 133, "Accounting for Derivative Instruments
and Hedging Activities" and SFAS No. 138 "Accounting for Certain Derivative
Instruments and Hedging Activities, an Amendment of FASB Statement No. 133,"
(collectively, SFAS No. 133, as amended) effective July 31, 2000. These
standards were adopted as of the beginning of Fiscal 2001 as a change in
accounting principle and cannot be applied retroactively to financial statements
of prior periods.

         SFAS No. 133, as amended, establishes accounting and reporting
standards requiring that every derivative instrument (including certain
derivative instruments embedded in other contracts) be recorded in the balance
sheet as either an asset or liability measured at its fair value. Special
accounting for qualifying hedges allows a derivative's gains and losses to
offset related results on the hedged item in the income statement, to the extent
effective, and requires that the Company formally document, designate and assess
the effectiveness of transactions that receive hedge accounting. SFAS No. 133,
as amended, in part, allows special hedge accounting for fair value and cash
flow hedges. The statement provides that the gain or loss on a derivative
instrument designated and qualifying as a fair value hedging instrument, as well
as the offsetting changes in the fair value of the hedged item attributable to
the hedged risk, be recognized currently in earnings in the same accounting
period. SFAS No. 133, as amended, provides that the effective portion of the

<PAGE>

gain or loss on a derivative instrument designated and qualifying as a cash flow
hedging instrument be reported as a component of other comprehensive income and
be reclassified into earnings in the same period or periods during which the
hedged forecasted transaction affects earnings. The ineffective portion of a
derivative's change in fair value is recognized currently through earnings
regardless of whether the instrument is designated as a hedge.

         The Company had five interest rate swap contracts outstanding at the
time of adoption. Two of these contracts were designated as cash flow hedges,
and they have subsequently been terminated by the floating rate payer on
November 17, 2000. Upon adoption, the fair value of these swaps were recorded as
an asset on the balance sheet with a corresponding credit to other comprehensive
income. The cancellation of these swaps effectively resulted in a reversal of
the amounts recognized upon adoption.

         The Company has entered into three other interest rate swap agreements
that do not qualify for hedge accounting under SFAS No. 133 as amended. The net
effect of these swaps will be cash interest savings to the Company of $2.1
million over the life of the Senior Subordinated Notes. As of July 30, 2000, the
Company had $8,592,185 recorded in Other Long Term Liabilities in the
accompanying Consolidated Balance Sheet and had been recording the net effect of
the interest savings on a straight line basis over the life of the agreements
through the income statement. Upon adoption, the fair values of these swaps were
recorded as an asset and a liability with a corresponding entry to cumulative
effect of the change in accounting principle in earnings; and the amount
recorded in Other Long Term Liabilities was recognized through a cumulative
effect of the change in accounting principle in earnings. For the twelve months
ended July 29, 2001, the subsequent change in the fair value of the swaps of
$893,000 has been recorded as interest expense through the accompanying
consolidated statement of operations. The net effect of the Change in Accounting
Principle was derived as follows (in thousands):

<TABLE>



                                                                                   Cumulative effect of
                                                                 Other Long Term  change in accounting
           Debit/(Credit)        Asset - Swap   Liability-Swap    Liabilities     principle in earnings
       ------------------------------------------------------------------------------------------------
       <S>                             <C>          <C>               <C>              <C>
       Non-hedging Derivatives         $6,520       ($11,066)         $8,592           ($4,047)
       ------------------------------------------------------------------------------------------------
</TABLE>

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

14.    Business Segment Information

         The Company has adopted SFAS No. 131, "Disclosures about Segments of an
Enterprise and Related Information". In accordance with SFAS No. 131, the
Company has classified its operations into two business segments, Resorts and
Real Estate. The two segments are managed differently because they offer
different products and services and require different marketing strategies. Each
segment also has distinctly separate capital structures. The Resort segment
operates nine ski resorts and all of their related activities (lift ticket
sales, retail, food & beverage, skier development, lodging services, golf and
other summer activities). The Real Estate segment develops mountainside real
estate properties at the Company's ski resorts. Data by segment is as follows
(in thousands):
<TABLE>

