UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
(X) ANNUAL REPORTS* PURSUANT TO SECTION 13 OR 15 (d) OF THE
SECURITIES ACT OF 1934 (FEE REQUIRED)
For the fiscal year ended MARCH 31, 2001
OR
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 (NO FEE REQUIRED)
For the transition period from to
0-2844 (Blue Ridge)
Commission File No. 0-2843 (Big Boulder)
BLUE RIDGE REAL ESTATE COMPANY
BIG BOULDER CORPORATION
(exact name of Registrants as specified in their charters)
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
Registrants' telephone number, including area code:570-443-8433
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act:
Common Stock, without par value, stated value $.30 per combined share*
Indicate by check mark whether the registrant (1) has filed all reports to be
filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the
preceding 12 months and (2) has been subject to such filing requirements for the
past 90 days: Yes _X No___ 1
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/A or any amendment to
this Form 10-K. (X)
The aggregate market value of common stock, without par value, stated value
$.30 per combined share, held by non-affiliates at June 15, 2001, was
$18,222,710. The market value per share is based upon the per share cost of
shares as indicated over the counter on March 31, 2001. There is no established
public trading market for the Companies' stock.
Number of shares outstanding of each of the issuer's classes of common
stock.
Class Outstanding June 15, 2001
Common Stock, without par value 1,918,180 Shares
stated value $.30 per
combined share
DOCUMENTS INCORPORATED BY REFERENCE
Specified portions of the Companies' 2001 Annual Report to Shareholders are
incorporated by reference into Part II hereof.
Specified portions of the Companies' definitive Proxy Statement for the
2001 Annual Meetings of Shareholders to be filed pursuant to Regulation 14A with
the Securities and Exchange Commission not later than 120 days after the end of
the fiscal year covered by this report and is incorporated herein by reference.
-------------------- *Under a Security Combination Agreement between Blue
Ridge Real Estate Company ("Blue Ridge") and Big Boulder Corporation ("Big
Boulder") (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-K is being filed. Except as otherwise indicated, all information applies
to both Corporations.
FORM 10-K
PART I
ITEM 1. BUSINESS
BLUE RIDGE REAL ESTATE COMPANY
Blue Ridge Real Estate Company ("Blue Ridge"), which was incorporated in
Pennsylvania in 1911, is believed to be one of the largest owners of investment
property in Northeastern Pennsylvania. It owns 18,709 acres of land which are
predominately located in the Pocono Mountains. These lands are held entirely as
investment property. Income is derived from these lands through leases,
selective timbering by others, condemnation, sales, and other dispositions. Blue
Ridge also owns the Jack Frost Mountain Ski Area which is leased to Jack Frost
Mountain Company, a 225-site campground, a retail store leased to Wal-Mart and a
shopping center. The ski area, campground retail store and shopping center are
more fully described under Item 2. Jack Frost Mountain Company, a wholly-owned
subsidiary of Blue Ridge was incorporated in Pennsylvania in 1980 and commenced
operations on June 1, 1981. It was created to lease and operate the Jack Frost
Mountain Ski Area and to provide certain services to other facilities, such as
the Snow Ridge resort community, and to operate recreational facilities located
within the Jack Frost Mountain tract. Northeast Land Company, a wholly owned
subsidiary of Blue Ridge, was incorporated in Pennsylvania in 1967. The major
assets of the company consist of 103 acres of land in Northeast Pennsylvania.
Revenues are from managing the rental homes at Snow Ridge, Blue Heron,
Laurelwoods and Midlake as resort accommodations, and from real estate
commissions for the sale of homes at these resort communities, and from Trust
and Condo fees for Services to these resort communities. Northeast Land Company
also rec eives revenue from a land lease to a Burger King franchise, and leased
space on a 196 foot communication tower. BRRE Holdings, Inc., a wholly-owned
subsidiary of Blue Ridge, was incorporated in Delaware in 1986. It was
established for investment purposes. Blue Ridge employs 26 full-time employees.
Jack Frost Mountain Company, which operates the Jack Frost Mountain Ski Area,
has 54 full-time employees and during the skiing season there are approximately
500 additional employees. Northeast Land Company has 24 full-time employees.
BIG BOULDER CORPORATION
Big Boulder Corporation ("Big Boulder") was incorporated in Pennsylvania in
1949. The major assets of the company are 929 acres of land, which includes
a 175 acre lake, the Big Boulder Ski Area, and the Mountains's Edge. The
principal source of revenue for Big Boulder is derived from the Big Boulder
Ski Area which is leased to Lake Mountain Company. Lake Mountain Company, a
wholly-owned subsidiary of Big Boulder Corporation was incorporated in
Pennsylvania in 1983 and commenced operations on June 1, 1983. It was
created to lease and operate the Big Boulder Ski Area, and operate the
recreational facilities as they are located within the Big Boulder Lake
tract.
BBC Holdings, Inc., a wholly-owned subsidiary of Big Boulder, was
incorporated in Delaware in 1986. It was established for investment purposes.
Big Boulder has no employees. Lake Mountain Company, which operates the Big
Boulder Ski Area, no longer has any employees. The Lake Mountain Company has
been merged with the payroll of Jack Frost Mountain Company. Big Boulder Ski
area has 20 full-time employees. During the skiing season, there are
approximately 525 additional employees.
INDUSTRY SEGMENT INFORMATION
Information with respect to business segments is presented in Note 11 to
the Registrants' financial statements included in Item 8.
The quarterly results of operations for 2001, 2000 and 1999 reflect the
cyclical nature of the Companies' business since (a) the Companies' two ski
facilities operate principally during the months of December through March and
(b) land dispositions occur sporadically and do not follow any pattern during
the fiscal year. Costs and expenses, net of revenues received in advance
attributable to the ski facilities for the months of April through November, are
deferred and recognized as revenue and operati ng expenses, ratably, over the
operating period.
ITEM 2. PROPERTIES
A. BLUE RIDGE REAL ESTATE COMPANY
The physical properties of Blue Ridge consist of approximately 18,812 acres
owned by Blue Ridge and Northeast Land Company, the Jack Frost
4
Mountain Ski Area, the Fern Ridge Campground, the Wal-Mart Store, the
Dreshertown Shopping Center, a sewage treatment facility, corporate headquarters
building, and other miscellaneous facilities.
SKI FACILITIES
The Jack Frost Mountain Ski Area, under lease to Jack Frost Mountain
Company since June 1, 1981, is located near White Haven, Carbon County,
Pennsylvania, and commenced operations in December 1972. The Jack Frost
Mountain Ski Area consists of twenty-one slopes and trails including a
snowboard slope, snowmobile course, snowtubing hill, five double chairlifts,
two triple chairlifts, one quad chairlift, and various buildings including a
Summit Lodge with food service, a cocktail lounge, a ski shop, and a ski rental
shop. The total lift capacity per hour is 12,000 skiers. These lifts are in
good condition and are operated as needed during the ski season. These
facilities are situated on approximately 473 acres owned by Blue Ridge and
leased to Jack Frost Mountain Company. The total capital investment in the ski
area is $21,218,879, the major portion of which represents the cost of the
slopes and trails, chairlifts, snowmaking equipment, water supply, roads and
parking areas, and all buildings including the Summit Lodge.
