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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
---------------------------

FORM 10-Q

[ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934

FOR THE QUARTERLY PERIOD ENDED MARCH 31, 1999

[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934

COMMISSION FILE NUMBER: 0-9264

AMERICAN CLASSIC VOYAGES CO.
(Exact name of registrant as specified in its charter)

DELAWARE 31-0303330
(State or other jurisdiction of incorporation or organization) (I.R.S. Employer identification No.)

TWO NORTH RIVERSIDE PLAZA, CHICAGO, IL 60606
(Address of principal executive offices) (Zip Code)

(312) 258-1890
(Registrant's telephone number, including area code)

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 Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes [ X ] No [ ]

As of May 10, 1999, there were 18,436,536 shares of Common Stock outstanding.

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AMERICAN CLASSIC VOYAGES CO.

INDEX

ITEM DESCRIPTION PAGE
- ---------------- ----

Part I. Financial Information:

Item 1. Condensed Consolidated Financial Statements (Unaudited)

Condensed Consolidated Balance Sheets at March 31, 1999
and December 31, 1998....................................................... 3

Condensed Consolidated Statements of Operations for the
Three Months Ended March 31, 1999 and 1998.................................. 4

Condensed Consolidated Statements of Cash Flows for the
Three Months Ended March 31, 1999 and 1998.................................. 5

Notes to Condensed Consolidated Financial Statements........................ 6

Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations......................................... 9

Item 3. Quantitative and Qualitative Disclosures About Market Risk ................. 15

Part II. Other Information:

Item 1. Legal Proceedings........................................................... 16

Item 6. Exhibits and Reports on Form 8-K............................................ 16

2
3

AMERICAN CLASSIC VOYAGES CO.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except shares and par value)

(Unaudited) (Audited)
March 31, December 31,
1999 1998
------------ ------------
ASSETS

Cash and cash equivalents................................................ $ 30,934 $ 27,004
Restricted short-term investments........................................ 60 60
Accounts receivable...................................................... 2,012 1,989
Prepaid expenses and other current assets................................ 13,831 9,053
-------- --------
Total current assets................................................ 46,837 38,106

Property and equipment, net.............................................. 162,585 162,129
Deferred income taxes, net............................................... 12,689 10,011
Other assets............................................................. 4,194 2,546
-------- --------
Total assets........................................................ $226,305 $212,792
======== ========

LIABILITIES
Accounts payable......................................................... $ 15,096 $ 13,493
Other accrued liabilities................................................ 15,125 16,500
Current portion of long-term debt........................................ 4,100 4,100
Unearned passenger revenues.............................................. 56,057 39,297
-------- --------
Total current liabilities........................................... 90,37 73,390

Long-term debt, less current portion..................................... 76,176 77,388
-------- --------
Total liabilities................................................... $166,554 $150,778
======== ========

COMMITMENTS AND CONTINGENCIES (NOTE 5 AND 6)

STOCKHOLDERS' EQUITY
Preferred stock, $.01 par value (5,000,000 shares
authorized, none issued and outstanding).............................. $ -- $ --
Common stock, $.01 par value (40,000,000 and 20,000,000
shares authorized, respectively; 14,457,036 and 14,293,931 shares
issued, respectively)................................................ 145 143
Additional paid-in capital............................................... 82,726 80,451
Accumulated deficit...................................................... (22,363) (17,823)
Common stock in treasury, at cost (51,000 shares)........................ (757) (757)
-------- --------
Total stockholders' equity.......................................... 59,751 62,014
-------- --------
Total liabilities and stockholders' equity.......................... $226,305 $212,792
======== ========

The accompanying notes are an integral part of these condensed consolidated
financial statements.

AMERICAN CLASSIC VOYAGES CO.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data)
(Unaudited)

For the Three Months
Ended March 31,
---------------------------

1999 1998
---------- ---------

Revenues................................................................. $ 40,566 $ 40,668

Cost of operations (exclusive of depreciation expense shown
below) ................................................................ 28,768 29,459
---------- ---------

Gross profit............................................................. 11,798 11,209

Selling, general and administrative expenses............................. 13,935 13,096
Depreciation expense..................................................... 4,155 4,256
---------- ---------

Operating loss........................................................... (6,292) (6,143)

Interest income.......................................................... 322 251
Interest expense......................................................... 1,570 1,670
Other income............................................................. -- 300
---------- ---------

Loss before income taxes................................................. (7,540) (7,262)

Income tax benefit....................................................... 3,000 2,900
---------- ---------

Net loss................................................................. $ (4,540) $ (4,362)
========== =========

PER SHARE INFORMATION
Basic:
Basic weighted average shares outstanding............................. 14,321 14,068
Loss per share........................................................ $ (0.32) $ (0.31)

Diluted:
Diluted weighted average shares outstanding........................... 14,321 14,068
Loss per share........................................................ $ (0.32) $ (0.31)

The accompanying notes are an integral part of these condensed consolidated
financial statements.