           ----------------------------------------------------------------------------------
                                        July 25, 1999     July 30, 2000        July 29, 2001
           ----------------------------------------------------------------------------------
           <S>                             <C>            <C>                  <C>
           Net revenues:
              Resorts                      $  292,558     $  292,077           $  328,705
              Real estate                      24,492        132,063               96,864
                                        --------------    ---------------    -------------
                                           $  317,050     $  424,140           $  425,569
                                        ==============    ===============    =============

            Loss before income taxes:
              Resorts                     $  (33,371)     $  (31,409)         $  (89,623)
              Real estate                     (9,636)        (4,529)             (31,101)
                                        --------------    ---------------    -------------
                                          $  (43,007)     $  (35,938)         $ (120,724)
                                        ==============    ===============    =============
<PAGE>
           ----------------------------------------------------------------------------------
                                        July 25, 1999     July 30, 2000        July 29, 2001
           ----------------------------------------------------------------------------------

           Depreciation and amortization:
              Resorts                      $   43,226         45,759           $   44,160
              Real estate                         976         1,269                 2,836
                                        --------------    ---------------    -------------
                                           $   44,202     $   47,028           $   46,996
                                        ==============    ===============    =============

           Capital expenditures:
              Resorts                      $   52,465     $   27,229            $  23,842
              Real estate                     153,106        166,879               44,783
                                        --------------    ---------------    -------------
                                           $  205,571     $  194,108            $  68,625
                                        ==============    ===============    =============

           Identifiable assets:
              Resorts                                     $  538,131           $  527,424
              Real estate                                    291,754              234,122
                                                          ===============    =============
                                                          $  829,885            $  761,546
           -------------------------------------------------------------------------------
</TABLE>

15.    Related Party Transactions

         Tranche C of the Company's Amended Real Estate Term Facility was
purchased by Oak Hill on July 31, 2001 (See Note 7 - Real Estate Term Facility
and Note 9 - Mandatorily Redeemable Securities). The Company paid a $375,000
financing fee to Oak Hill in connection with this $13 million investment. The
Amended Real Estate Term Facility and the related Securities Purchase Agreement
with Oak Hill were restructured subsequent to the end of Fiscal 2001 (See Note
19 - Subsequent Events).

         During Fiscal 2001 the Company paid $150,000 each to Mr. Paul Wachter
and Mr. David Hawkes, both of whom are members of the Company's Board of
Directors, for their participation in the Special Committee that was formed to
evaluate the proposed merger between the Company and Meristar Hotels and
Resorts, Inc. The Company also reimbursed Oak Hill a total amount of $137,000
for their professional and other fees incurred in connection with the Meristar
Merger.

         On March 28, 2001, Mr. Otten resigned as the Company's Chairman and
Chief Executive Officer. Mr. Otten is still a major shareholder in the Company
and is a member of the Company's Board of Directors. As part of his separation
agreement, the Company will continue to pay Mr. Otten and his executive
assistant their salary and medical benefits for two years. In addition, the
Company has granted Mr. Otten the use of Company office space for up to two
years and the Company also transferred ownership of one of its vehicles to Mr.
Otten at no charge.

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

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

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

         o        Approximately 3,300 acres of undeveloped land at the Sunday
                  River resort, which was optioned to a subsidiary of the
                  Company for an initial payment of $650,000, which payment may
                  be applied to the purchase price. The purchase price is
                  $3,692,000, which is a 12% discount from the appraised value
                  of the land. The purchase price will be discounted by another
                  20% or 10% if the option is exercised within 12 and 24 months
                  of the option date, respectively. As of July 29, 2001, the
                  Company has not exercised its option to purchase the
                  undeveloped land.


<PAGE>

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

         Mr. Wachter is the founder and Chief Executive Officer of Main Street
Advisors. Main Street Advisors, through Mr. Wachter, is currently acting as one
of the Company's investment bankers in connection with the marketing of the
Steamboat ski resort for sale. Main Street Advisors is entitled to a
percentage-based fee in the event of the sale of the Steamboat ski resort or any
other significant asset of the Company, other than the Sugarbush resort and
certain undeveloped real estate properties.

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

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


16.    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 statements of operations for 1999, 2000 and 2001
was $2.6 million, $3.1 million and $3.0 million, respectively.