The remainder is for furnishings and equipment for the Summit Lodge,
trucks, maintenance equipment, and miscellaneous outside equipment. At March 31,
2001 the out-standing debt on the Jack Frost Mountain Ski Area was
$930,012. REAL ESTATE MANAGEMENT OPERATIONS The Wal-Mart Store located in
Laurens, South Carolina, was acquired in September 1990 for cash consideration
of $2,190,470 which was the total capital investment at March 31,2001. The
building consists of 70,000 square feet, located on 10.217 acres of land and is
leased to Wal-Mart on a triple net basis through January 31, 2039. At March 31,
2001 a mortgage totaling $1,291,719 was outstanding on this property. The
Dreshertown Plaza Shopping Center, Dresher, Montgomery County, Pennsylvania, was
acquired in July, 1986 for consideration of $4,592,579. The center consists of
approximately 101,233 square feet located on approximately 15 acres of land. On
March 31, 2001, the center was 97% occupied under leases expiring on various
dates from April 30, 2001 to October 31, 2020. The total capital investment in
the shopping center is $5,459,641. At March 31, 2001, a mortgage totaling
$4,941,000 was out-standing on this property. The Fern Ridge Campground is
located at the intersection of Route 115 and Interstate 80 in Monroe County,
Pennsylvania. This campground is built on 85 acres and consists of 225
campsites, 75 with water and electric, 25 with rustic cabins and the remaining
125 are wilderness sites. Its operating period is from April 1 through September
30. At March 31, 2001, the Companies' investment in this facility was $930,920.
Blue Ridge owns 18,709 acres of land which are
predominately located in the Pocono Mountains. The majority of this property is
leased to various hunting clubs. Blue Ridge also owns several cottages in the
area that are leased to private individuals. Blue Ridge owns and leases to Jack
Frost Mountain Company a sewage treatment facility to serve the resort housing
at Jack Frost Mountain. The total investment in this facility at March 31, 2001
was $1,227,655 with outstanding debt of $102,503. Blue Ridge also owns The
Sports Complex at Jack Frost Mountain which consists of a swimming pool, fitness
trail, tennis courts, in-line skate park, motocross/B.M.X. and A.T.V. (All
Terrain Vehicle) park and accompanying buildings. The Stretch is an exclusive
fishing club. The Corporate Office Building is located on Route 940 and Mosey
Wood Road. Northeast Land Company owns 103 acres of land which are located in
the Pocono Mountains and a 196 foot communication tower. For the fiscal year
ended March 31, 2001, revenues from operations of Blue Ridge and its
subsidiaries amounted to $12,367,702. Approximately 48% of this revenue or
$5,992,023 was derived from the Jack Frost Mountain Ski Area which operated 122
days during the fiscal year. B. BIG BOULDER CORPORATION The physical properties
owned by Big Boulder consist of approximately 929 acres, the Big Boulder Ski
Area, a sewage treatment facility, a 200 foot communications tower, and the
Mountain's Edge. SKI FACILITIES The Big Boulder Ski Area's physical properties
have been leased to Lake Mountain Company since June 1, 1983, and are located in
Kidder Township, Carbon County, Pennsylvania. Big Boulder Ski Area commenced
operations in 1947. The Big Boulder Ski Area contains fourteen slopes and trails
including a snowboard slope, snowtubing hill, five double chairlifts, two triple
chairlifts, and various buildings including a base lodge, providing food
service, a cocktail lounge, a ski shop and a ski rental service. The total lift
capacity per hour is 9,600 skiers. These lifts are in good condition and are
operated as needed during the ski season. These facilities are situated on
approximatel y 90 acres owned by Big Boulder. The total capital investment in
the ski area is $13,470,981. At March 31, 2001, the outstanding debt on the Big
Boulder Ski Area was $500,114. REAL ESTATE MANAGEMENT OPERATIONS A sewage
treatment facility was constructed by Big Boulder Corporation to serve the
resort housing within the Big Boulder tract. The facility has the capacity of
treating 225,000 gallons per day and is leased to Lake Mountain Company for
operation. The capital investment in the facility at March 31, 2001, was
$1,511,847 with an outstanding debt of $269,293 at that date. Big Boulder
Corporation constructed the Mountain's Edge which consists of 8,800 square feet
and is located on the east shore of Big Boulder Lake, Kidder Township, Carbon
County, Pennsylvania. The facility, leased to a private operator, commenced
operations in May 1986. The restaurant has dining capacity for 100 patrons. The
capital investment in the facility at March 31, 2001 was $1,594,192. Big Boulder
owns 929 acres of land which are located in the Pocono Mountains. The Big
Boulder Lake Club includes a 175 acre lake, swimming pool, tennis courts, boat
docks and accompanying buildings. For the fiscal year ended March 31, 2001,
revenues from operations of Big Boulder amounted to $6,528,749. Approximately
81% of this revenue of $5,275,348 was derived from the Big Boulder Ski Area
which operated 78 days during that fiscal year. ITEM 3. LEGAL PROCEEDINGS Not
applicable. ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS Not
applicable. ITEM 4A. EXECUTIVE OFFICERS OF THE REGISTRANTS Age Office Held
Since Michael J. Flynn 66 1991 Chairman of the Board Eldon D. Dietterick 55 1995
Secretary/Treasurer All officers of the Registrants serve for a one-year period
or until their election at the first meeting of the Board of Directors after the
Annual Meeting of Shareholders. Michael J. Flynn was elected Chairman of the
Board of the Registrants on July 11, 1991. He is Vice Chairman of the Board of
Kimco Realty Corporation since January 1996. Mr. Flynn serves as a Director of
Kimco Realty Corporation. Mr. Flynn was formerly Chairman of the Board and
President of Slattery Associates, Inc. and Director of Slattery Group, Inc. From
1987 to December 1995. Eldon D. Dietterick was appointed Secretary/Treasurer in
October, 1998. He has been employed by the Registrants on a full-time basis
since January 1985; he was appointed Secretary in October 1996. ITEM 5. MARKET
FOR THE REGISTRANT'S COMMON STOCK AND _______RELATED STOCKHOLDER
MATTERS__________ Information required with respect to Registrants' common stock
and related shareholder matters is incorporated herein by reference to the
caption entitled "Price Range of Common Shares and Dividend Information" on Page
12 of the Fiscal 2001 Annual Report to Shareholders. ITEM 6. SELECTED FINANCIAL
DATA Information required with respect to the specified financial data is
incorporated herein by reference to Page 13 of the Fiscal 2001 Annual Report to
Shareholders. ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
________CONDITION AND RESULTS OF OPERATIONS______ Information required with
respect to Registrants' financial condition, changes in financial condition and
results of operations is incorporated herein by reference to Pages 13 and 14 of
the Fiscal 2001 Annual Report to Shareholders. ITEM 8. FINANCIAL STATEMENTS AND
SUPPLEMENTARY DATA The required financial statements are incorporated herein by
reference to Pages 2 through 12 of the Fiscal 2001 Annual Report to
Shareholders. ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS _ON
ACCOUNTING AND FINANCIAL DISCLOSURES_____ Not applicable. PART III ITEM 10.
DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANTS The information concerning
Directors required by Item 10 of Form 10-K is set forth under the caption
"Election of Directors" in the Registrants' definitive Proxy Statement for the
2001 Annual Meetings of Shareholders to be filed pursuant to Regulation 14A with
the Securities and Exchange Commission not later than 120 days after the end of
the fiscal year covered by this report and is incorporated herein by reference.
The information concerning Executive Officers required by Item 10 of Form 10-K
is set forth in Item 4A of this report. CERTAIN SIGNIFICANT EMPLOYEES OF THE
REGISTRANTS Employed in Present Age __Position Since___ Carl V. Kerstetter,
Director of Marketing 50 1991 Cynthia A. Barron, Controller 37 1996 Carl V.
Kerstetter and Cynthia A. Barron have been employed by the Registrants on a
full-time basis for more than five years. ITEM 11. EXECUTIVE COMPENSATION The
information concerning Executive Compensation required by Item 11 of Form 10-K
is set forth under the caption "Renumeration of Executive Officers and
Directors" in the registrant's definitive Proxy Statement for the 2001 Annual
Meetings of Shareholders to be filed pursuant to Regulation 14A with the
Securities and Exchange Commission not later than 120 days after the end of the
fiscal year covered by this report and is incorporated herein by reference. ITEM
12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL __________OWNERS AND
MANAGEMENT_________ The information required by Item 12 of Form 10-K is set
forth under the caption "Holdings of Common Stock" in the Registrants'
definitive Proxy Statement for the 2001 Annual Meetings of Shareholders to be
filed pursuant to Regulation 14A with the Securities and Exchange Commission not
later than 120 days after the end of the fiscal year covered by this report and
is incorporated herein by reference.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Not applicable.
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES
________AND REPORTS ON FORM 8-K________
A. (1) Financial statements included in Registrants' Fiscal 2001 Annual
Report to Shareholders on Pages 2 through 12 are incorporated by reference. The
Report of Independent Auditors for the combined financial statements appears on
Page 15 of this Form 10-K. A. (2) Financial Statement Schedules The following is
a list of financial statement schedules filed as part of this Annual Report on
Form 10-K. The report of Independent Auditors for the financial statement
schedule appears on Page 14 of this Form 10-K. All other schedules omitted
herein are so omitted because either (1) they are not applicable, (2) the
required information is shown in the financial statements, or (3) conditions are
present which permit their omission, as set forth in the instructions pertaining
to the content of financial statements:
Schedules: III. Real Estate and Accumulated Depreciation
A. (3) Exhibits, Including Those Incorporated by Reference
The following is a list of Exhibits filed as part of this Annual Report on
Form 10-K. Where so indicated by footnote, Exhibits that were previously filed
are incorporated by reference. For Exhibits incorporated by reference, the
location of the Exhibit in the previous filing is indicated in parentheses.
