UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 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 December 31, 2000
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from.......... to..........
Blue Ridge 0-28-44
Commission File No.: Big Boulder 0-28-43
BLUE RIDGE REAL ESTATE COMPANY
BIG BOULDER CORPORATION
State or other jurisdiction of incorporation or organization: Pennsylvania
24-0854342 (Blue Ridge)
I.R.S. Employer Identification Number: 24-0822326 (Big Boulder)
Address of principal executive office: Blakeslee, Pennsylvania
Zip Code: 18610
Registrant's telephone number, including area code: (570)-443-8433
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 for such 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__________
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the close of the period of this report:
Class Outstanding at December 31, 2000
Common Stock, without par value, 1,923,784
stated value $.30 per combined share*
*Under a Security Combination Agreement between Blue Ridge Real Estate Company
("Blue Ridge") and Big Boulder Corporation ("Big Boulder") (referred to as the
"Corporations") and under the by-laws of the Corporations, shares of the
Corporations are combined in unit certificates, each certificate representing
the same number of shares of each of the Corporations. Shares of each
Corporation may be transferred only together with an equal number of shares of
the other Corporation. For this reason, a combined Blue Ridge/Big Boulder Form
10-Q is being filed. Except as otherwise indicated, all information applies to
both Corporations.
INDEX
Page No.
PART I - FINANCIAL INFORMATION
Item 1-Financial Statements
Combined Condensed Balance Sheets
December 31, 2000 and March 31, 2000 1 & 2
Combined Condensed Statements of
Operations - Three Months and Nine
Months ended December 31, 2000 and 1999 3
Combined Condensed Statements of
Cash Flows - Nine Months Ended
December 31, 2000 and 1999 4
Notes to Financial Statements 5 & 6
Item 2-Management's Discussion and Analysis
of Financial Condition and Results
of Operations 7 & 8
PART II - OTHER INFORMATION 9
Signatures 9
BLUE RIDGE REAL ESTATE COMPANY and SUBSIDIARIES
BIG BOULDER CORPORATION AND SUBSIDIARIES
COMBINED CONDENSED BALANCE SHEETS
(UNAUDITED)
ASSETS December 31, March 31,
2000 2000
------- ------
Current Assets:
Cash and cash equivalents
(all funds are interest bearing) $ 1,525,893 $2,553,510
Accounts receivable 833,301 448,838
Inventories 311,185 213,215
Prepaid expenses, principally
insurance and real estate taxes 475,476 620,284
Deferred operating costs-net of
deferred revenue-ski facilities 4,135,610 0
--------- ------------
Total current assets 7,281,465 3,835,847
--------- ---------
Properties:
Land, principally unimproved
(19,741 acres per land ledger) 1,868,505 1,869,709
Land improvements, buildings
and equipment 53,257,016 52,025,096
---------- ----------
55,125,521 53,894,805
---------- ----------
Less accumulated depreciation
and amortization 35,092,775 33,774,181
---------- ----------
20,032,746 20,120,624
---------- ----------
$27,314,211 $23,956,471
=========== ===========
See accompanying notes to unaudited financial statements.
1
LIABILITIES AND SHAREHOLDERS' EQUITY
December 31, March 31,
2000 2000
------- -----
Current Liabilities:
Notes Payable-line of credit $1,950,000 $ 0
Current installments of
long-term debt 834,184 842,152
Accounts and other payables 1,156,498 410,430
Accrued claims 128,370 46,601
Accrued income taxes 113,206 293,113
Accrued pension expense 620,876 494,837
Accrued liabilities 992,150 659,800
Deferred revenue 517,169 216,899
-------- -------
Total current liabilities 6,312,453 2,963,832
--------- ---------
Long-term debt, less
current installments 7,568,404 7,976,642
--------- ---------
Deferred income taxes 2,383,153 2,149,945
--------- ---------
Deferred income 515,631 502,433
------- -------
Commitments and Contingencies
Combined shareholders' equity: Capital Stock, without par value, stated value
$.30 per combined share, Blue Ridge and Big Boulder each have authorized
3,000,000 shares and each have issued 2,198,148 shares as of Dec. 31,
2000 and as of March 31, 2000 659,444 659,444
Capital in excess of stated
value 1,461,748 1,461,748
Earnings retained in the
business 10,424,038 10,031,343
---------- ----------
12,545,230 12,152,535
---------- ----------
LESS: Cost of 274,364 & 250,790
shares of capital stock in treasury as
of December 31 2000 & March 31,2000,
respectively. 2,010,660 1,788,916
--------- ---------
10,534,570 10,363,619
---------- ----------
$27,314,211 $23,956,471
=========== ===========
See accompanying notes to unaudited financial statements.