AMERICAN CLASSIC VOYAGES CO.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)

For the Three Months
Ended March 31,
---------------------------
1999 1998
----------- ----------
OPERATING ACTIVITIES:

Net loss ....................................................................... $ (4,540) $ (4,362)
Depreciation expense........................................................ 4,155 4,256
Gain on sale of assets...................................................... -- (300)
Changes in working capital and other:
Working capital changes and other....................................... (6,758) (6,711)
Unearned passenger revenues............................................. 16,760 12,079
--------- ---------
Net cash provided by operating activities................................... 9,617 4,962
--------- ---------

INVESTING ACTIVITIES:
Capital expenditures............................................................ (4,775) ( 4,085)
Proceeds from sale of assets.................................................... -- 300
--------- ---------
Net cash used in investing activities....................................... (4,775) (3,785)
--------- ---------

FINANCING ACTIVITIES:
Repayment of borrowings......................................................... (1,212) (1,212)
Issuance of common stock........................................................ 880 754
Deferred financing fees......................................................... (580) --
--------- ---------
Net cash used in financing activities....................................... (912) (458)
--------- ---------

Increase in cash and cash equivalents.............................................. 3,930 719
Cash and cash equivalents, beginning of period..................................... 27,004 19,187
--------- ---------
Cash and cash equivalents, end of period........................................... $ 30,934 $ 19,906
========= =========

SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Cash paid during the period for:

Interest.................................................................... $ 1,946 $ 1,998
Income taxes................................................................ 100 --

The accompanying notes are an integral part of these condensed consolidated
financial statements.

AMERICAN CLASSIC VOYAGES CO.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 1999
(Unaudited)

1. BASIS OF PRESENTATION

These accompanying unaudited Condensed Consolidated Financial Statements
("Financial Statements") have been prepared pursuant to Securities and Exchange
Commission ("SEC") rules and regulations and should be read in conjunction with
the Consolidated Financial Statements and Notes thereto included on Form 10-K
for the year ended December 31, 1998 (the "Form 10-K") for American Classic
Voyages Co. ("AMCV") and its subsidiaries. These Financial Statements include
the accounts of AMCV and its wholly owned subsidiaries, The Delta Queen
Steamboat Co. ("DQSC") and Great Hawaiian Cruise Line, Inc. ("GHCL")
(collectively with such subsidiaries, the "Company"). The following notes to the
Financial Statements highlight significant changes to the notes included in the
Form 10-K and such interim disclosures as required by the SEC. These Financial
Statements reflect, in the opinion of management, all adjustments necessary for
a fair presentation of the interim financial statements. All such adjustments
are of a normal and recurring nature. Certain previously reported amounts have
been reclassified to conform to the 1999 presentation.

The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent liabilities at the date of the financial statements and the reported
amounts of revenues and expenses during the reporting period. Actual results
could differ from those estimates.

2. EARNINGS PER SHARE

As the Company reported losses for the quarters ended March 31, 1999 and 1998,
diluted earnings per share was computed in the same manner as basic earnings per
share.

3. DEBT

Long-term debt consisted of (in thousands):

March 31, December 31,
1999 1998
------------- ------------

U.S. Government Guaranteed Ship Financing Note, American Queen Series, LIBOR +
0.25% floating rate notes due semi-annually beginning February 24, 1996 through
August 24, 2005...................................................................... $ 15,597 $ 16,809
U.S. Government Guaranteed Ship Financing Bond, American Queen Series, 7.68% fixed
rate, sinking fund bonds due semi-annually beginning February 24, 2006 through
June 2, 2020......................................................................... 36,198 36,198
U.S. Government Guaranteed Ship Financing Note, Independence Series A, LIBOR +
0.27% floating rate notes due semi-annually beginning June 7, 1996 through
December 7, 2005..................................................................... 9,248 9,248
U.S. Government Guaranteed Ship Financing Bond, Independence Series A, 6.84% fixed
rate sinking fund bonds due semi-annually beginning June 7, 2006 through
December 7, 2015..................................................................... 13,215 13,215
U.S. Government Guaranteed Ship Financing Note, Independence Series B, LIBOR +
0.27% floating rate notes due semi-annually beginning December 7, 1996 through
December 7, 2005..................................................................... 2,478 2,478
U.S. Government Guaranteed Ship Financing Bond, Independence Series B, 7.46% fixed
rate sinking fund bonds due semi-annually beginning June 7, 2006 through
December 7, 2015..................................................................... 3,540 3,540

Revolving credit facility (maximum availability of $70 million) ......................... -- --
======== =========
80,276 81,488

Less current portion..................................................................... 4,100 4,100
-------- ---------
$ 76,176 $ 77,388
======== =========

6
7

In the first quarter of 1999, DQSC, as borrower, closed on a new long-term
credit facility with The Chase Manhattan Bank, as agent, and several participant
banks (the "Chase Facility"). The Chase Facility, which is a $70 million
revolving credit facility maturing in February 2004, replaces the previous
credit facility with Chase Manhattan. Borrowings under the new facility bear
interest at a rate, at the option of the Company, equal to either (1) the
greater of Chase's prime rate or certain alternative base rates plus a margin
ranging from 0.50% to 1.50%, or (2) the London Interbank Offered Rate plus a
margin ranging from 1.50% to 2.50%. The Company is also required to pay an
unused commitment fee at a rate of 0.50% per annum.