Legend for
Documents
Incorporated Page
Articles of Incorporation and By-Laws By Reference Number
3( 1).1 Articles of Incorporation (1)
3( 1).4 Articles of Amendment (2)
3(ii).1 By-Laws of Blue Ridge Real Estate Company
as amended through July 25, 1990 (8)
3(ii).2 By-Laws of Big Boulder Corporation
as amended through July 25, 1990 (8)
Instruments Defining the Rights of Security
________Holders including Indentures_____
4.1 Specimen Certificate for Shares of (1)
Common Stock
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES
________AND REPORTS ON FORM 8-K________ -(Continued)
Legend for
Documents
Incorporated
By Reference
4.2 Security Combination Agreement (1)
4.3 Revised Specimen Unit Certificates
for shares of common stock (7)
Material Contracts
Financial Agreements
10.1.1 Mortgage Relating to the Construction
of the Jack Frost Mountain Ski Area (2)
10.1.2 Construction Loan - Jack Frost
Mountain Ski Area (3)
10.1.3 Loan from PNC Bank, Wilkes-Barre (4)
10.1.4 First Mortgage, Principal Mutual,
Building leased to Wal-Mart (8)
10.1.16 First Mortgage, First Union National Bank,
Dreshertown Plaza Shopping Center,
Montgomery County
Acquisition of Properties
10.2.1 Acquisition of Dreshertown Plaza
Shopping Center (6)
10.2.2 Acquisition of Building leased to
Wal-Mart (8)
Lease
10.3.1 Building leased to Wal-Mart (10)
Agreement with Executive Officers and Director
10.4.1 Stock Option - Michael J. Flynn (9)
Stock Option Agreement - Michael J. Flynn
13.1 The Registrants' Fiscal 2001 Annual Report to Shareholders, to the
extent referred to in the responses to the Items of this Annual Report.
Subsidiaries of the Registrants
21.1 List of the Subsidiaries of the Registrants (6)
(1) Filed September 23, 1966 as an Exhibit to Form 10 and
incorporated herein by reference
(2) Filed August 22, 1973 as an Exhibit to Form 10-K and
incorporated herein by reference
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES,
_______AND REPORTS ON FORM 8-K__________ - (Continued)
(3) Filed August 27, 1975 as an Exhibit to Form 10-K and
incorporated herein by reference
(4) Filed February 7, 1975 as an Exhibit to Form 8-K and
incorporated herein by reference
(5) Northeast Land Company - Incorporated in
Commonwealth of Pennsylvania
Jack Frost Mountain Company - Incorporated
in Commonwealth of Pennsylvania
Lake Mountain Company - Incorporated in
Commonwealth of Pennsylvania
Big Boulder Lodge, Inc. - Incorporated in
Commonwealth of Pennsylvania
BRRE Holdings, Inc. - Incorporated in
State of Delaware
BBC Holdings, Inc. - Incorporated in
State of Delaware
(6) Filed August 28, 1987 as an Exhibit to Form 10-K and
incorporated herein by reference
(7) Filed August 28, 1990 as an Exhibit to Form 10-K and
incorporated herein by reference
(8) Filed August 26, 1991 as an Exhibit to Form 10-K and
incorporated herein by reference
(9) Filed August 26, 1994 as an Exhibit to Form 10-K and
incorporated herein by reference
(10) Filed August 29, 1995 as an Exhibit to Form 10-K and
incorporated herein by reference.
Copies of Exhibits are available to Shareholders by contacting
Eldon D. Dietterick, Secretary, Blakeslee,PA 18610. A charge of
$.25 per page to cover the Registrants' expenses will be made.
B. Reports on Form 8-K
None
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrants have duly caused this report to be signed
on their behalf by the undersigned, thereunto duly authorized.
BLUE RIDGE REAL ESTATE COMPANY BLUE RIDGE REAL ESTATE COMPANY
BIG BOULDER CORPORATION BIG BOULDER CORPORATION
By:__/S/_____________________ By: /S/______________________
Eldon D. Dietterick Cynthia A. Barron
Secretary/Treasurer Chief Accounting Officer
Dated:___6-29-01____ Dated:___6-29-01 ____
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed by the following persons on behalf of the Registrants and
in the capacities and on the dates indicated.
Each person in so signing also makes, constitutes and appoints Michael J.
Flynn, President, his true and lawful attorney-in-fact, in his name, place and
stead to execute and cause to be filed with the Securities and Exchange
Commission any or all amendments to this report.
_______Signature_______ __________Title___________ ____Date___
___/S/_________________ __6-29-01__
Michael J. Flynn Chairman of the Board & President
Principal Executive Officer
___/S/__________________ __6-29-01__
Eldon D. Dietterick Secretary/Treasurer
___/S/_________________ __6-29-01__
Milton Cooper Director
___/S/_________________ __6-29-01__
Allen J. Model Director
___/S/_________________ __6-29-01__
Wolfgang Traber Director
INDEPENDENT AUDITORS' REPORT ON
FINANCIAL STATEMENT SCHEDULES
To the Board of Directors of
Blue Ridge Real Estate Company
and Big Boulder Corporation:
We have audited the combined financial statements of Blue Ridge Real Estate
Company and subsidiaries and Big Boulder Corporation and subsidiaries (the
"Companies") as of March 31, 2001, and for the year then ended, and have issued
our report thereon dated June 15, 2001; such financial statements and report are
included in your 2001 Annual Report to Shareholders and are incorporated herein
by reference. Our audit also included the combined financial statement schedules
of the Companies listed in Item 14. These financial statement schedules are the
responsibility of the Companies' management. Our responsibility is to express an
opinion based on our audit. In our opinion, such combined financial statement
schedules, when considered in relation to the basic combined financial
statements taken as a whole, present fairly in all material respects the
information set therein.
/S/
Parente Randolph, P.C.
June 15, 2001
Wilkes-Barre, Pennsylvania
INDEPENDENT AUDITORS' REPORT
To the Shareholders of
Blue Ridge Real Estate Company and
Big Boulder Corporation:
We have audited the combined balance sheets of Blue Ridge Real Estate
Company and subsidiaries and Big Boulder Corporation and subsidiaries (the
"Companies") as of March 31, 2001 and 2000, and the related combined statements
of operations and earnings retained in the business and cash flows for the years
then ended. These financial statements are the responsibility of the Companies'
management. Our responsibility is to express an opinion on these financial
statements based on our audits. The combined fi nancial statements of the
Companies as of March 31, 1999 were audited by other auditors whose report dated
June 4, 1999, expressed an unqualified opinion on those statements. We conducted
our audits in accordance with auditing standards generally accepted in the
United States of America. 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 managemen t, 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 2001 and 2000 combined financial statements referred to
above present fairly, in all material respects, the financial position of Blue
Ridge Real Estate Company and subsidiaries and Big Boulder Corporation and
subsidiaries as of March 31, 2001 and 2000, and the results of their operations
and their cash flows for the years then ended in conformity with accounting
principles generally accepted in the United States of America.
/S/
Parente Randolph, P.C.
Wilkes-Barre, Pennsylvania
June 15, 2001
REPORT OF INDEPENDENT ACCOUNTANTS
To Shareholders of
Blue Ridge Real Estate Company
and Big Boulder Corporation
In our opinion, the accompanying combined balance sheet and the related combined
statements of operations and earnings retained in the business and cash flows
present fairly, in all material respects, the financial position of Blue Ridge
Real Estate Company and subsidiaries and Big Boulder Corporation and
subsidiaries (the "Companies") at March 31, 1999, and the results of their
operations and their cash flows for the years ended March 31, 1999 and 1998 in
conformity with accounting principles generally ac cepted in the United States.
These financial statements are the responsibility of the Companies' management;
our responsibility is to express an opinion on these financial statements based
on our audits. We conducted our audits of these statements in accordance with
auditing standards generally accepted in the United States, which require that
we plan and perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit includes
examinin g, on a test basis, evidence supporting the amounts and disclosures in
the financial statements, assessing the accounting principles used and
significant estimates made by management, and evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for the opinion expressed above.
/S/
PricewaterhouseCoopers LLP
June 4, 1999
Philadelphia, Pennsylvania
REPORT OF INDEPENDENT ACCOUNTANTS ON
FINANCIAL STATEMENT SCHEDULES
To the Board of Directors of
Blue Ridge Real Estate Company
and Big Boulder Corporation
Our audits of the combined financial statements referred to in our report dated
June 4, 1999 appearing in the 1999 Annual Report to Shareholders of Blue Ridge
Real Estate Company and Big Boulder Corporation (which report and combined
financial statements are incorporated by reference in this Annual Report on
Form 10-K) also included an audit of the combined financial statements
schedules listed in Item 14 (a)(2) of the Form 10-K. In our opinion, these
combined financial statement schedules present fairly, in all material
respects, the information set forth therein when read in conjunction with the
related combined financial statements.
/S/
PricewaterhouseCoopers LLP
June 4, 1999
Philadephia, Pennsylvania
COMBINED SCHEDULE III.