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

          In connection with the purchase of The Canyons, the Company entered
into an operating lease arrangement with the seller for the lease of certain
land to be used in the operation of the resort and for future real estate
development. The arrangement provides for an initial lease term of 50 years,
with the option to extend for three additional 50-year periods for a fee of $1.0
million for each extension period. Lease payments are based on a percentage of
gross skiing and lodging revenues. The arrangement also provides for additional
one-time payments ranging from $250,000 to $3.0 million upon achievement of

<PAGE>

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 statements of operations for 1999,
2000 and 2001 was $311,000, $918,000, and $1.4 million, respectively. In
addition, the Company has the option to purchase parcels of land covered under
the operating lease for real estate development. Payments for these options
total approximately $19.5 million and are payable at various times and in
varying amounts, at the Company's discretion, through December 2001. The Company
is not required to make the option payments for all parcels of land in order to
develop and sell real estate on the land covered under the lease. Through July
29, 2001, the Company has made $13.6 million of option payments, of which $3.6
million has been allocated to the cost of parcels that have been purchased to
date. The remaining $10.0 million in option payments are included in other
assets in the accompanying consolidated balance sheet as of July 29, 2001 and
will eventually be allocated to the cost of future parcels purchased by the
Company.

          In addition to the leases described above, the Company is committed
under several operating and capital leases for various facilities, machinery and
equipment. Rent expense under all operating leases was $6.1 million, $7.8
million and $6.4 million for the fiscal years ended 1999, 2000 and 2001,
respectively.

         Future minimum lease payments for lease obligations, exclusive of
contingent skier visit payments at The Canyons, at July 29, 2001 are as follows
(in thousands):

      ------------------------------------------------------------------
                                                Capital        Operating
                                                Leases           leases
       ------------------------------------------------------------------
      2002                                     $  8,027        $  6,731
      2003                                        5,474           6,947
      2004                                        9,591           6,123
      2005                                          600           5,378
      2006 and thereafter                             -          13,253
                                             ------------     -----------
        Total payments                           23,692        $ 38,432
        Less interest                            (3,816)
                                             ------------
        Present value of net minimum payments    19,876
        Less current portion                     (6,316)
                                             ------------
        Long-term obligations                  $ 13,560
     ------------------------------------------------------------------



         The Company opened the Grand Summit Hotel at Steamboat during Fiscal
2001, although final construction of certain units has yet to be completed.
Total construction costs for this project are estimated to be $122 million and
the Company estimates that as of July 29, 2001, approximately $12 million was
required to complete its construction. The Steamboat Grand Hotel it is primarily
being financed through a $110 million revolving construction loan facility with
TFC Textron and an additional $10 million bulge facility, also with TFC Textron.
The Company also has a $73 million term facility with Fleet National Bank that
can be used for this project as well as general and operating expenditures. On
May 11, 2001, the agent for the lenders under the construction loan facility
notified Grand Summit that they would no longer be approving advances under this
facility for project costs due to the placement of certain mechanics' liens on
the Steamboat Grand Hotel project. The Company has entered into a settlement
memorandum with the general contractor for the Steamboat Grand Hotel project
which would resolve all pending claims between the parties and would result in
the removal of the foregoing mechanics' liens. The settlement memorandum is
subject to the approval of the lenders under the construction loan facility.
Subsequent to the end of Fiscal 2001, the Company agreed upon an amendment to
the construction loan facility which approved the settlement memorandum and
allowed additional funding under the construction loan (See Note 19 - Subsequent
Events).

         The Killington resort has been identified by the U.S. Environmental
Protection Agency (the "EPA") as a potentially responsible party ("PRP") at two
sites pursuant to the Comprehensive Environmental Response, Compensation and
Liability Act ("CERCLA" or "Superfund"). Killington has entered into a
settlement agreement with the EPA at one of the sites, the Solvents Recovery
Service of New England Superfund site in Southington, Connecticut. Killington
rejected an offer to enter into a de minimis settlement with the EPA for the

<PAGE>

other site, the PSC Resources Superfund site in Palmer, Massachusetts, on the
basis that Killington disputes its designation as a PRP. In addition, the
Company's Heavenly resort was designated as a PRP at a Superfund site in
Patterson, CA. The Company entered into a cash-out settlement agreement which
has been accepted by the EPA and funded as part of an overall settlement of the
site. The Company believes that its liability for these Superfund sites,
individually and in the aggregate, will not have a material adverse effect on
the business or financial condition of the Company or results of operations or
cash flows.