2
BLUE RIDGE REAL ESTATE COMPANY AND SUBSIDIARIES
BIG BOULDER CORPORATION and SUBSIDIARIES
COMBINED CONDENSED STATEMENTS OF OPERATIONS
(UNAUDITED)
Three Months Ended Nine Months Ended
Dec. 31, Dec. 31, Dec. 31, Dec. 31,
2000 1999 2000 1999
---- ---- ---- ----
Revenues:
Ski operations $2,657,373 $2,293,328 $2,657,373 $2,293,328
Real estate management 997,071 1,011,876 4,581,232 4,481,721
Rental income 428,439 410,425 1,366,953 1,333,026
------- ------- --------- ---------
4,082,883 3,715,629 8,605,558 8,108,075
--------- --------- --------- ---------
Costs and expenses:
Ski operations 2,685,046 2,379,330 2,685,046 2,379,330
Real estate management 966,804 927,013 3,934,516 3,804,095
Rental operations 220,219 226,078 670,168 697,946
General & administra-
tive expenses 267,654 260,675 810,582 777,520
------- ------- ------- -------
4,139,723 3,793,096 8,100,312 ,658,891
--------- --------- --------- ---------
Income from operations (56,840) (77,467) 505,246 449,184
-------- ------- ------- -------
Other income (expense:)
Interest & other income 134,403 120,697 719,392 374,026
Interest expense (208,589) (203,262) (572,943) (548,630)
--------- --------- --------- ---------
(74,186) (82,565) 146,449 (174,604)
-------- -------- ------- ---------
Income (loss) before
income taxes (131,026) (160,032) 651,695 274,580
--------- --------- ------- -------
Provision (benefit) for
income taxes (54,000) (109,107) 259,000 (11,412)
-------- --------- ------- --------
Income (loss) as
restated in 1999 (77,026) (50,925) 392,695 285,992
======== ======== ======= =======
Basic and diluted income (loss)
per weighted average combined
share as restated in 1999 ($0.04) ($0.03) $0.20 $0.14
====== ====== ===== =====
See accompanying notes to unaudited financial statements.
3
BLUE RIDGE REAL ESTATE COMPANY
BIG BOULDER CORPORATION and SUBSIDIARIES
COMBINED CONDENSED STATEMENT OF CASH FLOWS FOR
NINE MONTHS ENDED DECEMBER 31, 2000 AND DECEMBER 31, 1999
(UNAUDITED)
2000 1999
---- ----
Cash Flows used in Operating Activities:
Net income $ 392,695 $ 285,992
Adjustments to reconcile net income to net
cash used in operating activities:
Depreciation and amortization 738,853 716,707
Deferred income taxes 233,208 305,020
Gain on sale of assets (524,088) 0
Deferred revenue 300,270 386,973
Changes in assets and liabilities:
Accounts & other receivables (384,463) 62,254
Prepaid expenses and other current assets (3,370,936) (3,192,752)
Accounts payable & accrued liabilities 1,286,226 220,709
Accrued income taxes (179,907) (119,910)
-------- --------
Net cash used in operating activities (1,508,142) (1,335,007)
----------- -----------
Cash Flows used in Investing Activities:
Deferred Income 13,198 152,246
Additions to intangible assets 0 (35,615)
Additions to land 0 (2,137)
Proceeds from disposition of assets 525,292 83
Additions to properties (1,370,015) (2,296,852)
---------- ----------
Net cash used in investing activities (831,525) (2,182,275)
-------- ----------
Cash flows from Financing Activities:
Purchase of treasury stock (221,744) (214,292)
Proceeds from notes payable, bank 2,050,000 2,350,000
Proceeds from long term debt 62,360 800,000
Payment of notes payable, bank (100,000) (950,000)
Payment of long-term debt (478,566) (426,299)
--------- --------
Net cash from financing activities 1,312,050 1,559,409
--------- ---------
Net decrease in cash &
cash equivalents (1,027,617) (1,957,873)
Cash & cash equivalents beginning of period 2,553,510 2,707,188
--------- ---------
Cash and cash equivalents end of period $1,525,893 $749,315
========== ========
Supplemental disclosures of cash
flow information: Cash paid during period:
Interest $569,917 $ 539,559
Income taxes $226,783 $ 214,100
4
NOTES TO UNAUDITED FINANCIAL STATEMENTS
1. The combined financial statements include the accounts of Blue Ridge Real
Estate Company and its wholly-owned subsidiaries (Northeast Land Company, Jack
Frost Mountain Company and BRRE Holdings, Inc.) and Big Boulder Corporation and