REAL ESTATE AND ACCUMULATED DEPRECIATION March 31, 2001
Column A Column B Column C Column D
Initial Cost Cost Capitalized
to Company Subsequent To
Acquisition
Buildings &
Description Encumbrances Land Improvements Improvements
Land located
in N E PA including
various improvements 1,867,766 49,915 5,485,623
Corporate
Building 282,918 187,989
Buildings Leased
to Others
Eastern PA
Exchanged Asset-
Shopping Center 5,700,000 780,700 4,554,235 124,706
Other 0 0 0 2,436,810
Laurens,SC 1,600,000 276,000 1,914,470 0
TOTAL 7,300,000 2,924,466 6,801,538 8,235,128
Column E Column F
Gross Amount at which Carried
at Close of Period (1)(2)
Land located in
N E PA including Building Accumulated
Various improvements Land Improvements Total Depreciation
1,868,506 5,534,798 7,403,304 2,929,206
Corporate Building 470,907 470,907 267,686
Buildings Leased to
Others Eastern PA
Exchanged Asset-
Shopping Center 780,700 4,678,941 5,459,641 2,785,328
Other 0 2,436,810 2,436,810 1,316,951
Laurens, SC 276,000 1,914,470 2,190,470 659,427
TOTAL 2,925,206 15,035,925 7,961,131 7,958,599
Column G Column H Column I
Life on which
Depreciation in
Date of Date latest income
Contstruction Acquired Statement
is computed
Land located in NE PA
Including various
improvements Various Various 5 to 30 Yrs
Corporate Building 1982 10 to 30 Yrs
Buildings leased to others
Eastern PA Exchanged Asset
Shopping Center N/A Various 5 to 30 Yrs
Other N/A Various 5 to 30 Yrs
Laurens, SC N/A Various 5 to 30 Yrs
TOTAL
(1) Activity for the fiscal years ended March 31, 2001, March 31, 2000 &
March 31, 1999 is as follows:
2001 2000 1999
Balance at beginning of year 17,012,095 16,159,756 15,927,399
Additions during year:
Improvements 426,502 418,407 232,439
(reclassify) 523,738 434,015 0
17,962,335 17,012,178 16,159,838
Deductions during year:
Cost of real estate sold 1,204 83 82
Balance at end of year 17,961,131 17,012,095 16,159,756
(2) The aggregate cost for Federal Income Tax purposes at March 31, 2001 is
$16,498,499.
(3) Activity for the fiscal years ended March 31, 2001, March 31, 2000 &
March 31, 1999 is as follows:
2001 2000 1999
Balance at beginning of year 7,472,074 6,754,807 6,366,443
Additions during year:
(Reclassification) 36,316 304,923 0
Current year depreciation 450,209 412,344 388,364
Less retirements 0 0 0
Balance at end of year 7,958,599 7,472,074 6,754,807
BLUE RIDGE REAL ESTATE COMPANY
BIG BOULDER CORPORATION
To Our Shareholders,
Year 2001 presented a number of challenges and opportunities for our
company. The Companies report net income of $252,532 or $.13 per combined share
for fiscal 2001 compared to $480,640 and $.24 for the previous year. Financial
results fell short of expectations resulting in the re-evaluation of key
management positions and structuring the company to meet future growth.
Strategic Priorities for 2002
The management team has established the following priorities for the year that
will enable our company to be more profitable. Strengthen Customer Service.
Implement customer-training programs for employees and management to improve the
quality of services. Maximize current facilities. Additional seating in both
lodges, expansion of the Jack Frost Mountain ski rental shop, food service
outlets, and construction of a Terrain Park at Big Boulder Ski Area are some of
the major improvements planned for next ski season. Keep Building the Team. Keep
motivating our dedicated team of employees and managers. Many have valuable
experiences in the ski resort and real estate industry. We have enhanced our
human resources department to maximize the performance of our current employees
and attract a qualified staff. Improve Profit Margin. Accounting policies and
controls have been implemented by management to allow for close monitoring of
operating costs. Capture Internet Marketing Advantages. Maintain technological
leadership by using the Internet for:
* Providing information about the activities and events, accommodations, snow
condition reports and real estate opportunities. * Introducing an on-line
reservation system for ski / snowboard rental equipment and lift tickets prior
to arrival at the resort.
Profit Center Revenue Enhancement. Winter sports remain our primary
business, however, we will continue to investigate new potential profit centers.
All existing profit centers will be evaluated as to their contribution to the
company.
Develop New Business Opportunities. Future development opportunities and
real estate ventures for the companies' large landholdings are being
investigated. Management will continue to monitor the local real estate
market and outline a strategy for moving forward. The growth and success of
our companies is a result of teamwork. I would like to thank our dedicated
employees for helping to make the company profitable.
I am looking forward to the coming year to grow the Company further, improve its
economic success and build shareholder value.
Michael J. Flynn
Chairman of the Board and President
Blakeslee, Pennsylvania
June 15, 2001
BLUE RIDGE REAL ESTATE COMPANY AND SUBSIDIARIES
AND
BIG BOULDER CORPORATION AND SUBSIDIARIES
COMBINED BALANCE SHEETS
March 31, 2001 and 2000
ASSETS 2001 2000
Current Assets:
Cash and cash equivalents (all funds are
interest bearing) $2,628,839 2,553,510
Accounts receivable 429,653 448,838
Inventories 141,611 213,215
Deferred tax asset 665,095 410,186
Prepaid expenses and other current assets 403,313 620,284
Total current assets 4,268,511 4,246,033
Properties:
Land, principally unimproved (19,741
and 19,873, respectively, acres per
land ledger) 1,868,505 1,869,709
Land improvements,
buildings and equipment 53,754,045 52,025,096
55,622,550 53,894,805
Less accumulated depreciation &
amortization 35,597,696 33,774,181
20,024,854 20,120,624
$24,293,365 $24,366,657
LIABILITIES AND SHAREHOLDERS' EQUITY 2001 2000
Current liabilities:
Current installments of long-term debt $757,228 $842,152
Accounts and other payables 549,847 410,430
Accrued claims 80,433 46,601
Accrued income taxes 67,387 293,113
Accrued pension expense 627,042 494,837
Accrued liabilities 1,087,851 659,800
Deferred revenue 316,753 145,169
Total current liabilities 3,486,541 2,892,102
Long-term debt, less current
installments 7,277,413 7,976,642
Deferred income taxes 2,442,178 2,560,131
Other non-current liabilities 204,321 71,730
Deferred income non-current 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 authorized 3,000,000
shares, each issued 2,198,148 shares 659,444 659,444
Capital in excess of stated value 1,461,748 1,461,748
Earnings retained in the business 10,283,875 10,031,343
12,405,067 12,152,535
Less cost of 277,221 and 250,790 shares of
capital stock in treasury as of March 31,
2001 and 2000, respectively 2,037,786 1,788,916
10,367,281 10,363,619
$24,293,365 $24,366,657
The accompanying notes are an integral part of the combined financial
statements.
BLUE RIDGE REAL ESTATE COMAPNY AND SUBSIDIARIES AND BIG BOULDER CORPORATION AND
SUBSIDIARIES COMBINED STATEMENTS OF OPERATIONS AND EARNINGS RETAINED IN THE
BUSINESS for the years ended March 31, 2001,2000 & 1999
2001 2000 1999
Revenues:
Ski operations $11,267,371 $11,565,643 $11,124,018
Real estate management 5,761,390 5,417,962 4,926,533
Rental income 1,867,690 1,903,314 1,736,929
18,896,451 18,886,919 17,787,480
Costs and expenses:
Ski operations 11,246,003 11,135,115 11,293,011
Real estate management 4,968,664 4,798,647 4,230,279
Rental income 950,258 936,870 868,536
General and administration 1,768,375 1,084,649 1,064,167
18,933,300 17,955,281 7,455,993
Income (loss)
from operations (36,849) 931,638 331,487
Other income (expense):
Interest and other income 866,127 620,203 246,745
Interest expense (736,865) (732,201) (698,913)
129,262 (111,998) (452,168)
Income (loss)before income taxes 92,413 819,640 (120,681)
Provision(credit)for income taxes:
Current 259,417 382,000 144,357
Deferred (419,536) (43,000) (185,839)
(160,119) 339,000 (41,482)
Net income (loss) 252,532 480,640 (79,199)
Earnings retained in business:
Beginning of year 10,031,343 9,550,703 9,629,902
End of year $10,283,875 $10,031,343 $9,550,703
Basic and diluted earnings (loss)per
weighted average combined share $0.13 $0.24 ($0.04)
The accompanying notes are an integral part of the combined financial
statements.