The Chase Facility will be used to fund the acquisition of the fourth Delta
Queen riverboat, the construction of the first two coastal vessels, and Delta
Queen working capital. The new facility is secured by all of the assets of DQSC
except the American Queen, and has various limitations and restrictions on
investments, additional indebtedness, the construction costs of the new vessels,
and other capital expenditures. The Chase Facility also limits dividends by
DQSC, when aggregated with investments and certain other payments, to amounts
ranging from $5 million to $15 million per annum. DQSC is required to comply
with certain financial covenants, including maintenance of minimum interest
coverage ratios and maximum leverage ratios.

As of March 31, 1999, the Company complied with all covenants under its various
debt agreements.

4. ACCUMULATED DEFICIT

Changes in accumulated deficit for the three months ended March 31, 1999 were
(in thousands):

Accumulated deficit at December 31, 1998........................ $(17,823)
Net loss........................................................ (4,540)
--------
Accumulated deficit at March 31, 1999........................... $(22,363)
========

5. CONSTRUCTION CONTRACT

On March 9, 1999, the Company executed definitive agreements with Ingalls
Shipbuilding, Inc. to construct at least two new vessels for the Hawaii cruise
market. The new Hawaii cruise ships will have the capacity to accommodate
approximately 1,900 passengers each and are currently estimated to cost $440
million each, plus approximately $30 million each for furnishings, fixtures and
equipment. The contract provides that Ingalls Shipbuilding will deliver the
first new ship in January 2003 and the second ship in January 2004. In addition,
the shipbuilding contract provides the Company an option to build up to four
additional vessels. The estimated contract price of the first option vessel is
$487 million and the contract price for the subsequent option vessels will be
negotiated between the parties. Ingalls Shipbuilding will provide a limited
warranty for the design, material and workmanship of each vessel for one year
after delivery.

6. SUBSEQUENT EVENTS

FINANCING GUARANTEES

On April 8, 1999, the Company received a commitment from the Maritime
Administration for up to $1.1 billion in financing guarantees. The commitment
amount represents 87.5% of the total cost of the initial two Hawaii vessels,
including shipyard costs, capitalized interest, and fees.

COMMON STOCK OFFERING

On April 27, 1999 and May 4, 1999, the Company completed offerings of an
additional 3,500,000 and 525,000 shares of common stock, respectively. The net
proceeds to the Company, before offering expenses, were $64.3 million and will
be used for construction of the initial Hawaii vessel.

CONSTRUCTION CONTRACT

The Company entered into a Construction Contract, as of May 1, 1999, with
Atlantic Marine, Inc. of Jacksonville, Florida to construct at least two coastal
cruise vessels for its Delta Queen line. This contract is the culmination of the
previously announced plans to build a series of up to five new vessels to
provide cruises along U.S. coastal waterways. The price of the vessels will be
$30 million each and will have a total project cost, including Company provided
furnishings, fixtures and equipment, of approximately $35 million. The coastal
cruise vessels will be approximately 300 feet long and provide accommodations
for up to 226 passengers. The contract provides that the delivery date will be
early March, 2001 for the first vessel and mid-June, 2001 for the second vessel.
In addition, the contract provides the Company an option to purchase a third
vessel by notifying the shipyard by December 31, 1999. The contract price for
the third vessel will be subject to negotiation between the parties. Atlantic
Marine will provide a limited warranty for the work, parts and components
fabricated by the yard for the 12 months following delivery of each vessel.

RIVERBOAT ACQUISITION

On April 29, 1999, the Company entered into a contract to acquire the Capitol
Queen, a substantially complete riverboat built for the casino trade. The
contract is subject to bankruptcy court approval at a hearing scheduled for May
25, 1999. The Company anticipates converting the 218 foot boat into an overnight
passenger vessel with approximately 150 passenger berths for use as the fourth
Delta Queen riverboat. The purchase price for the vessel is $3.2 million and the
Company estimates that the total renovation, relocation, start-up and marketing
costs will require an additional $12 to $15 million . The Company expects the
conversion project will take between six and nine months and that the vessel
will enter service in the spring of 2000. The current plans call for the vessel
to be operated by Delta Queen in the Pacific Northwest, including the Columbia
River system near Portland, Oregon. The Company also terminated its agreement to
acquire the M/V Speculation, a riverboat it had previously entered into a
contract to acquire for $8.0 million.