its wholly-owned subsidiaries (Lake Mountain Company and BBC Holdings, Inc.). In
the opinion of management, the accompanying unaudited combined condensed
financial statements contain all adjustments (consisting of only normal
recurring accruals) necessary to present fairly the financial position as of
December 31, 2000, and the results of operations and the statements of cash
flows for the three and nine month periods ended December 31, 2000 and 1999.
Certain information and footnote disclosures have been condensed or
omitted pursuant to the rules and regulations of the Securities and Exchange
Commission. These combined financial statements should be read in conjunction
with the financial statements and notes thereto included in the Companies'
Annual report on Form 10-K for the year ended March 31, 2000.
2. The Companies and the subsidiaries, under SFAS No. 131 operate in two
business segments - Ski Operations and Real Estate Management/Rental
Operations.
The results of operations for the three months are not necessarily
indicative of the results to be expected for the full year since the Companies'
two ski facilities operate principally during the months of December through
March. Costs and expenses net of revenues received in advance attributable to
the Ski Operations for the months of April through November are deferred and
recognized as revenue and operating expenses, ratably, over the operating
period. Therefore revenues and operating expenses of the Real Estate
Management/Rental Operations are as disclosed on the statement of operations.
Depreciation of ski facility fixed assets is calculated over the 12
month period. The expense is deferred until the operating period, at which time
it will be recognized ratably.
3. In 1999, the Companies, under a contract with the Pennsylvania Department of
Transportation ("PDOT"), began construction of a two-mile sewer line from the
Jack Frost treatment plant to a rest station on Interstate Route 80. The monies
received from PDOT in 1999 were recorded, net of estimated income taxes, as an
extraordinary item. During the fourth quarter of Fiscal 2000, management
determined that the amounts received under the contract related to construction
of the sewer line should be deferred and recognized as income over the period in
which depreciation on those assets is charged. The amounts related to
reimbursement of income taxes and non-capital overhead expenses will be
recognized as income in the periods in which the related income taxes and
overhead expenses are incurred. Accordingly results of operations for 1999 and
the first three quarters of 2000 have been restated. The effect on the three and
six month periods ended December 30, 1999 was a decrease in the net income of
$54,656 ($.03 per share) and $152,246 ($.08 per share).
5
4. The provision (benefit) for income taxes for the nine months ended
December 31, 2000 and December 31, 1999 represents the estimated annual
effective tax rate for the year ending March 31, 2001 and 2000, respectively.
The effective income tax rate for the first nine months of Fiscal 2000 was 40%,
as compared to 34% for the nine months ended December 31, 1999. State taxes
account primarily for the Fiscal 2000 effective rates being greater than the
federal statutory rate of 34%.
6
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
Results of Operations
Operations for the Third Quarter and First Nine Months of Fiscal 2001 resulted
in net income (loss) of $(.04) and $.20 per combined share compared to a
net income (loss) of $(.03) and $.14 per combined share for the
three and nine months ended December 31, 1999.
Combined revenue of $8,605,558 represents an increase of $367,254 and $497,483
for the third quarter and first nine months of Fiscal 2001 as compared to the
three and nine months ended December 31, 1999. Ski operations revenue increased
364,045 for the third quarter and first nine months of Fiscal 2001 as compared
to the three and nine months ended December 31, 1999.