BLUE RIDGE REAL ESTATE COMPANY AND SUBSIDIARIES
AND
BIG BOULDER CORPORATION AND SUBSIDIARIES
COMBINED STATEMENTS OF CASH FLOWS
For the years ended March 31, 2001, 2000 & 1999
2001 2000 1999
Cash Flows From Operating Activities:
Net income (loss) $252,532 $480,640 ($79,199)
Adjustments to reconcile net income (loss)
to net cash provided by operating activities:
Depreciation and amortization 1,969,154 1,921,237 2,003,891
Deferred income taxes (372,862) (43,000) (102,471)
Gain on sale of assets (528,242) (19,006) (4,930)
Changes in operating assets and liabilities:
Accounts receivable 19,185 110,840 35,178
Refundable income taxes 0 0 8,614
Prepaid expenses & other current
assets 288,575 161,692 (251,671)
Accounts payable & accrued
liabilities 866,096 (324,934) 497,289
Accrued income taxes (225,726) 124,596 (99,368)
Deferred revenue 171,584 (111,308) 91,609
Net cash provided by operating
activities 2,440,296 2,300,757 2,098,942
Cash Flows From (used in) Investing Activities:
Deferred income 13,198 254,246 248,187
Proceeds from disposition of
assets 529,446 19,089 16,150
Additions to properties (1,874,588) 2,496,246) (1,763,597)
Net cash used in investing
activities (1,331,944) (2,222,911)(1,499,260)
Cash Flows From (used in) Financing
Activities:
Borrowings under short-term
financing 2,050,000 2,550,000 1,950,000
Payment of short-
inancing (2,050,000) (2,550,000)(1,950,000)
Additions to long-term debt 0 800,000 0
Payment of long-term debt (784,153) (781,111) (491,004)
Purchase of treasury stock (248,870) (250,413) (201,267)
Net cash used in financing
activities (1,033,023) (231,524) (692,271)
Net increase (decrease) in cash
& cash equivalents 75,329 (153,678) (92,589)
Cash & cash equivalents,
beginning of year 2,553,510 2,707,188 2,799,777
Cash & cash equivalents,
end of year $2,628,839 $2,553,510 $2,707,188
Supplemental disclosures of cash flow information: Cash paid during year for:
Interest $736,054 $732,458 $714,107
Income taxes $427,516 $335,395 $214,100
The accompanying notes are an integral part of the combined financial
statements.
NOTES TO COMBINED FINANCIAL STATEMENTS
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
BASIS OF COMBINATION:
The combined financial statements include the accounts of Blue Ridge Real
Estate Company (Blue Ridge) and its wholly-owned subsidiaries, Northeast Land
Company, Jack Frost Mountain Company, and BRRE Holdings, Inc.; and Big Boulder
Corporation (Big Boulder) and its wholly-owned subsidiaries, Lake Mountain
Company and BBC Holdings, Inc. Under a Security Combination Agreement between
Blue Ridge and Big Boulder and under the bylaws of both Companies, shares of the
Companies are combined in unit certificates, each certificate representing
concurrent ownership of the same number of shares of each company; shares of
each company may be transferred only together with an equal number of shares of
the other company. All significant intercompany accounts and transactions are
eliminated.
DISPOSITION OF LAND AND RESORT HOMES: The Companies recognize income
on the disposition of real estate in accordance with the provisions of Statement
of Financial Accounting Standards No. 66, "Accounting for Sales of Real Estate"
(SFAS 66). Down payments of less than 20% are accounted for as deposits as
required by SFAS No 66. The costs of developing land for resale as resort homes
and the costs of constructing certain related amenities are allocated to the
specific parcels to which the costs relate. Such costs, as well as the costs of
construction of the resort homes, are charged to operations as sales occur. Land
held for resale and resort homes under construction are stated at lower of cost
or market.
PROPERTIES AND DEPRECIATION: Properties are stated at cost.
Depreciation and amortization is provided principally using the straight-line
method over the following years:
Land improvements 10-30
Buildings 3-30
Equipment and furnishings 3-20
Ski facilities:
Land improvements 10-30
Buildings 5-30
Machinery and equipment 5-20
Upon sale or retirement of depreciable property, the cost and related
accumulated depreciation are removed from the related accounts, and resulting
gains or losses are reflected in income. Interest, real estate taxes, and
insurance costs, including those costs associated with holding unimproved land,
are normally charged to expense as incurred. Interest cost incurred during
construction of facilities is capitalized as part of the cost of such
facilities. Maintenance and repairs are charged to expense, and major renewals
and betterments are added to property accounts. Impairment losses are recognized
in operating income as they are determined. The Companies review their
long-lived assets whenever events or changes in circumstances indicate that the
carrying value of an asset may not be recoverable. In that event, the Companies
calculate the expected future net cash flows to be generated by the asset. If
those net future cash flows are less than the carrying value of the asset, an
impairment loss is recognized in operating income. The impairment loss is the
differenc e between the carrying value and the fair value of the asset. No such
losses were recognized in the three years ended March 31, 2001. 1. SUMMARY OF
SIGNIFICANT ACCOUNTING POLICIES (continued): INVENTORIES: Inventories consist of
food, beverage and retail merchandise and are stated at cost which approximates
market, with cost determined using the first-in, first-out method. DEFERRED
REVENUE: Deferred revenues include revenues billed in advance for services and
dues which are not yet earned. INCOME TAXES: The Companies' account for income
taxes utilizing the asset and liability method of recognizing the tax
consequence of transactions that have been recognized for financial reporting or
income tax purposes. Among other things, this method requires current
recognition of the effect of changes in statutory tax rates on previously
provided deferred taxes. Valuation allowances are established, when necessary,
to reduce tax assets to the amount expected to be realized. Blue Ridge,
including its subsidiaries, and Big Boulder, including its subsidiaries, report
as separate entities for federal income tax purposes. State income taxes are
reported on a separate company basis. DEFERRED INCOME: Amounts received under a
contract with the Pennsylvania Department of Transportation for reimbursement of
the cost of a constructed asset are deferred. The amounts will be recognized as
income over the period in which depreciation on those assets is charged. This
asset has not yet been placed in service. ADVERTISING COSTS: Advertising costs
are expensed when incurred. Advertising expense for the years ended March 31,
2001, 2000 and 1999 was $1,538,647, $1,488,268 and $1,580,385, respectively. USE
OF ESTIMATES AND ASSUMPTIONS: 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 assets and liabilities at the dates of
the financial statements and the reported amounts of revenues and expenses
during the reporting periods. Actual results could differ from those estimates.
STATEMENT OF CASH FLOWS: For purposes of reporting cash flows, the Companies
consider cash equivalents to be all highly liquid investments with maturities of
three months or less when acquired. CONCENTRATION OF CREDIT RISK: Financial
instruments which potentially subject the Companies to concentration of credit
risk consist principally of temporary cash investments. The Companies' temporary
cash investments are held by financial institutions. The Companies have not
experienced any losses related to these investments. EARNINGS (LOSS) PER SHARE:
Basic earnings (loss) per share is calculated based on the weighted-average
number of shares outstanding. Diluted earnings (loss) per share includes the
dilutive effect of stock options. RECLASSIFICATION: Certain reclassifications
have been made to conform to current year presentation. RECENT ACCOUNTING
PRONOUNCEMENT: The Financial Accounting Standards Board issued Statement of
Financial Standard ("SFAS") No. 133, "Accounting for Derivative Financial
Instruments and Hedging Activities." The statement establishes accounting and
reporting standards for derivative instruments including certain derivative
instruments imbedded in other contracts, and for hedging activities. It requires
that an entity recognize all derivatives as either assets or liabilities in the
statement of financial position and measure those inst ruments at fair value.
SFAS No. 133 is effective for the Companies' fiscal year beginning April 1,
2001, and will not be applied retroactively to the Companies' financial
statements of prior periods. The adoption of SFAS No. 133 will have no material
effect on the Companies' financial statements.
2. CONDENSED FINANCIAL INFORMATION:
Condensed financial information of the constituent Companies, Blue Ridge
and its subsidiaries and Big Boulder and its subsidiaries, at March 31, 2001,
2000 and 1999 and for each of the periods then ended is as follows:
Blue Ridge and Subsidiaries
2001 2000 1999
FINANCIAL POSITION:
Current assets $1,666,123 $1,583,756 $1,839,683
Total assets 16,687,506 16,527,534 16,096,555
Current liabilities 3,125,297 2,451,318 2,403,281
Shareholders'equity 4,404,959 4,445,461 4,384,868
OPERATIONS:
Revenues 12,367,702 11,798,218 11,468,148
Income(loss)before taxes (75,807) 464,004 (185,036)
Provision(credit)for
income taxes (284,176) 153,000 (71,540)
Net income (loss) 208,369 311,004 (113,496)
Big Boulder and Subsidiaries
2001 2000 1999
FINANCIAL POSITION:
Current assets $2,602,388 $2,662,277 $2,385,577
Total assets 7,605,859 7,839,123 7,711,200
Current liabilities 361,244 440,784 491,654
Shareholders'equity 5,962,322 5,918,158 5,748,524
OPERATIONS:
Revenues 6,528,749 7,088,701 6,319,332
Income(loss)before taxes 168,220 355,636 64,355
Provision(credit)for
income taxes 124,057 186,000 30,058
Net income (loss) 44,163 169,636 34,297
3. SHORT-TERM FINANCING:
At March 31, 2001, Blue Ridge had an unused line of credit agreement with a
bank aggregating $2,000,000 available for short-term financing, expiring August
31, 2001, which management expects to be renewed. The line of credit bears
interest at .25% less than the prime rate (7.75% at March 31,2001). The
agreement requires, amoung other things, that the Companies comply with minimum
current and total liabilities to tangible net worth ratios and meet a minumum
debt service coverage ratio. The companies have met or obtained waivers for each
of these covenants.
