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 January 31, 2002
( ) 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 January 31, 2002
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
January 31, 2002 and October 31, 2001 1 & 2
Combined Condensed Statements of
Operations - Three Months ended
January 31, 2002 and December 31, 2000 3
Combined Condensed Statements of
Cash Flows - Three Months Ended
January 31, 2002 and December 31, 2000 4
Notes to Financial Statements 5
Item 2-Management's Discussion and Analysis
of Financial Condition and Results
of Operations 6,7 & 8
PART II - OTHER INFORMATION 8
Signatures 9
BLUE RIDGE REAL ESTATE COMPANY and SUBSIDIARIES
BIG BOULDER CORPORATION AND SUBSIDIARIES
COMBINED CONDENSED BALANCE SHEETS
(UNAUDITED)
ASSETS January 31, October 31,
2002 2001
Current Assets
Cash and cash equivalents
(all funds are interest bearing) $1,122,444 $263,178
Accounts receivable 365,597 376,838
Inventories 396,075 231,771
Prepaid expenses, principally
insurance and real estate taxes 617,024 730,382
Deferred operating costs 1,152,477 2,106,478
Total current assets 3,653,617 3,708,647
Properties:
Land, principally unimproved (19,741 1,868,505 1,868,505
acres per land ledger)
Land Improvements, buildings
and equipment 54,448,432 53,985,296
56,316,937 55,853,801
Less accumulated depreciation
and amortization 36,634,725 36,636,005
19,682,212 19,217,796
$23,335,829 $22,926,443
See accompanying notes to unaudited financial statements.
1
LIABILITIES AND SHAREHOLDERS' EQUITY
January 31, October 31,
2002 2001
Current Liabilities:
Notes payable - line of credit $0 $648,195
Current installments of
long-term debt 721,869 720,435
Accounts and other payables 1,400,176 544,734
Accrued claims 130,767 134,770
Deferred income taxes 671,834 625,292
Accrued pension expense 774,580 732,580
Accrued liabilities 1,324,588 999,527
Deferred revenue 588,987 638,875
Total current liabilities 5,612,801 5,044,408
Long-term debt, less
current installments 6,728,788 6,949,805
Deferred income taxes 842,117 842,117
Other non-current liabilities 40,292 48,219
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 January
31, 2002 and as of October 31, 2001 659,444 659,444
Capital in excess of stated
value 1,461,748 1,461,748
Earnings retained in the business 9,549,390 9,479,453
11,670,582 11,600,645
LESS: Cost of 280,968 share of
capital stock in treasury as January
31, 2002 & October 31, 2001,
respectively. 2,074,382 2,074,382
9,596,200 9,526,263
$23,335,829 $22,926,443
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
THREE MONTHS ENDED JANUARY 31, 2002 & DECEMBER 31, 2000
(UNAUDITED)
2002 2000
Revenues:
Ski operations $4,941,020 $2,657,373
Real estate management 988,067 687,023
Summer recreation operations 178,357 310,048
Rental income 429,856 428,439
6,537,300 4,082,883
Costs and expenses:
Ski operations 4,921,516 2,685,046
Real estate management 680,007 641,211
Summer recreation operations 168,173 325,593
Rental operations 245,825 220,219
General & administrative expenses 304,337 267,654
6,319,858 4,139,723
Income (loss)from operations 217,442 (56,840)
Other income (expense:)
Interest & other income 5,797 134,403
Interest expense (106,702) (208,589)
(100,905) (74,186)
Income (loss) before income taxes 116,537 (131,026)
Provision (benefit) for income taxes 46,600 (54,000)
Net income (loss) $69,937 $(77,026)
Basic and diluted loss per weighted
average combined share $.04 ($0.04)
See accompanying notes to unaudited financial statements.
3
BLUE RIDGE REAL ESTATE COMPANY
BIG BOULDER CORPORATION and SUBSIDIARIES
COMBINED CONDENSED STATEMENT OF CASH FLOWS
THREE MONTHS ENDED JANUARY 31, 2002 & DECEMBER 31, 2000
(UNAUDITED)
2002 2000
Cash Flows From(Used In) Operating Activities:
Net Income(Loss) $ 69,937 $(77,026)
Adjustments to reconcile net income (loss) to net
cash provided by operating activities:
Depreciation and amortization 884,265 442,731
Deferred income taxes 46,542 (70,185)
Gain on sale of assets (1,632) (1,725)
Changes in assets and liabilities:
Accounts receivable 11,241 (537,455)
Prepaid expenses and other current assets (50,946) 28,471
Deferred operating costs 515,956 (451,233)
Accounts Payable & accrued liabilities 1,210,573 1,099,913
Accrued income taxes 0 (7,367)
Deferred revenue (49,888) 233,745
Net cash provided by operating activities 2,636,048 659,869
Cash Flows From (Used In) Investing Activities:
Deferred Income 0 13,198
Proceeds from disposition of assets 17,191 1,725
Additions to properties (926,195) (425,535)
Net cash used in investing activities (909,004) (410,612)
Cash flows From (Used In) Financing Activities:
Payment of short-term financing (1,448,195) (100,000)
Proceeds from short-term financing 800,000 1,350,000
Payment of long-term debt (219,583) (215,885)
Purchase of Treasury stock 0 (18,842)
Net cash from (used in) financing activities (867,778) 1,015,273
Net increase in cash and cash equivalents 859,266 1,264,530
Cash and cash equivalents, beginning
of period 263,178 261,363
Cash and cash equivalents, end of period $1,122,444 $1,525,893
Supplemental disclosures of cash flow information:
Cash paid during period:
Interest $107,516 $205,113
Income taxes $0 $47,069
See accompanying notes to unaudited financial statements.