8
9

AMERICAN CLASSIC VOYAGES CO.
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS

GENERAL

American Classic Voyages Co. is a holding company which owns and controls The
Delta Queen Steamboat Co. and Great Hawaiian Cruise Line, Inc. Through our
various subsidiaries, we operate two cruise lines: Delta Queen, which owns and
operates the American Queen, Mississippi Queen and Delta Queen steamboats; and
American Hawaii, which owns and operates the Independence steamship.

Our revenues are comprised of:

(1) cruise fares,

(2) onboard revenues, such as those from gift shops and shore excursions,
and

(3) trip cancellation insurance and pre- and post-cruise hotel packages.

Additional revenue is also derived from the sale of airplane tickets to and from
points of embarkation or disembarkation. Our cost for air tickets typically
matches the revenue we generate from sales of airline tickets, so we recognize
minimal profits from such sales. Our cost of operations are comprised of:

(1) passenger expenses, such as employee payroll and benefits and the cost
of food and beverages,

(2) vessel operating costs including lay-up and drydocking costs for our
vessels,

(3) insurance costs,

(4) commissions paid to travel agents, and

(5) air ticket and hotel costs.

When we receive deposits from passengers for cruises, we establish a liability
for unearned passenger revenue. We recognize revenue when the passengers take
their cruises and make a corresponding reduction in our unearned passenger
revenues. Our revenues and some of our expenses vary considerably when measured
on a quarterly basis. This is due to the seasonality of our Delta Queen
revenues, the timing of our layups and drydockings, and fluctuations in
airfares. These variations are reflected in our fare revenues per passenger
night, which are commonly referred to as fare per diems, and our occupancy
rates.

Delta Queen's operations are seasonal. Historically, we have had greater
passenger interest and higher yields in the spring and fall months of the year.
The vessels typically undergo their annual lay-ups in December or January. While
American Hawaii has historically experienced greater passenger interest in the
summer and fall months of the year, quarterly variations in its revenues are
much smaller than those of Delta Queen. During the summer months, in particular,
American Hawaii tends to have average occupancies in excess of 100% as the
number of families sharing cabins with children increases significantly during
this period.

The following discusses the Company's consolidated results of operations and
financial condition for the three month period ended March 31, 1999 versus the
comparable period ended March 31, 1998. This section should be read in
conjunction with the Management's Discussion and Analysis of Financial Condition
and Results of Operations included in the Company's Form 10-K for the year ended
December 31, 1998.

RESULTS OF OPERATIONS

The following tables set forth various financial results and operating
statistics for the three months ended March 31, 1999 and 1998:

FINANCIAL HIGHLIGHTS
(in thousands, except per share data)
For the Three Months
Ended March 31,
-------------------------------------
1999 1998
---------- ----------

Revenues............................................ $ 40,566 $ 40,668

Gross profit........................................ 11,798 11,209

Operating loss ..................................... (6,292) (6,143)

Net loss............................................ (4,540) (4,362)

Diluted loss per share.............................. $ (0.32) $ (0.31)

OPERATING STATISTICS

For the Three Months
Ended March 31,
------------------------------
1999 1998
---------- ----------

Fare revenue per passenger night........................ $ 209 $ 210
Total revenue per passenger night....................... $ 309 $ 307

Weighted average operating days (1):
Delta Queen........................................ 67 73
American Hawaii.................................... 90 90

Vessels capacity per day (berths) (2):
Delta Queen........................................ 1,026 1,026
American Hawaii.................................... 867 867

Passenger nights (3).................................... 131,374 132,325
Physical occupancy percentage (berths) (4).............. 90% 87%

(1) Weighted average operating days for each cruise line is determined by
dividing capacity passenger nights for each cruise line by the cruise
line's total vessel capacity per day. Capacity passenger nights is
determined by multiplying, for the respective period, the actual operating
days of each vessel by each vessel's capacity per day.

(2) Vessel capacity per day represents the number of passengers each cruise
line can carry assuming double occupancy for cabins which accommodate two
or more passengers. Some cabins on the Independence and the American Queen
can accommodate three or four passengers.

(3) A passenger night represents one passenger spending one night on a vessel;
for example, one passenger taking a three-night cruise would generate three
passenger nights.

(4) Physical occupancy percentage is passenger nights divided by capacity
passenger nights.

QUARTER ENDED MARCH 31, 1999 COMPARED TO QUARTER ENDED MARCH 31, 1998

Consolidated first quarter 1999 revenues decreased $0.1 million to $40.6 million
from $40.7 million for the first quarter 1998. This represents a $0.3 million
decrease in fare revenues combined with a $0.2 million increase in other
revenues. Delta Queen's fare revenues decreased $1.2 million, reflecting a 9%
decrease in capacity due to six fewer average operating days and a 3% decrease
in occupancy, offset by a 4% increase in fare per diems. American Hawaii's fare
revenues increased $0.9 million on an 8% increase in passenger nights while fare
per diems decreased by 2%. The $0.2 million increase in other revenues was
mainly due to the increase in passenger nights at American Hawaii. As a result,
consolidated total revenues per passenger night increased to $309.