4. LONG-TERM DEBT:
Long-term debt as of March 31, 2001 and 2000 consists of the following:
2001 2000
Mortgage note payable to bank, interest is LIBOR plus 160 basis points (6.655%
at March 31, 2001) payable monthly with Principal reduction of $18,000 through
August 2003 4,941,000 5,138,999
Mortgage note payable to bank, interest at 80% of the bank's prime rate (6.4% at
March 31, 2001) payable in monthly installments of $24,187 plus interest
through Fiscal 2005 1,281,922 1,572,168
Mortgage note payable to insurance company, interest fixed at 10.5% payable in
monthly installments of $15,351 including interest
through Fiscal 2014 1,291,719 1,337,642
Mortgage note payable to bank, interest at 7% payable monthly with principle
reduction at $32,500 per month December to
March through 2001 0 129,985
Mortgage note payable to bank, interest at 6.84% payable monthly with principal
reduction at $40,000 per month December to
March through 2004 520,000 640,000
8,034,641 8,818,794
Less current installments 757,228 842,152
$7,277,413 $7,976,642
Properties at cost, which have been pledged as collateral for long-term debt,
include the following at March 31, 2001:
Investment properties leased to others $7,650,111
Ski facilities $17,418,087
The aggregate amount of long-term debt maturing in each of the five years
ending subsequent to March 31, 2001, is as follows: 2002-$757,228;
2003-$5,231,846; 2004-$513,085; 2005-$360,010; 2006-$198,395; Thereafter
$974,077.
5. INCOME TAXES:
The provision (credit) for income taxes is as follows:
2001 2000 1999
Currently payable
Federal $259,417 $382,000 $141,749
State 0 0 2,608
259,417 382,000 144,357
Deferred:
Federal (315,926) (43,000) (185,839)
State (103 610) 0 0
(419,536) (43,000) 185,839)
($160,119) $339,000 ($41,482)
A reconciliation between the amount computed using the statutory federal
income tax rate and the provision (credit) for income taxes is as follows:
2001 2000 1999
Computed at statutory rate $31,420 $279,000 ($41,032)
State net operating losses
subject to valuation allowance 0 46,000 0
State income taxes, net of federal
income tax 0 0 1,721
Prior year overaccrual (107,367) 0 0
Other 3,919 6,000 5,228
AMT (utilization) tax (88,091) 8,000 (7,399)
Provision(credit)for income
Taxes ($160,119) $339,000 ($41,482)
The components of the deferred tax assets and liabilities as of March 31,
2001 and 2000 are as follows:
2001 2000
Current deferred tax asset:
Accrued expenses $266,379 52,472
Deferred revenues 79,431 0
State net operating losses and AMT
credit carryforward 631,723 653,977
Contribution carryforward 0 1,073
Valuation allowance (312,438) (297,336)
Current deferred tax asset 665,095 410,186
Noncurrent deferred tax liability
Depreciation (2,673,786) (2,761,406)
Deferred income, sewer line and tower 231,608 201,275
Noncurrent deferred tax liability (2,442,178) (2,560,131)
Deferred income tax liability, net ($1,777,083) ($2,149,945)
At March 31, 2001, the Companies have $296,957 of Alternative Minimum Tax
(AMT) credit carryforward available to reduce future federal income taxes. The
AMT credit has no expiration date. For state income tax purposes, the Companies
have available state net operating loss carryforwards of $3,351,014 which will
expire by 2011. The valuation allowance increased by $15,102 during Fiscal 2001
due to additional state net operating losses which are not expected to be
utilized.
6. PENSION BENEFITS:
Assumptions 2001 2000 1999
Discount Rates used to determine
projected benefit obligations
as of March 31, 7.25% 7.50% 6.75%
Expected long-term rates of return
on assets 8.50% 8.50% 8.50%
Rates of increase in compensation
levels 5.00% 5.00% 5.00%
Change in Benefit Obligation 2001 2000
Benefit obligation at beginning of year $3,065,215 $3,102,102
Service cost(net of expenses) 213,365 219,936
Interest cost 220,819 208,672
Plan amendments 0 0
Actuarial (gain) loss 75,268 (322,519)
Benefit payments (151,811) (139,976)
Benefit obligation at end of year $3,422,856 $3,065,215
6. PENSION BENEFITS (continued):
Change in Plan Assets 2001 2000
Fair value of plan assets at
beginning of year $3,473,821 $3,145,730
Actual return on plan assets (311,801) 491,996
Employer contributions 0 0
Benefits paid (151,811) (139,976)
Actual expenses paid during the year (26,706) (23,929)
Fair value of plan assets at end of year $2,983,503 $3,473,821
Reconciliation of Funded Status of the Plan 2001 2000
Funded status at end of year ($439,353) $408,606
Unrecognized transition obligation 103,172 111,652
Unrecognized net prior service cost 9,270 9,881
Unrecognized net actuarial gain (300,131) (1,025,015)
Net amount recognized at end of year ($627,042) ($494,876)
Components of Net Periodic Benefit Cost 2001 2000 1999
Service Cost $238,365 $240,936 $240,717
Interest Cost 220,819 208,672 186,169
Expected return of plan 287,388 282,286 250,562
Net amortization and deferral:
Amortization of transition
obligation 8,480 8,480 8,480
Amortization of prior service
cost 611 611 611
Amortization of accumulated (48,721) (8,374) (19,911)
Net amortization and deferral $(39,630) $717 ($10,820)
Total net periodic pension cost $132,166 $168,039 $165,504
7. PROPERTIES:
Properties consist of the following at March 31, 2001 and 2000:
2001 2000
Land, principally unimproved $1,868,505 $1,869,709
Land improvements 5,534,798 4,626,270
Corporate buildings 470,907 470,907
Buildings leased to others 10,147,329 10,076,083
Ski facilities:
Land 4,552 4,552
Land improvements 7,902,133 8,769,371
Buildings 6,528,611 6,515,956
Machinery & equipment 19,676,762 19,163,807
Equipment & furnishings 3,488,953 2,398,150
55,622,550 53,894,805
Less accumulated depreciation and
Amortization 35,597,696 33,774,181
$20,024,854 $20,120,624
Buildings leased to others include land of $1,056,700 at March 31, 2001, 2000
and 1999.
8. ACCRUED LIABILITIES:
Accrued liabilities consist of the following at March 31, 2001 and 2000.
2001 2000
Accrued Payroll $693,347 $294,714
Accrued Security & Other Deposits 133,898 120,415
Accrued Professional Fees 140,223 29,505
Accrued - Miscellaneous 120,383 215,166
$1,087,851 $659,800
9. LEASES:
The Companies are lessors under various operating lease agreements for the
rental of land, land improvements and investment properties leased to others.
Rents are reported as income over the terms of the leases as they are earned. A
shopping center is leased to various tenants for renewable terms averaging 3.03
years with options for renewal. A store has been net leased until January 2039.
Information concerning rental properties and minimum future rentals under
current leases as of March 31, 2001, is as follows:
Properties Subject To Lease
Accumulated
Cost Depreciation
Investment properties leased to
others $7,962,043 $3,524,078
Land and land improvements 3,997,935 1,237,480
Minimum future rentals:
Fiscal years ending March 31: 2002 1,682,814
2003 1,188,267
2004 1,042,048
2005 856,060
2006 851,491
Thereafter 15,410,234*
$21,030,914
*Includes $1,401,750 under a land lease expiring in 2072 and $6,600,835
under a net lease for a store expiring in 2039. There were no contingent rentals
included in income for Fiscal 2001, 2000 or 1999.
Under an agreement with a management company relating to the shopping center, in
the event of the termination of the management contract or the sale of the
property, the management company is entitled to approximately 25% of the fair
market value after satisfaction of certain obligations.
10. FAIR VALUE:
The Companies have estimated the fair value of their financial instruments
at March 31, 2001 and 2000 as follows: The carrying values of cash and cash
equivalents, accounts receivable, accounts payable and accrued expenses are
reasonable estimates of their fair values. The carrying values of variable and
fixed rate long-term debt are reasonable estimates of their fair values based on
their discounted cash flows at discount rates currently available to the
Companies for debt with similar terms and remain ing maturities.
11. QUARTERLY FINANCIAL INFORMATION (Unaudited) The results of operations for
each of the quarters in the last two years are presented below.
Earnings (Loss)
Income(loss) Per Weighted
Operating from Net Avg. Combined
Quarter Revenues Operations Income (Loss) Share
2001
1st $1,647,042 $24,605 ($106,111) ($0.05)
2nd 2,875,633 537,481 575,832 0.29
3rd 4,082,883 56,840 (77,026) (0.04)
4th 10,290,893 (655,775) (140,163) (0.07)
$18,896,451 $(36,849) $252,532 $0.13
2000
1st $1,531,989 ($83,551) ($87,119) ($0.05)
2nd 2,860,457 610,202 424,036 0.22
3rd 3,715,629 (77,467) (50,925) (0.03)
4th 10,778,84 482,454 194,648 0.10
$18,886,919 $931,638 $480,640 $0.24
The quarterly results of operations for 2001 and 2000 reflect the cyclical
nature of the Companies' business since (1) the Companies' two ski facilities
operate principally during the months of December through March and (2) land
dispositions occur sporadically and do not follow any pattern during the fiscal
year. Costs and expenses, net of revenues received in advance attributable to
the ski facilities for the months of April through November, are deferred and
recognized as revenue and operating expenses , ratably, over the operating
period. The fourth quarter of Fiscal 2001 was impacted by a $467,000 severance
accrual due to a change in management.