The increase in ski operation revenue for the three and nine months of Fiscal
2001 as compared to the three and nine months ended December 31, 1999 is
attributable to improved weather conditions as compared to the previous year,
resulting in an opening date of 11/24/00 as compared to the opening date of
12/04/99 last year. Real Estate Management decreased $14,805 and increased
$99,511 for the third quarter and first nine months of Fiscal 2001 as compared
to the three and nine months ended December 31, 1999. Rental Income increased
$18,014 and $33,927 for the third quarter and first nine months of Fiscal 2001
as compared to the three and nine months ended December 31, 1999.
Real Estate Management increased for the first nine months of fiscal 2001 as
compared to the nine months ended December 31, 1999 due to rental management
operations (77%) and increased revenue from communication towers (23%).
Rental income increase for the first nine months of Fiscal 2001 as compared to
the nine months ended December 31, 1999 is due to increased rental income from
the Dreshertown Plaza Shopping Center (27%) and the Mountains Edge Restaurant
(73%).
Interest and Other Income increased $13,706 and $345,366 for the third quarter
and first nine months of Fiscal 2001 as compared to the three and nine months
ended December 31, 1999. The increase is primarily due to a gain on the
disposition of land.
Operating costs (net G & A) increased by $339,648 and $408,359 for the third
quarter and first nine months of Fiscal 2001 as compared to the three and nine
months ended December 31, 1999. This increase was primarily related to the early
opening of the Jack Frost Ski facility.
7
General and Administrative expenses increased by $6,979 and $33,062 for the
third quarter and first nine months of Fiscal 2001 as compared to the three and
nine months ended December 31, 1999. This fluctuation is the result of timing
differences in the purchase of recurring supplies and services.
Interest expense increased by $5,327 and $24,313 for the third quarter and first
nine months of Fiscal 2001 as compared to the three and nine months ended
December 31, 1999. This increase is due to an additional mortgage note payable
of $800,000 for the East Mountain Lift at Jack Frost Mountain and an increase in
the prime interest rate from December 1999 of 1 percentage point.
Per Share Data
Earnings per share are computed as follows:
9 Mos. Ended 9 Mos. Ended
December 31, December 31,
2000 1999
---------------------------------
Net Income $ 392,695 $ 285,992
---------- -----------
Weighted average combined shares of common
stock outstanding used to compute basic
earnings per combined common share 1,927,894 1,967,091
Additional combined common shares to be
issued assuming exercise of stock options,
net of combined shares assumed reacquired 10,365 10,691
Combined shares used to complete dilutive
effect of stock option 1,938,260 1,977,782
---------------------------
Basic and diluted earnings per combined
common share $0.20 $0.14
-----------------------
Financial Condition, Liquidity and Capital Resources
Working capital as of December 31, 2000 increased by $96,997 as compared to
March 31, 2000. The increase primarily due to the cyclical nature of the
Companies' business. The change in the balance of deferred operating costs from
March 31, 2000 to December 31, 2000 was due primarily to revenue and expenses
that are applicable to the ski facilities, which are deferred and recognized
ratably during the months of December through March. The Companies have executed
a commitment letter to refinance the mortgage note payable to First Union
National Bank. The note will be extended for a two year period at similar terms.
Moving Forward
Capital expenditures for the First nine months of Fiscal 2001 were used to
expand our Motorcross Park and install snowmaking capability on a portion of
this facility to introduce snowmobiling as an amenity to the Jack Frost Mountain
Resort. The companies in fiscal 2002 will upgrade its software package for
managing the vacation home accommodations adjacent to its ski slopes, and expand
its Fernridge Campground with additional cabins, campsites and renovations to
comply with its newly acquired liquor license.
8
PART II - OTHER INFORMATION
The Companies have no matters to report with respect to Items 1, 2, 3, 4, 5, and
6(A) and (B).
FORM 10-Q
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:
BLUE RIDGE REAL ESTATE COMPANY
BIG BOULDER CORPORATION
(Registrant)
(Signature)
Gary A. Smith
President
(Signature)
Cynthia A. Barron
Chief Accounting Officer
Date: February 2, 2001
9