Consolidated cost of operations decreased $0.7 million to $28.8 million for the
first quarter of 1999 from $29.5 million for the comparable period of 1998.
Delta Queen's operating costs decreased $0.9 million primarily corresponding to
the decrease in passenger nights. American Hawaii's operating costs increased
$0.2 million as a result of increased passenger nights. Consolidated gross
profit increased $0.6 million for the first quarter 1999 as compared to 1998.

Consolidated selling, general and administrative expenses increased $0.8 million
to $13.9 million for the first quarter of 1999 from $13.1 million for the same
period in 1998. The increase was partially due to an increase of $0.4 million
over 1998 in capacity expansion expenses at both cruise lines.
Depreciation expense for the first quarter of 1999 was consistent with 1998.

The consolidated operating loss for the first quarter of 1999 was $6.3 million
as compared to $6.1 million for the comparable period of 1998.

Interest expense decreased slightly due to a lower outstanding debt balance in
the first quarter of 1999. In February 1998, we received $0.3 million of final
proceeds from the buyer of the Maison Dupuy hotel which we sold in October 1996.
Our consolidated effective tax rate was 40% for both periods in 1999 and 1998.

LIQUIDITY, CAPITAL RESOURCES AND FINANCIAL CONDITION

Operating Activities

For the three months ended March 31, 1999, cash provided by operations was $9.6
million compared to $5.0 million in 1998. The improvement reflected a greater
seasonal increase in unearned passenger revenues, which increased $16.8 million
in 1999, as compared to an increase of $12.1 million in 1998. The increase in
unearned passenger revenues was greater in 1999 than in 1998 due to (1) an
improvement in American Hawaii's bookings and (2) deposits received in 1999 for
charter cruises at Delta Queen and for millennium charter cruises for both
cruise lines.

Investing Activities

For the three months ended March 31, 1999, we made expenditures of $4.8 million
on capital projects, of which $2.6 million related to our existing vessels. On
January 21, 1999, the Mississippi Queen completed a 39-day lay-up. The American
Queen also completed a 15-day lay-up on February 10, 1999. The Delta Queen
completed a 54-day lay-up on February 27, 1999. The lay-ups for the three
vessels, including repairs and maintenance, cost approximately $5.5 million and
were funded from working capital. Other significant capital expenditures
included $2.2 million related to design fees and costs associated with new
shipbuilding programs at American Hawaii and Delta Queen, as discussed below.

Financing Activities

For the three months ended March 31, 1999, we made scheduled principal payments
of $1.2 million under the American Queen ship financing notes and received $0.9
million from the issuance of our common stock, principally from stock options
exercised by our current and former employees. We also paid $0.6 million for
financing efforts related to our new credit facility, as discussed below.

Capital Expenditures and Debt

In October 1997, we announced plans to expand capacity in the Hawaii cruise
market. We intend to construct two new cruise ships over the next five years and
plan to introduce an existing foreign-built cruise ship in the Hawaii market
while awaiting construction of the new vessels. On March 9, 1999, we signed a
definitive agreement with Ingalls Shipbuilding to construct two passenger ships,
each containing approximately 1,900 passengers berths, with options to build up
to four additional vessels. The estimated construction cost of the two initial
ships will be approximately $470 million each. The agreement provides that the
first ship will be delivered in January 2003 and the second ship in January
2004.

We will finance a significant portion of the construction cost of the Hawaii
cruise ships through the Maritime Administration, which provides guarantees of
private financing for new vessel construction projects conducted in U.S.
shipyards. In April 1999, we received financing guarantees for debt up to 87.5%
of the cost of the vessels. The guaranteed debt will be accessed during the
construction period, with interest payments during that period capitalized as
part of the cost of construction. In the current market, this type of debt
generally bears interest at a rate of 100 to 150 basis points over the
comparable U.S. government obligations and can have a term of up to 25 years
from the date of delivery of the vessel. The loans generally amortize on a
straight line basis over the term of the loan commencing after the delivery
date. Fees associated with obtaining the financing guarantees included a
one-time investigation fee of approximately $1.4 million, which we paid to the
Maritime Administration in April 1999. In addition, the Maritime Administration
imposes an annual guarantee fee of not less than 1/4 of 1% and not more than 1%
of the indebtedness, reduced by any required escrow, based upon the obligor's
ratio of long-term debt to stockholders' equity. The present value of the annual
guarantee fees is payable at the closing of the Maritime Administration
guaranteed financing and will be capitalized as part of the vessel cost.

On April 27, 1999 and May 4, 1999, we completed offerings of an additional
3,500,000 and 525,000 shares of common stock, respectively. The net proceeds to
us, before offering expenses, were $64.3 million and will be used for
construction of the initial Hawaii vessel.