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

17.    Stock Option Plan

          Effective August 1, 1997, the Company established a fixed stock option
plan, the American Skiing Company Stock Option Plan (the "Plan"), to provide for
the grant of incentive and non-qualified stock options for the purchase of up to
5,688,699 shares of the Company's common stock by officers, management employees
of the Company and its subsidiaries and other key persons (eligible for
nonqualified stock options only) as designated by the Options Committee. The
Options Committee, which is appointed by the Board of Directors, is responsible
for the Plan's administration. The Options Committee determines the term of each
option, option exercise price, number of shares for which each option is granted
and the rate at which each option is exercisable. Options granted under the Plan
generally expire ten years from the date of grant and vest either immediately or
over a five-year term. Incentive stock options shall not have an exercise price
less than the fair market value of the common stock at the date of grant.
Nonqualified stock options shall be granted at an exercise price as determined
by the Options Committee. The status of the Company's stock option plan is
summarized below:

                   ------------------------------------------------------------
                                                                    Weighted
                                                                     Average
                                                  Number            Exercise
                                                 of Shares            Price
                   ------------------------------------------------------------
                   Outstanding at July 26, 1998    2,696,057          $ 14.10
                   Granted                         1,196,000             7.17
                   Exercised                          (1,221)            2.00
                   ------------------------------------------------------------
                   Outstanding at July 25, 1999    3,890,836           $ 11.97
                   Granted                         2,660,000              2.70
                   Exercised                        (182,390)             2.00
                   Returned                       (2,325,127)            15.60
                   ------------------------------------------------------------
                   Outstanding at July 30, 2000    4,043,319            $ 4.24
                   Granted                         1,235,000              2.58
                   Exercised                        (248,960)             2.00
                   Returned                        (439,062)              4.26
                   ------------------------------------------------------------
                   Outstanding at July 29, 2001    4,590,297            $ 3.91
                   ------------------------------------------------------------

         During fiscal 1998, the Company granted nonqualified options under the
Plan to certain key members of management to purchase 672,010 shares of common
stock with an exercise price of $2.00 per share when the fair market value of
the stock was estimated to be $18.00 per share. The majority of these options
(511,530 shares) were granted to members of senior management and were 100%
vested on the date of grant. Accordingly, the Company recognized stock
compensation expense of $8.1 million in Fiscal 1998 relating to the grants based
on the intrinsic value of $16.00 per share. Under these senior management grant
agreements, the Company also agreed to pay the optionees a fixed tax "bonus" in
the aggregate of $5.8 million to provide for certain fixed tax liabilities that
the optionees will incur upon exercise. The liability for this fixed tax bonus
has been reduced to reflect $5.1 million in tax bonus payments made through July

<PAGE>

29, 2001 in connection with options exercised. The remaining $0.7 million tax
bonus liability is reflected in accounts payable and other current liabilities
in the accompanying consolidated balance sheet at July 29, 2001. The remainder
of these original $2.00 options (160,480 shares) were granted under the Plan to
certain members of management and were vested 20% on the date of grant and vest
ratably to 100% over the following four years. For fiscal 1999, 2000 and 2001,
the Company recognized $0.8 million, $1.0 million and $0.4 million,
respectively, of stock compensation expense relating to these options.

         The following table summarizes information about the stock options
outstanding under the Stock Plan at July 29, 2001:
<TABLE>

             ---------------------------------------------------------------------------------------
                                                    Weighted
                                                     Average                                Weighted
                                                   Remaining    Weighted                     Average
                    Range of   Outstanding       Contractual     Average      Exercisable   Exercise
             Exercise Prices     @ 7/29/01   Life (in years)    Exercise  Price @ 7/29/01      Price
             ---------------------------------------------------------------------------------------
                <S>              <C>                <C>         <C>          <C>              <C>
                $0 - $5          3,686,897          8.8         $2.58        1,933,319        $2.62
                 6 - 10            712,550          7.0          7.13          501,900         7.14
                11 - 15             22,500          6.0         14.19           22,500        14.19
                16 - 18            168,350          7.0         18.00          168,350        18.00
             ---------------------------------------------------------------------------------------
                $0 - $18         4,590,297          8.4         $3.91        2,626,069        $4.57
             ---------------------------------------------------------------------------------------

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

        ---------------------------------------------------------------------
         Fiscal Years Ended          1999             2000            2001
        ---------------------------------------------------------------------
         Net Loss
            As reported         $  (32,322)      $ (52,452)     $ (141,572)
            Pro forma              (32,691)        (39,904)       (144,712)