12. BUSINESS SEGMENT INFORMATION:
The following information is presented in accordance with SFAS No. 131,
"Disclosures about Segments of an Enterprise and Related Information." In
accordance with SFAS No. 131, the Companies' business segments were determined
from the Companies' internal organization and management reporting, which are
based primarily on differences in services. The Companies and the subsidiaries,
under SFAS No.131, operate in two business segments consisting of the following:
SKI OPERATIONS:
Two ski areas located in the Pocono Mountains of Northeastern Pennsylvania.
REAL ESTATE MANAGEMENT/RENTAL OPERATIONS:
Investment properties leased to others located in Eastern Pennsylvania and South
Carolina, fees from managing investor-owned properties, principally resort
homes, recreational club activities and services to the trusts that operate
resort communities, sales of land held for resale and investment purposes, and
rental of land and land improvements.
Income or loss for each segment represents total revenue less operating
expenses. General and administrative expenses are allocated to each business
segment based on percentage of revenue. Identifiable assets are those utilized
in the operation of the respective segments; corporate assets consist
principally of cash and non-revenue producing properties held for investment
purposes.
3/31/01 03/31/00 03/31/99
Revenues:
Ski operations $11,267,371 $11,565,643 $11,124,018
Real estate management/
Rental operations 7,629,080 7,321,276 6,663,462
$18,896,451 $18,886,919 $17,787,480
Income:(loss)
Ski operations $21,368 430,528 ($168,993)
Real estate management/
Rental operations 1,710,158 1,585,759 1,564,647
$1,731,526 $2,016,287 $1,395,654
General & administrative expenses:
Ski Operations ($1,061,025) ($661,636) ($670,425)
Real estate management/
Rental operations (707,350) (423,013) (393,742)
($1,768,375) ($1,084,649) ($1,064,167)
Interest and other income:
Ski Operations $17,710 $13,995 $2,736
Real estate management/
Rental operations 848,417 606,208 244,009
$866,127 $620,203 $246,745
Interest expense:
Ski operations ($161,016) ($170,898) ($141,467)
Real estate management/
rental operations (575,849) (561,303) (557,446)
($736,865) ($732,201) ($698,913)
Income (loss) before income
taxes, $92,413 $819,640 ($120,681)
In Fiscal 2001, 2000 and 1999, no one customer represented 10% or more of
total revenues.
Identifiable assets, net of accumulated depreciation at March 31, 2001,
2000 and 1999 and depreciation expense and capital expenditures for the years
then ended by business segment are as follows:
Identifiable Depreciation Capital
2001 Assets Expense Expenditure
Ski Operations $10,478,612 $1,373,109 $1,295,402
Real Estate Management/Rental
Operations 11,916,318 451,993 451,297
Other Corporate 1,898,435 144,052 158,072
Total $24,293,365 $1,969,154 $1,904,771
2000
Ski Operations $11,660,694 $1,397,361 $2,080,192
Real Estate Management/Rental
Operations 11,253,397 426,243 330,347
Other Corporate 1,452,566 97,633 85,707
Total $24,366,657 $1,921,237 $2,496,246
1999
Ski Operations $11,622,619 $1,485,975 $1,249,973
Real Estate Management/Rental
Operations $9,858,387 419,891 321,087
Other Corporate 2,326,749 98,025 192,537
Total $23,807,755 $2,003,891 $1,763,597
13. CONTINGENT LIABILITIES AND COMMITMENTS:
The Companies are party to various legal proceedings incidental to their
business. Certain claims, suits, and complaints arising in the ordinary
course of business have been filed or are possible of assertion against the
Companies. In the opinion of management, all such matters are without merit
or are of such kind, or involve such amounts, that are not expected to have
a material effect on the combined financial position or results of
operations of the Companies. Blue Ridge has pledged approximately 20 acres
of its leased land (cost $144,786) to serve as collateral, together with
the lessee's land improvements, for the lessee's mortgage loan which
amounts to approximately $1,264,000 at March 31, 2001.
14. STOCK OPTIONS AND CAPITAL STOCK:
During Fiscal 1998, the Companies adopted an employee stock option plan,
under which an officer was granted options to purchase shares of the Companies'
common stock. The options expire July 1, 2003. Option activity during the
periods ended March 31, 2001, 2000 and 1999 is as follows:
2001 2000 1999
Exercise Exercise Exercise
Shares Price Shares Price Shares Price
<C
Outstanding at
beginning of year:35,000 $6.75 35,000 $6.75 10,000 $6.75
Granted - - - - - -
Exercised - - - - - -
Canceled - - - - - -
Outstanding at
end of year 35,000 $6.75 35,000 $6.75 35,000 $6.75
Options exercisable
At year-end 35,000 $6.75 35,000 $6.75 35,000 $6.75
Option price
range $6.75 $6.75 $6.75
Weighted average
fair value of
options granted
during year $- $- $-
The Companies elected to follow APB Opinion No. 25, "Accounting for Stock
Issued to Employees," in accounting for its employee stock options as permitted
by SFAS No. 123, "Accounting for Stock Based Compensation." Under APB No. 25,
because the exercise price of the employee stock options equals the estimated
fair market value of the Companies' underlying stock on the date of the grant,
no compensation expense is recognized.
15. PER SHARE DATA:
Earnings per share for the years ended March 31, 2001, 2000 and 1999 are
computed as follows:
2001 2000 1999
Net Earnings $252,532 $480,640 ($79,199)
Weighted average combined
shares of common stock out-
standing used to compute basic
earnings per combined
common share 1,926,402 1,962,491 1,980,706
Additional combined common shares to be issued assuming exercise of stock
options, net of combined shares assumed re-
acquired 10,195 10,295 12,346
Combined shares used to compute
dilutive effect of stock
option 1,936,597 1,972,786 1,993,052
Basic and diluted earnings per
combined common share $0.13 $0.24 ($0.04)
INDEPENDENT AUDITOR'S REPORT
To Shareholders of
Blue Ridge Real Estate Company
and Big Boulder Corporation:
We have audited the combined balance sheet of Blue Ridge Real Estate
Company and subsidiaries and Big Boulder Corporation and subsidiaries (the
"Companies") as of March 31, 2001 and 2000, and the related combined statements
of operations and earnings retained in the business and cash flows for the year
then ended. These financial statements are the responsibility of the Companies'
management. Our responsibility is to express an opinion on these financial
statements based on our audits. The combined fina ncial statements of the
Companies as of March 31, 1999 were audited by other auditors whose report dated
June 4, 1999, expressed an unqualified opinion on those statements.
We conducted our audits in accordance with auditing standards generally
accepted in the United States of America. 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 2001 and 2000 combined financial statements referred to
above present fairly, in all material respects, the financial position of Blue
Ridge Real Estate Company and subsidiaries and Big Boulder Corporation and
subsidiaries as of March 31, 2001 and 2000, and the results of their operations
and their cash flows for the year then ended in conformity with accounting
principles generally accepted in the United States of America.
Parente Randolph, P.C.
Wilkes-Barre, Pennsylvania
June 15, 2001
PRICE RANGE OF COMMON SHARES AND DIVIDEND INFORMATION
Prior to May 4, 1993, Blue Ridge Real Estate Company and Big Boulder
Corporation common shares were listed and traded as unit certificates on the
Over-the-Counter market and were quoted on the NASDAQ National Market System
(Symbol: BLRGZ). Effective May 4, 1993, the Companies decided to discontinue
their listing with NASDAQ. Subsequent to May 4, 1993, the Companies are aware of
limited trades in their common stock; however, Management does not believe such
limited activity constitutes an established publ ic trading market.
The following sets forth the high asked and low bid price quotations as
reported on the monthly statistical reports of the National Association of
Securities Dealers, Inc. for Fiscal Years 2001 and 2000. No dividends were paid
on common stock in either Fiscal Year.
FISCAL YEAR 2001 HIGH LOW
ASKED BID
First Quarter 10.500 9.125
Second Quarter 10.500 9.250
Third Quarter 9.750 9.250
Fourth Quarter 10.875 9.250
FISCAL YEAR 2000 HIGH LOW
ASKED BID
First Quarter 10.500 9.500
Second Quarter 10.500 9.250
Third Quarter 9.875 9.250
Fourth Quarter 9.750 9.125
The reported quotations represent prices between dealers, do not reflect
retail mark-ups, mark-downs or commissions and do not necessarily represent
actual transactions. The approximate number of holders of record of common stock
on March 31, 2001 and 2000 were 608 and 636, respectively.