In 1999, we expect to spend between $70 million and $90 million on building the
two new Hawaii cruise vessels, which includes anticipated payments to Ingalls
Shipbuilding.

In April 1998, we announced plans to expand capacity at Delta Queen. For the
Delta Queen fleet, we intend to build up to five new small coastal ships over
the next seven to 10 years. We entered into a construction contract, as of May
1, 1999, with Atlantic Marine, Inc. of Jacksonville, Florida to construct at
least two coastal cruise vessels for our Delta Queen line. The price of the
vessels will be $30 million each and will have a total project cost, including
furnishing, fixtures and equipment, of approximately $35 million. The coastal
cruise vessels will be approximately 300 feet long and provide accommodations
for up to 226 passengers. The contract provides that the delivery date will be
early March, 2001 for the first vessel and mid-June, 2001 for the second vessel.
In addition, the contract provides us with an option to purchase a third vessel
by notifying the shipyard by December 31, 1999. The contract price for the third
vessel will be subject to negotiation between the parties. Atlantic Marine will
provide a limited warranty for the work, parts and components fabricated by the
yard for the 12 months following delivery of each vessel.

On April 29, 1999, we entered into a contract to acquire the Capitol Queen, a
substantially complete riverboat built for the casino trade. The contract is
subject to bankruptcy court approval at a hearing scheduled for May 25, 1999. We
anticipate converting the 218 foot boat into an overnight passenger vessel with
approximately 150 passenger berths for use as the fourth Delta Queen riverboat.
The purchase price for the vessel is $3.2 million and we estimate that the
total renovation, relocation, start-up and marketing costs will require an
additional $12 to $15 million. We expect the conversion project will take
between six and nine months and that the vessel will enter service in the spring
of 2000. The current plans call for the vessel to be operated by Delta Queen in
the Pacific Northwest, including the Columbia River system near Portland,
Oregon. We also terminated our agreement to acquire the M/V Speculation, a
riverboat we had previously entered into a contract to acquire for $8.0 million.

On February 25, 1999, The Delta Queen Steamboat Co. entered into a credit
agreement with a group of lenders, with The Chase Manhattan Bank as agent. This
credit agreement provides for a revolving credit facility of up to $70 million
to fund the expansion of our Delta Queen line. This new $70 million facility
replaced our prior credit facility with Chase Manhattan. Borrowings under the
new credit facility bear interest at either (1) the greater of Chase Manhattan's
prime rate or alternative base rates plus a margin ranging from 0.50% to 1.50%,
or (2) the London Interbank Offered Rate plus a margin ranging from 1.50% to
2.50%. We are also charged a fee of 0.50% per annum on any unused

13
commitment. The new credit facility is secured by all of the assets of The Delta
Queen Steamboat Co., except for the American Queen. The new credit facility
limits the dividends The Delta Queen Steamboat Co. may pay to between $5 million
and $15 million per year when aggregated with investments and other payments.

In 1999, we expect to spend between $10 million and $15 million on building the
new coastal cruise vessels, which also includes anticipated payments to Atlantic
Marine, Inc. We estimate that costs to be incurred in 1999 to acquire and outfit
the fourth riverboat will be $11 to $14 million.

As of March 31, 1999, we complied with all covenants under our various debt
agreements.

We believe we will have adequate access to capital resources, both internally
and externally, to meet our current short-term and long-term capital
commitments. Such resources may include cash on hand and the ability to secure
additional financing through the capital markets. We continually evaluate
opportunities to increase capacity at both Delta Queen and in Hawaii and to
strategically grow our business. Although we believe that we will be able to
obtain sufficient equity and debt financing from the capital markets to
construct the new vessels, we cannot assure you that we will be able to obtain
additional financing at commercially acceptable levels to finance such new
construction and, if we so choose, to pursue strategic business opportunities.

In June 1997, our board of directors approved a stock repurchase plan. The plan
authorizes us to repurchase up to one million shares of our stock. These shares
may be purchased from time to time in the public market or through privately
negotiated transactions. As of March 31, 1999, we had repurchased 51,000 shares
at an average purchase price of $14.84 per share under the plan. We currently
have no intention to repurchase any additional shares of common stock.

Impact of Year 2000

Many computer programs have been written using two digits rather than four to
define the applicable year. Any of our computer programs that have
time-sensitive software may recognize a date using "00" as the year 1900 rather
than the year 2000. This could result in a major system failure, miscalculations
and/or other unanticipated problems.

State of Readiness

We have established internally staffed project teams to address Year 2000
issues. Each team is formulating a plan that focuses on Year 2000 compliance
efforts for information technology systems and non-information technology
systems. This plan addresses (1) information technology systems software and
hardware such as reservations, accounting and associated systems, personal
computers and software and (2) non-information technology systems such as
embedded chip systems in building facilities, shipboard navigation, control,
power generation systems, and communication systems.