         Basic and diluted net loss
            per common share
            As reported           $  (1.07)       $  (1.73)       $  (4.64)
            Pro forma                (1.08)          (1.31)          (4.74)
         ---------------------------------------------------------------------

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

                ------------------------------------------------------------
                Fiscal Years Ended       1999         2000          2001
                ------------------------------------------------------------
                Expected life           10 yrs       10 yrs        10 yrs
                Risk-free interest rate  6.0%         6.5%          3.5%
                Volatility              68.4%         93.9%         73.9%
                Dividend yield             -            -             -
                ------------------------------------------------------------

         The weighted average grant date fair value for the options granted in
fiscal 1999 with an exercise price of $4.00 to $8.75 per share was $5.71 per
share. The weighted average grant date fair value for the options granted in
Fiscal 2000 with an exercise price of $2.00 to $3.00 per share was $2.26 per
share. The weighted average grant date fair value for the options granted in
Fiscal 2001 with an exercise price of $0.72 to $4.00 per share was $1.60 per
share.

18.    Quarterly Financial Information (Unaudited)

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

       -----------------------------------------------------------------------------------------------------
                                                        First         Second          Third         Fourth
                                                       Quarter        Quarter        Quarter       Quarter
       -----------------------------------------------------------------------------------------------------
       Year ended July 29, 2001:

       <S>                                             <C>           <C>            <C>            <C>
       Net sales                                       $ 48,128      $ 156,264      $ 179,574      $ 41,603
       Income (loss) from operations                    (20,238)         7,935         39,529       (95,135)
       Income (loss) before preferred stock
       dividends                                        (18,490)        (4,600)        13,025      (108,150)
       Net income (loss) available to common
       shareholders                                     (24,176)       (10,405)         7,236      (114,227)

       Basic income (loss) per share:
       Net income (loss) available to common
       shareholders                                    $  (0.79)       $ (0.34)     $    0.24       $ (3.73)
       Weighted average shares outstanding               30,469         30,470         30,509        30,653

       Diluted income (loss) per share:
       Net income (loss) available to common
       shareholders                                    $  (0.79)       $ (0.34)     $     0.19      $ (3.73)
       Weighted average shares outstanding               30,469         30,470         62,875        30,653

       Year ended July 30, 2000:

       Net sales                                       $ 23,355      $ 126,627      $ 223,095      $ 51,063
       Income (loss) from operations                    (22,899)        (6,589)        52,641       (23,185)
       Income (loss) before preferred stock
       dividends                                        (23,138)        (9,805)        26,783       (25,298)
       Net income (loss) available to common
       shareholders                                     (27,954)       (15,124)        21,464       (30,838)

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

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

       -----------------------------------------------------------------------------------------------------
</TABLE>

19.    Subsequent Events

Recapitalization

     On July 15, 2001, the Company entered into a securities purchase agreement
with Oak Hill Capital Partners to assist the Company in meeting its current
financing needs. Pursuant to the terms of the securities purchase agreement,
which closed on August 31, 2001:

         o        The Company issued, and Oak Hill purchased, $12.5 million
                  aggregate principal amount of Junior Subordinated Notes, which
                  are convertible into shares of the Company's series D
                  participating preferred stock (the "Series D Preferred
                  Stock"). These Junior Subordinated Notes bear interest at a
                  rate of 11.3025%, which compounds annually and is due and
                  payable at maturity of the Junior Subordinated Notes in July,
                  2007. The proceeds of the Junior Subordinated Notes were used
                  to fund short-term liquidity needs of Resort Properties by way
                  of the purchase of certain real estate assets by ASC from
                  Resort Properties;

         o        Oak Hill funded $2.5 million of the $3.5 million of
                  availability remaining under Tranche C of the Resort
                  Properties credit facility to facilitate amendments to such
                  credit facility. This was the final advance under Tranche C,
                  as the maximum availability under this facility has now been
                  reduced from $13 million to $12 million;

         o        Oak Hill agreed to provide a guarantee for a $14 million,
                  equipment lease for the Heavenly gondola. Management is
                  currently negotiating the terms of this lease, which are
                  expected to include a 5 to 7 year term and other market terms.
                  Management will use commercially reasonable efforts to
                  negotiate a provision in the lease allowing for the release of
                  the guarantee upon a material improvement in the Company's
                  credit quality;

         o        Oak Hill purchased one million shares of the Company's common
                  stock for an aggregate purchase price of $1 million;
<PAGE>

         o        Oak Hill agreed to cancel an agreement to provide it with
                  warrants for 6 million shares of the Company's common stock or
                  15% of the common stock of Resort Properties.