BLUE RIDGE REAL ESTATE COMPANY AND SUBSIDIARIES
AND BIG BOULDER CORPORATION AND SUBSIDIARIES
COMBINED SUMMARY OF SELECTED FINANCIAL DATA
2001 2000 1999
Revenues $18,896,451 $18,886,919 $17,787,480
Net income(loss) 252,532 480,640 (79,199)
Net income(loss)per
combined share $0.13 $0.24 $(0.04)
Cash dividends per
combined share 0 0 0
Weighted average number
of combined shares
outstanding 1,926,402 1,962,491 1,980,706
Total assets 24,293,365 24,366,657 23,807,755
Long-term debt 8,034,641 8,818,794 8,799,905
Shareholders' equity 10,367,281 10,363,619 10,133,392
1998 1997
Revenues $18,655,995 $16,038,000
Net income(loss) 394,593 486,806
Net income(loss)per combined share .20 $0.24
Cash dividends per combined share 0 0
Weighted average number of
combined shares outstanding 1,993,014 2,004,014
Total assets 23,943,980 23,802,737
Long-term debt 9,290,909 9,778,431
Shareholders' equity 10,413,858 10,100,268
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS Results of Operations
FISCAL 2001 VERSUS FISCAL 2000
For Fiscal Year ended March 31, 2001, the Companies reported net income of
$252,532 or $.13 per combined share as compared with a net income of
$480,640 or $.24 per combined share for Fiscal 2000. Combined revenue of
$18,896,451 represents an increase of $9,532 or less than 1% when compared
to Fiscal 2000.Ski Operations decreased $298,272 or 3%, and Real Estate
Management
Operations increased $307,804 or 4% when compared to Fiscal 2000.
The Ski Operations had approximately 247,000 skiers visit our slopes
compared to 256,000 skier visits last season. The decrease of 9,000 skier visits
represents a decrease of 4%. Revenue per skier was $31 compared to $30 last
season for an increase of $1.00 or 3%. Tubing operations had approximately
83,000 tuber visits compared to 90,000 tuber visits last season. The decrease of
7,000 tuber visits represents an 8% decrease. Revenue per tuber was $15.18
compared to $13.84 last season for an increase of $1.34 or 9%. The ski areas
operated for a combined total of 200 days compared to 181 days last season. The
food and beverage operations at the ski areas contributed revenue of $6.79 per
skier visit. The retail shop operations at the ski areas contributed revenue of
$2.12 per skier visit compared to $1.97 the previous season.
The Real Estate Management Operations increase is attributed to commissions
for resale of homes in our resort communitites (37%), fees for contract services
provided to the homeowners of the resort communities (53%), and fishinig and
hunting leases (10%). The increases were offset by a decrease in festival
revenues and fees for services provided to the trusts of the resort communities.
Disposition of properties occur sporadically and do not follow any pattern
during the fiscal year. In Fiscal 2001, 132 acres of land was sold for $521,607
with a basis of $1,204. No major land sales occurred in Fiscal 2000.
Operating costs associated with Ski Operations increased by $110,888 when
compared to Fiscal 2000. This increase is attributed to seasonal labor costs.
Operating costs associated with Real Estate Management Operations increased by
$183,405 when compared to Fiscal 2000. This increase is attributed to increased
expenses related to summer activities and the investment properties. General and
Administration expenses increased by $683,726 when compared to Fiscal 2000. The
increase is primarily due to severance expenses of $466,922 relating to
management changes. The remaining increase is due to professional fees. Interest
and Other Income increased by $245,924 when compared to Fiscal 2000. This
increase is attributable to reimbursement of estimated income taxes (25%) and
overhead expenses related to the construction of the sewer line (15%) and an
increase in disposed assets and resulting gains (60%). Interest expense
increased by $4,664 when compared to Fiscal 2000. This increase
is primarily attributable to an increase in LIBOR. The effective Tax Rate for
Fiscal 2001 and 2000 was 34% and 41% respectively.
FISCAL 2000 VERSUS FISCAL 1999
For Fiscal Year ended March 31, 2000, the Companies reported net income of
$480,640 or $.24 per combined share as compared with a net loss of
$(79,199) or $.04 per combined share for Fiscal 1999. Combined revenue of
$18,886,919 represents an increase of $1,099,439 or 6% when compared to
Fiscal 1999.
Ski Operations increased $441,625 or 4%, and Real Estate Management
Operations increased $657,814 or 9% when compared to Fiscal 1999.
The Ski Operations had approximately 256,000 skiers visit our slopes
compared to 257,000 skier visits last season. The decrease of 1,000 skier visits
represents a decrease of less than 1%. Revenue per skier was $30 compared to $27
last season for an increase of $3.00 or 10%. Tubing operations had approximately
90,000 tuber visits compared to 86,000 tuber visits last season. The increase of
4,000 tuber visits represents a 5% increase. Revenue per tuber was $13.84
compared to $13.95 last season for an decrease of $.11 or 1%. The ski areas
operated for a combined total of 181 days compared to 179 days last season. The
food and beverage operation at the ski areas contributed revenue of $8.13 per
skier visit. The retail shop operations at the ski areas contributed revenue of
$1.97 per skier visit compared to $2.16 the previous season.
The Real Estate Management Operations increase is attributed to fewer
vacancies in investment properties (25%), leasing commissions in resort
communities (62%), and fishing and hunting leases (13%). The increases were
offset by a decrease in commissions for resale of homes in our resort
communities. Disposition of properties occur sporadically and do not follow any
pattern during the fiscal year. No major land sales occurred in Fiscal 2000 or
Fiscal 1999. Operating costs associated with Ski Operations decreased by
$157,896 when compared to Fiscal 1999. This decrease is attributed to reduced
advertising (50%) and depreciation costs (50%). Operating costs associated with
Real Estate Management Operations increased by $636,702 when compared to Fiscal
1999. This increase is attributed to increased expenses related to summer
activities and the investment properties. General and Administration expenses
increased by $20,482 when compared to Fiscal 1999. The increase is attributable
to an increase in supplies and services.
Interest and Other Income increased by $373,458 when compared to Fiscal 1999.
This increase is attributable to reimbursement of estimated income taxes and
overhead expenses related to the construction of the sewer line (97%) and an
increase in disposed assets and resulting gains (3%). Interest expense increased
by $33,288 when compared to Fiscal 1999. This increase is attributable to an
additional mortgage note payable for the East Mountain Lift at Jack Frost
Mountain and an increase in the prime interest rate.
The effective Tax Rate for Fiscal 2000 and 1999 was 41% and 34% respectively.
BOARD OF DIRECTORS
Milton Cooper
Chairman, Kimco Realty Corporation;
Director, Getty Petroleum Corp.;
Director, Kimco Realty Corporation
Michael J. Flynn
Chairman of the Board and President of the Companies;
Vice Chairman and Director, Kimco Realty Corporation
Allen J. Model
Private Investor, Model Entities
Wolfgang Traber
Chairman of the Board, Hanseatic Corporation & Co. N.Y.
The above Directors serve both Companies.
OFFICERS
Michael J. Flynn
President
Eldon D. Dietterick
Secretary/Treasurer
Christine A. Liebold
Assistant Secretary
Cynthia A. Barron
Controller
The above Officers serve both Companies.
TRANSFER AGENT
HSBC Bank USA
New York, New York
INDEPENDENT AUDITORS
Parente Randolph, PC
Wilkes Barre, Pennsylvania
NOTICE OF ANNUAL MEETINGS
The Annual Meetings of Shareholders of Blue Ridge Real Estate Company and Big
Boulder Corporation will be announced with mailing of Proxy Material in July.
FORM 10-K AVAILABLE The Companies will furnish to any shareholder, without
charge, a copy of their Fiscal Year 2001 Annual Report as filed with the
Securities and Exchange Commission on Form 10-K. Written request should be
directed to the attention of the Secretary, Blue Ridge Real Estate Company, P.
O. Box 707, Blakeslee, PA 18610-0707
CORPORATE PROPERTIES
Resorts in the Pocono Mountains
Big Boulder Ski Area
Jack Frost Mountain
Fern Ridge Campground
Investment Properties
Dreshertown Plaza Shopping Center
Dresher, Montgomery County, Pennsylvania
Wal-Mart Store, Laurens, South Carolina
The Mountains Edge, Lake Harmony, Pennsylvania
Land Holdings
Blue Ridge
18,709 acres of land, held for investment
Big Boulder
929 acres of land, held for investment
Northeast Land Company
103 acres of land
Recreational Areas
"The Stretch" on the Tunkhannock
Porter Run Hunting Preserve
Splatter (Paintball game)
TRAXX, Motocross, ATV and BMX Park
Wheels, In-Line Skate and Board Park
Hub, Mountain Bike Facility