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 September 30, 2001
( ) 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 September 30, 2001 Common Stock, without par value, 1,917,180 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
September 30, 2001 and March 31, 2001 1 & 2
Combined Condensed Statements of
Operations - Three Months and Six
Months ended September 30, 2001 and 2000 3
Combined Condensed Statements of
Cash Flows - Six Months Ended
September 30, 2001 and 2000 4
Notes to Financial Statements 5
Item 2-Management's Discussion and Analysis
of Financial Condition and Results
of Operations 6 & 7
PART II - OTHER INFORMATION 8
Signatures 9
BLUE RIDGE REAL ESTATE COMPANY and SUBSIDIARIES
BIG BOULDER CORPORATION AND SUBSIDIARIES
COMBINED CONDENSED BALANCE SHEETS
ASSETS September 30, March 31,
2001 2001
(UNAUDITED) (AUDITED)
Current Assets:
Cash and cash equivalents
(all funds are interest bearing) $324,233 $2,628,839
Accounts receivable 471,720 429,653
Inventories 124,471 141,611
Deferred tax asset 579,224 665,095
Prepaid expenses, principally
insurance and real estate taxes 539,963 403,313
Deferred operating costs-net of
deferred revenue-ski facilities 2,724,515 0
Total current assets 4,764,126 4,268,511
Properties:
Land, principally unimproved
(19,741 acres per land ledger) 1,868,505 1,868,505
Land improvements, buildings
and equipment 53,929,308 53,754,045
55,797,813 55,622,550
Less accumulated depreciation
and amortization 36,557,029 35,597,696
19,240,784 20,024,854
$24,004,910 $24,293,365
See accompanying notes to unaudited financial statements.
LIABILITIES AND SHAREHOLDERS' EQUITY
September 30, March 31,
2001 2001
(UNAUDITED) (AUDITED)
Current Liabilities:
Notes Payable-Line of Credit $ 100,000 $ 0
Current installments of
long-term debt 719,965 757,228
Accounts and other payables 898,165 549,847
Accrued claims 209,770 80,433
Accrued income taxes 0 67,387
Accrued pension expense 711,042 627,042
Accrued liabilities 802,484 1,087,851
Deferred revenue 230,151 316,753
Total current liabilities 3,671,577 3,486,541
Long-term debt, less
current installments 6,996,728 7,277,413
Deferred income taxes 2,446,472 2,442,178
Other non-current liabilities 84,077 204,321
Deferred income non-current 515,631 515,631
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 Sept.30, 2001
and as of March 31, 2001 659,444 659,444
Capital in excess of stated
value 1,461,748 1,461,748
Earnings retained in the
business 10,243,615 10,283,875
12,364,807 12,405,067
LESS: Cost of 280,968 and 277,221
shares of capital stock in treasury as
of September 30, 2001 & March 31,2001
respectively. 2,074,382 2,037,786
10,290,425 10,367,281
$24,004,910 $24,293,365
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 Six Months Ended
Sept. 30, Sept. 30, Sept. 30, Sept. 30,
2001 2000 2001 2000
Revenues:
Ski operations $ 0 $ 0 $ 0 $ 0
Real estate
management 766,192 775,464 1,386,286 1,408,382
Summer recreation
operations 1,429,423 1,616,038 1,954,384 2,175,779
Rental income 613,325 484,131 1,056,670 938,514
2,808,940 2,875,633 4,397,340 4,522,675
Costs and expenses:
Ski operations 0 0 0 0
Real estate
management 620,411 676,130 1,199,573 1,273,024
Summer recreation
operations 1,274,218 1,165,240 1,799,771 1,694,688
Rental operations 346,285 229,985 587,180 449,949
General & administra-
tive expenses 289,047 266,797 540,373 542,928
2,529,961 2,338,152 4,126,897 3,960,589
Income from
operations 278,979 537,481 270,443 562,086
Other income (expense:)
Interest &
other income 22,969 536,114 38,529 584,989
Interest expense (123,262) (184,763) (259,067) (364,354)
(100,293) 351,351 (220,538) 220,635
Income before
income taxes 178,686 888,832 49,905 782,721
Provision for income
taxes 136,209 313,000 90,165 313,000
Net income $42,477 $575,832 ($40,260) $469,721
Basic and diluted income
per weighted average
combined share $0.02 $0.29 ($0.02) $0.24
See accompanying notes to unaudited financial statements.
BLUE RIDGE REAL ESTATE COMPANY
BIG BOULDER CORPORATION and SUBSIDIARIES
COMBINED CONDENSED STATEMENT OF CASH FLOWS
SIX MONTHS ENDED SEPTEMBER 30, 2001 AND SEPTEMBER 30, 2000
(UNAUDITED)
2001 2000
Cash Flows from Operating Activities:
Net Income(Loss) ($40,260) $469,721
Adjustments to reconcile net income (loss)
to net cash used in operating activities:
Depreciation and amortization 298,917 296,122
Deferred income taxes 92,748 303,393
Gain on sale of assets (1,108) (522,363)
Changes in assets and liabilities:
Accounts & other receivables (42,067) 152,992
Prepaid expenses and other current
assets (2,152,396) (2,948,174)
Accounts payable & accrued liabilities 156,044 186,313
Accrued income taxes (69,970) (172,540)
Deferred revenue (86,602) 66,525
Net cash used in operating activities (1,844,694) (2,168,011)
Cash Flows (used in) from Investing Activities:
Proceeds from disposition of assets 19,457 523,567
Additions to properties (224,825) (944,480)
Net cash used in investing activities (205,368) (420,913)
Cash flows (used in) from Financing Activities:
Borrowings under short-term financing 100,000 700,000
Additions to long-term debt 62,360
Payment of long-term debt (317,948) (262,681)
Purchase of treasury stock (36,596) (202,902)
Net cash from(used in)financing activities (254,544) 296,777
Net decrease in cash &
cash equivalents (2,304,606) (2,292,147)
Cash & cash equivalents beginning
of period 2,628,839 2,553,510
Cash and cash equivalents end of period $324,233 $261,363
Supplemental disclosures of cash
flow information:
Cash paid during period:
Interest $265,024 $364,804
Income taxes $136,311 $179,714
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 September 30, 2001, and the results of operations and the statements of cash
flows for the three and six month periods ended September 30, 2001 and September
30, 2000.