Our Year 2000 plan addresses the Year 2000 issues in various phases for both
types of systems including: (1) inventory of our systems, equipment and
suppliers that may be vulnerable to Year 2000 issues; (2) assessment of
inventoried items to determine the risks associated with their possible failure
to be Year 2000 compliant; (3) testing of systems and components to determine if
they are Year 2000 compliant, both prior to and subsequent to remediation; (4)
remediation and implementation of new systems; and (5) contingency planning to
address reasonably likely worst case scenarios.

For information technology systems, inventories and risk assessments have been
substantially completed for all our shoreside software applications, hardware
and operating systems. Most of our reservations systems functions have been
tested and were found to be compliant. The remaining functions will be tested
and remediated, if necessary, by mid-1999. We have also determined that our
shoreside phone system and onboard financial systems on the Delta Queen vessels
are Year 2000 compliant. The Independence's onboard financial system and our
shoreside accounting system, however, are not Year 2000 compliant. We will
utilize both internal and external resources to continue testing, reprogramming
and replacing our information technology systems that require Year 2000
modifications. We anticipate completing the system improvements and the Year
2000 project no later than September 30, 1999. This is prior to any anticipated
impact on our operating systems. We anticipate that these modifications and
improvements will enable our information systems to function properly with
respect to dates in the Year 2000 and thereafter.

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Inventories and risk assessments have been substantially completed for all
non-information technology systems. No Year 2000 issues with respect to
navigation and propulsion systems are believed to exist on our vessels. Certain
galley and air conditioning equipment on the American Queen is not Year 2000
compliant. The process of testing, remediation and implementation is expected to
be completed by September 30, 1999.

Risks of Year 2000 Issues

If any of our suppliers or travel partners do not, or if we do not, successfully
deal with the Year 2000 issue, we could experience delays in scheduled cruises
which could result in lost revenues or increases in costs and could subject us
to claims and damages. To determine the most reasonably likely sources of these
risks, we have been communicating with our major suppliers and travel partners
on their Year 2000 compliance issues. For example, our external air ticketing
and credit card processing software have been determined to be Year 2000
compliant.

Based on these procedures, management believes that the most reasonably likely
sources of risk to us include (1) the disruption of transportation channels
relevant to our operations, including ports and transportation vendors,
primarily airlines, as a result of a general failure of support systems and
necessary infrastructure; (2) the disruption of travel agency and other sales
distribution systems; and (3) the inability of principal product suppliers to
deliver goods and services. The severity of these possible problems would depend
on the nature of these problems and how quickly they could be corrected or
alternatives implemented.

Our major suppliers and travel partners consist of our transportation vendors,
our primary external airline ticketing vendors, and our primary credit card
processing software vendors. Our primary external airline ticketing vendor has
certified that its systems are Year 2000 complaint. Our primary credit card
processing software vendors have also certified that their systems are Year 2000
complaint. We have not received written assurance from our transportation
vendors indicating that they will be Year 2000 complaint before the end of 1999.
Because we have no contingency plan to transport our customers long distance to
and from our embarkation and disembarkation points, failure by our
transportation vendors to provide transportation services could have a material
adverse effect on our operations and our financial condition.

Some risks of the Year 2000 issue are beyond our control and our other travel
partners and suppliers. For example, no preparations or contingency plan will
protect us from a downturn in economic activity caused by the possible ripple
effect throughout the entire economy that could be caused by problems of others
with Year 2000 issues.

Costs

We have estimated our total costs for system improvements and the Year 2000
project to be approximately $1.0 million. These efforts are being funded from
working capital. Of the total project cost, approximately $0.5 million is
attributable to the implementation of a new accounting system. This amount
includes new software, new hardware, and consulting fees, all of which will be
capitalized. Another $0.3 million of capital outlays is attributable to the
upgrading of the Independence's onboard financial system and to the replacement
of imbedded chip systems in several of our vessels. The remaining $0.2 million
is expected to be expensed as incurred and is not expected to have a material
impact on the results of operations. The Year 2000 project represents less than
10% of our information systems budget. To date, we have incurred and expensed
approximately $125,000 related to our systems improvements and the Year 2000
project. These costs do not include costs incurred by us as a result of the
failure of any third parties, including suppliers, to become Year 2000 compliant
or costs to implement any contingency plans.

The costs of the project and the date on which we believe we will complete the
Year 2000 modifications are based on our best estimates given presently
available information. These estimates were derived utilizing numerous
assumptions of future events, including the continued availability of the
resources we rely on, third party modification plans and other factors. We
cannot assure you, however, that these estimates will be achieved, and actual
results could differ materially from those anticipated. Specific factors that
might cause such material differences include, but are not limited to, the
availability and cost of personnel trained in this area, the ability to locate
and correct all relevant computer code, and similar uncertainties.

Contingency Plans

We are preparing our contingency plans to identify and determine how to handle
our most probable worst case scenarios. Preliminary contingency plans are
currently being reviewed. Comprehensive contingency plans are estimated to be
complete by mid-1999.