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 January 31, 2002, and the results of operations and the statements of cash
flows for the three month periods ended January 31, 2002 and December 31, 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' Transition
Report on Form 10-K for the seven months ended October 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 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 months ended January 31,
2002 represents the estimated annual effective tax rate for the year ending
October 31, 2002. The effective income tax rate for the first three months of
Fiscal 2002 was 40%.
4. Reclassifications have been made to the December 31, 2000 Combined
Condensed Statement of Operations to reflect changes in presentation for the
three months ended January 31, 2002. Namely, Summer Recreation Operations are
reported as a separate segment of the Companies.
5
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
Results of Operations
Due to the change in the Companies' fiscal year end, the most recent being
October 31, 2001, the comparative quarterly information presented is from the
most current comparable quarter, which is the three months ended December 31,
2000. It was not financially practicable to restate the prior fiscal information
to match the newly stated quarters.
Operations for the three months ended January 31, 2002 (Fiscal 2002)
resulted in a net income of $.04 per combined share compared to a net loss of
$(.04) per combined share for the three months ended December 31, 2000.
Combined revenue of $6,537,300 represents an increase of $2,454,417 as
compared to the three months ended December 31, 2000. Ski operations increased
$2,283,647. Real Estate Management increased $301,044 and Rental Income
increased $1,417. Summer recreation activities decreased $131,691.
Ski operations increase in revenue for the three months ended January 31,
2002 is the result of two months of ski activity being compared to one month of
ski activity for the three months ended December 31, 2000. The ski areas
traditionally operate from December through March.
Real Estate Management increase in revenue is attributed to property
management of homes in our resort communities (50%) and the implementation of a
timbering program (50%).
Summer recreational activities decrease in revenue is attributed to
Splatter Paintball (18%) and Traxx (52%). These two operations were closed for
the majority of the three month period ending January 31, 2002, due to it being
cost beneficial to shorten the operating period. Both centers were operational
for all three months ended December 31, 2000.
Interest and Other Income decreased $128,606. This decrease was due to
other income received from the Penn DOT sewer line construction project in the
three month period ended December 31, 2000.
Operating costs increased by $2,143,452 during the first three months of
Fiscal 2002 as compared to the three months ended December 31, 2000. Ski
Operation expenses increased by $2,236,470 as a result of two months of ski
activity expenses being included for the three months ended January 31, 2002 as
compared to one month of ski activity expenses being included for the three
months ended December 31, 2000. The ski areas traditionally operate from
December through March.
6
Real Estate Management operating expenses increased by $38,796.
Summer recreational activities operating expenses decreased by $157,420 as
a result of Splatter Paintball and Traxx being closed for the majority of the
three months ended January 31, 2002 and being operational for the three months
ended December 31, 2000.
Rental income operating expenses increased by $25,606.
General and Administrative expenses for the first three months of Fiscal
2002 as compared to the three months ended December 31, 2000, increased by
$36,683, this fluctuation is the result of timing differences in the purchasing
of supplies and services.
Interest expense for the first three months of Fiscal 2002, as compared to
the three months ended December 31, 2000, decreased by $101,887. This decrease
is attributable to a reduction in debt on the Dreshertown Plaza Shopping Center
(59%) and the payoff of the Jack Frost Mountain compressor loan (20%). Balance
of the decrease is from a reduction in debt through monthly principal payments
and a reduction in the prime interest rate.
Options Granted
Effective December 10, 2001 four corporate officers were granted stock
options in varying amounts with a total of 11,000 shares. The option price of
$10.50 was equal to the market value on the date of the grant. Because the
exercise price of the stock options equals the fair market value of the
Companies' underlying stock on the date of the grant, no compensation expense is
recognized in the combined condensed statement of operation.
Per Share Data
Income (loss) per share are computed
as follows: 3 Mos ended 3 Mos ended
January 31, December 31,
2002 2000
Net Income (Loss) $ 69,937 $ (77,026)
Weighted average combined shares of common
stock outstanding used to compute basic
earnings per combined common share 1,917,180 1,924,433
Additional combined common shares to be
issued assuming exercise of stock options,
net of combined shares assumed reacquired 14,237 10,120
Combined shares used to complete dilutive
effect of stock option 1,931,417 1,934,553
Basic and diluted income (loss) per combined
common share $.04 $(.04)
7
Financial Condition, Liquidity and Capital Resources
Working capital as of January 31, 2002, decreased by $623,423 as compared
to October 31, 2001. The decrease is primarily due to the cyclical nature of the
Companies' business. The change in the balance of deferred operating costs from
October 31, 2001 to January 31, 2002 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 First Quarter of Fiscal 2002 were for various
equipment purchases. The Companies, in Fiscal 2002 will be constructing
additional Splatter Paintball fields, the completion of an ATV exclusive area at
the Traxx Motorcross facility at Jack Frost Mountain and upgrades to the
Fernridge Campground.
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).
8
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: March 6, 2002
9