         In consideration of Oak Hill's agreements and commitments in accordance
with the terms set forth above, the following has occurred:

         o        The outstanding Series B Preferred Stock that was held by Oak
                  Hill was stripped of all of its rights and preferences with
                  the exception of the right to elect up to six directors;

         o        The Company issued to Oak Hill two new series of Preferred
                  Stock; (i) $40 million of Series C-1 Preferred Stock, and (ii)
                  $139.5 million of Series C-2 Preferred Stock. The initial face
                  value of the Series C-1 Preferred Stock and Series C-2
                  Preferred Stock correspond to the accrued liquidation
                  preference of the Series B Preferred Stock immediately before
                  being stripped of its right to such accrued liquidation
                  preference. The Series C-1 Preferred Stock and Series C-2
                  Preferred Stock carry preferred dividends of 12% and 15%,
                  respectively. At the Company's option, dividends can either be
                  paid in cash or accrued in additional shares. The Series C-1
                  Preferred Stock is convertible into common stock at a price of
                  $1.25 per share, subject to adjustments. The Series C-2
                  Preferred Stock is not convertible. Both of Series C-1
                  Preferred Stock and series C-2 Preferred Stock will mature in
                  July, 2007;

         o        At Oak Hill's option, and subject to the consent of the other
                  lenders under the Resort Properties term facility, Tranche C
                  of the Resort Properties term facility will be exchangeable in
                  whole or in part into indebtedness of the Company when
                  permitted under the existing debt agreements.


Real Estate Debt Agreements

         On August 31, 2001, the Company entered into an amendment to the real
estate term facility which substantially reduces interest rates and extends
amortization and maturity dates. The amended real estate term facility is
comprised of three tranches, each with separate interest rates and maturity
dates as follows:

         o        Tranche A will become a revolving facility which will have a
                  current maximum principal amount of $22 million and will bear
                  interest at a variable rate equal to the Fleet National Bank
                  Base Rate plus 2.0%, payable monthly in arrears, a reduction
                  in rate of approximately 6,50%. Availability was increased
                  approximately $2.5 million before giving affect to reductions
                  from the sale of certain assets. Mandatory principal payments
                  on Tranche A of $3.75 million and $2.5 million each will be
                  payable on December 31, 2001 and January 31, 2002,
                  respectively. Additional mandatory principal reductions will
                  be required in certain prescribed percentages ranging from 50%
                  to 75% of net proceeds from any future sales of undeveloped
                  parcels. The remaining principal amount outstanding under
                  Tranche A will be payable in full on June 30, 2003.

         o        Tranche B has a maximum principal amount of $25 million, will
                  bear interest at a fixed rate of 18% per annum, reduced from
                  25%, (10% per annum is payable monthly in arrears and the
                  remaining 8% per annum accrues, is added to the principal
                  balance of Tranche B and bears interest at 18% per annum,
                  compounded annually). Mandatory principal payments on Tranche
                  B of $10 million are due on each of December 31, 2003 and June
                  30, 2004. The remaining $5 million in principal and all
                  accrued and unpaid interest on Tranche B will be due in full
                  on December 31, 2004.

         o        Tranche C will have a maximum principal amount of $12 million,
                  will continue to bear interest at an effective rate of 25% per
                  annum and will mature on December 31, 2005. Oak Hill funded
                  approximately $2.5 million of its remaining commitment to
                  provide additional liquidity to Resort Properties. Interest
                  accrues, is added to the principal balance of Tranche C and is
                  compounded semi-annually.

         In August 2001, the Company entered into amendments to its $110 million
Textron real estate development loan and its $10 million subordinated real

<PAGE>

estate note with Textron, which, among other things, reduced the effective
interest rates and extended the maturity dates of these facilities. The maturity
date for funds advanced under the Steamboat portion of the senior Textron
facility has been extended to March 31, 2003 and the maturity date for funds
advanced under the Canyons portion of the senior Textron facility has been
extended to September 28, 2002. The interest rate on funds advanced under the
Steamboat portion of the senior Textron facility is Prime plus 3.5% and the
interest rate floor on Steamboat advances is 9.0%. The interest rate on funds
advanced under the Canyons portion of the senior Textron facility is at Prime
plus 2.5%, with a floor of 9.5%. As a result of the extension of the maturity
dates, both of these facilities are classified as Long-term Debt as of July 29,
2001 in the accompanying consolidated balance sheet.