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, 2001.
2. The Companies and the subsidiaries, under SFAS No. 131 operate in three
business segments - Ski Operations, Real Estate Management/Rental Operations and
Summer Recreation Operations. The results of operations for the three and six
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 and Summer Recreation 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. The provision for income taxes for the three and six months ended
September 30, 2001 represents the estimated annual effective tax rate for the
year ending October 31, 2001. The effective income tax rate for the first six
months of Transition Period 2001 was 34%.
4. Reclassifications have been made to the September 30, 2000 Combined
Condensed Financial Statements to reflect changes in presentation for the three
and six months ended September 30, 2001. Namely, Summer Recreation Operations
are reported as a separate segment of the Companies.
5. During an executive session held on August 28 , 2001 the Board of
Directors approved a change in the fiscal year end from March 31 to October 31.
This change will result in a seven month 2001 Transition Period ended October
31, 2001. The purpose is to allow a more natural business year and to conform
the companies reporting period to that of the majority stockholder's financial
statements.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
Results of Operations
Operations for the three and six months ended September 30, 2001
(Transition Period 2001) resulted in net income of $.02 and ($.02) per combined
share compared to a net income of $.29 and $.24 per combined share for the three
and six months ended September 30, 2000.
Combined revenue of $2,808,940 and $4,397,340 for the three and six months
ended September 30, 2001 represents a decrease of $66,693 and $125,335 as
compared to the three and six months ended September 30, 2000. Ski operations
remained unchanged at $-0-. Real Estate Management decreased $9,272 and $22,096
for the three and six months ended September 30, 2001 as compared to the three
and six months ended September 30, 2000. Summer Recreation Operations decreased
by $186,615 and $221,395 for the three and six months ended September 30, 2001
as compared to the three and six months ended September 30, 2000. Rental Income
increased $129,194 and $118,156 for the three and six months ended September 30,
2001 as compared to the three and six months ended September 30, 2000.
Real Estate Management decrease in revenue is attributed to rental
management operations and property management of homes in our resort
communities.
Rental income increase in revenue is from investment properties, mainly an
increase in the revenues earned in the Dreshertown Plaza.
Summer Recreational Operations decrease is due to decreased festival revenue.
Interest and Other Income decreased $513,145 and $546,460 for the three and
six months ended September 30, 2001 as compared to the three and six months
ended September 30, 2000. This decrease was due to the sale of land in the prior
fiscal year. -6- Operating costs increased by $169,559 and $168,863 for the
three and six months ended September 30, 2001 as compared to the three and six
months ended September 30, 2000. This increase was due to increased advertising
costs associated with Splatter paintball (20%), increased festival expenses
(20%) and increased real estate taxes (60%) resulting from a change in real
estate tax expense recognition on the Dreshertown Plaza.
General and Administrative expenses for the three and six months ended
September 30, 2001 as compared to the three and six months ended September 30,
2000, increased by $22,250 and decreased by $2,555, this resulted from
fluctuations in supplies and services (50%) and repairs and maintenance (50%).
Interest expense for the three and six months ended September 30, 2001 as
compared to the three and six months ended September 30, 2000 decreased by
$61,501 and $105,287. This decrease is attributable to a reduction in the prime
interest rate (24%), paydowns of notes payable (64%), and lower draws on the
line of credit (12%).
Per Share Data
Earnings per share are computed as follows:
6 Mos. Ended 6 Mos.Ended
September 30, September 30,
2001 2000
Net Income (Loss) ($40,260) $469,721
Weighted average combined shares of common
stock outstanding used to compute basic
earnings per combined common share 1,917,971 1,929,625
Additional combined common shares to be
issued assuming exercise of stock options,
net of combined shares assumed reacquired 12,295 10,488
Combined shares used to complete dilutive
effect of stock option 1,930,266 1,940,113
Basic and diluted earnings per combined
common share ($0.02) $0.24
Financial Condition, Liquidity and Capital Resources Working capital as of
September 30, 2001 increased by $310,579 as compared to March 31, 2001. The
increase is primarily due to the cyclical nature of the Companies' business. The
change in the balance of deferred operating costs from March 31, 2001 to
September 30, 2001 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.
Moving Forward Capital expenditures for the six months ended September
30, 2001 were for various equipment purchases. The Companies, in Fiscal 2002,
will purchase a new groomer for Jack Frost Mountain, complete construction of
the rental shop addition at Jack Frost Mountain, and the snowboard terrain park
at Big Boulder Ski Area.
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)
Eldon D. Dietterick
Executive Vice-President/Treasurer
(Signature)
Cynthia A. Barron
Chief Accounting Officer
Date: November 7, 2001