Factors Concerning Forward-Looking Statements

Certain statements in "Management's Discussion and Analysis of Financial
Condition and Results of Operations" constitute "forward-looking statements"
which we believe are within the meaning of the Private Securities Litigation
Reform Act of 1995. Such forward-looking statements involve known and unknown
risks, uncertainties and other factors which may cause our actual results,
performance or achievements to be materially different from any future results,
performance or achievements expressed or implied by such forward-looking
statements. These forward-looking statements are not guarantees of future
performance and are subject to certain risks, uncertainties and assumptions.
Such factors include, among others, the following: construction delays and
deviations from specifications for the new vessels may adversely affect
expansion plans and future financial performance; limited remedies against
shipyards in the event of shipbuilding delays which would delay the introduction
of new vessels; failure to obtain significant amounts of capital to build,
purchase and renovate vessels, may adversely affect our expansion plans and
future operating results; increased leverage may adversely affect our financial
performance and cash flow; inability to locate and introduce a foreign-built
vessel in Hawaii would delay our growth in Hawaii; inability to manage our
financial resources during our expansion may adversely affect our financial
performance; if demand for our new cruise products fails to develop as expected
or competition increases, our business may be adversely affected; increased
capacity in Hawaii may reduce occupancy at the Independence, adversely affecting
revenues; increased expenditures for the Independence may adversely impact our
operating results; loss of exclusive rights of the Pilot Project Statute may
adversely affect our revenue growth in Hawaii; modification of existing
governmental regulations may adversely affect our business; increased
competition in the Hawaii cruise market and from other vacation alternatives may
adversely impact our financial performance; sensitivity of the vacation and
leisure industry to general economic and business conditions; failure to
complete drydocking on schedule or within budget may adversely affect our
revenues; weather factors can adversely affect our operations and our financial
performance; the loss of vessels from service would adversely impact our
business; our controlling stockholder may take actions that adversely affect our
business; sales of our controlling stockholder's shares could have an adverse
effect on our ability to raise capital; and our controlling stockholder may have
conflicts of interest with competing interests.

ITEM 3. Quantitative and Qualitative Disclosures About Market Risk

For a discussion of certain market risks related to us, see Part I Item 7A
"Quantitative and Qualitative Disclosures About Market Risks" in our Annual
Report on Form 10-K for the fiscal year ended December 31, 1998. There have been
no significant developments with respect to exposure to market risk.

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AMERICAN CLASSIC VOYAGES CO.

PART II - OTHER INFORMATION

ITEM 1. Legal Proceedings

There are no other material legal proceedings, to which the
Company is a party or of which any of its property is the subject,
other than ordinary routine litigation and claims incidental to
the business. The Company believes it maintains adequate insurance
coverage and reserves for such claims.

ITEM 6. Exhibits and Reports on Form 8-K

a) Exhibits:

10.(iv)(a)(3) Construction Contract for Coastal Queen Class Vessel dated May 1, 1999
by and between Coastal Queen Holdings, L.L.C. and Atlantic Marine, Inc.*

Appendix One - Coastal Queen Milestone Payments
Appendix Two - Affidavit for Exemption of Boat Sold for Removal from the
State of Florida by a Nonresident Purchaser
Appendix Three - Maker's List

10.(iv)(a)(4) Guaranty dated May 1, 1999 made by The Delta Queen Steamboat Co. in favor
of Atlantic Marine Inc.

10.(iv)(a)(5) Asset Purchase and Sale Agreement dated April 28, 1999 by and between
Capitol Queen & Casino, Inc., as Seller, and The Delta Queen Steamboat Co.,
as Purchaser.

Exhibit A - Escrow Agreement
Exhibit B - Vessel Inventory
Exhibit C - Order Approving Sale of Personal Property Free and Clear of Liens,
Claims and Encumbrances

27. Financial data schedule.

b) Reports on Form 8-K:

Form 8-K dated February 22, 1999 announcing the following:

1. Status of contract negotiations with Ingalls
Shipbuilding, Inc.
2. Agreement to acquire a recently completed vessel and
outfit as a riverboat.
3. Filing of a Registration Statement on Form S-3.
4. Increase in authorized capital stock.

Form 8-K dated March 26, 1999 announcing signing of a
contract with Ingalls Shipbuilding, Inc.

*Certain portions of this exhibit filed herewith have been
omitted pursuant to an application for an order of
confidential treatment pursuant to Rule 24b-2 under the
Securities Exchange Act of 1934, as amended. This non-public
information has been filed separately with the Securities
and Exchange Commission.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.

AMERICAN CLASSIC VOYAGES CO.

By: /s/ Philip C. Calian
--------------------------------------------
Philip C. Calian
Chief Executive Officer

By: /s/ Randall L. Talcott
--------------------------------------------
Randall L. Talcott
Vice President-Finance and Treasurer
(Principal Financial and Accounting Officer)

Dated: May 14, 1999
-------------------------