Sale of Resorts

         The Company has previously communicated its intent to sell its
Steamboat ski resort in Steamboat Springs, CO, to reduce the debt of the Company
as part of its strategic plan to improve its financial condition and ongoing
operations. The Company is currently negotiating terms with a small group of
potential purchasers, and on October 16, 2001 it executed a non-binding letter
of intent with one of the parties. The Company is currently negotiating the
terms of a purchase and sales agreement. Management anticipates that the sale of
Steamboat will be consummated prior to the end of calendar 2001.

         On September 7, 2001, the Company entered into a purchase and sales
agreement to sell substantially all of the operating assets of its Sugarbush ski
resort in Warren, VT to Summit Ventures NE, Inc. This sale closed on September
28, 2001 and the proceeds were used by the Company to permanently pay down the
revolving and term portions of its senior credit facility, on a pro-rata basis,
in accordance with the mandatory prepayment requirements of the facility. In
conjunction with this transaction, the Company also entered into a third
amendment to its senior credit facility, dated as of September 10, 2001. This
amendment, among other things, provides the consent of the lenders to sell
Sugarbush resort and it further reduces the maximum revolver availability
amounts established in the second amendment to the facility by $1.5 million.

         In accordance with SFAS No. 121, the carrying value of the net assets
for both Steamboat and Sugarbush that are subject to their respective sales were
reclassified as assets held for sale on the accompanying consolidated balance
sheet as of July 29, 2001. The assets held for sale have been reduced to their
estimated fair value based on the estimated selling price less costs to sell,
resulting in a combined pre-tax loss of $67.1 million, which is included in the
non-recurring merger, restructuring and asset impairment line in the
accompanying consolidated statement of operations for the year ended July 29,
2001. The components of the net assets held for sale for both Steamboat and
Sugarbush as of July 29, 2001 are as follows (in thousands):

                      ---------------------------------------------------
                      Net Assets as of July 29, 2001           Total
                      ---------------------------------------------------
                      Accounts receivable                      $   1,890
                      Inventory                                    1,717
                      Prepaid expenses                                49
                      Property & equipment, net                  103,153
                      Real estate developed for sale               9,638
                      Goodwill                                    49,529
                      Intangible assets                           10,552
                      Other assets                                    29
                      Accounts payable and accrued
                      liabilities                                 (4,711)
                      Deposits and deferred revenues              (1,568)
                      Other liabilities                             (401)
                      Debt assumed by purchaser                   (4,547)
                                                            -------------
                      Assets held for sale                       165,330
                      Allowance for loss on sale                 (67,111)
                                                            -------------
                      Net assets held for sale                $   98,219
                      ---------------------------------------------------

         Summary operating results for Steamboat and Sugarbush resorts on a
combined basis, which have historically been included in the Company's resort
segment in its results of operations, are as follows (in thousands):
<PAGE>

-------------------------------------------------------------------------------
Fiscal Years Ended                        1999           2000           2001
-------------------------------------------------------------------------------
Total revenues                        $ 67,149       $ 68,592        $ 68,875
Total expenses                          61,456         62,049          62,004
                                   -------------  -------------  --------------
Total income from operations           $ 5,693       $  6,543       $   6,871
--------------------------------------------------------------------------------

Fourth Amendment to Senior Credit Facility

         In November, 2001 the Company entered into a fourth amendment to the
Senior Credit Facility which allows it to raise an additional $7.2 million
through a junior subordinating participating interest in certain revolving
credit advances under the Senior Credit Facility. This participating interest
would be purchased by Oak Hill (who has provided a commitment for their
participation) and the proceeds would be used to make the January 2002 interest
payment on the Senior Subordinated Notes. This new advance will bear interest at
a fixed rate of 17.5% and would be repaid first by any proceeds from the sale of
Steamboat. In the event the Company does not sell Steamboat, this junior
participating interest in the revolver would only be repaid after all existing
credit advances are paid.