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 February 28, 1997
( ) 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: (717)-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 February 28, 1997
Common Stock, without par value, 2,004,014
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.
Page 1
INDEX
Page No.
PART I - FINANCIAL INFORMATION
Item 1-Financial Statements
Combined Condensed Balance Sheets
February 28, 1997 and May 31, 1996 1 & 2
Combined Condensed Statements of
Operations - Three Months and Nine
Months Ended February 28, 1997 3
& February 29, 1996
Combined Condensed Statements of
Cash Flows - Nine Months Ended
February 28, 1997 & February 29,1996 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 7
Signatures 8
Page 2
BLUE RIDGE REAL ESTATE COMPANY and SUBSIDIARIES
COMBINED CONDENSED BALANCE SHEETS
(UNAUDITED)
ASSETS February 28, May 31,
1997 1996
Current Assets
Cash (including interest bearing
deposits of $2,536,797 at February
28, 1997 and $2,064,134 at May
31, 1996) $ 2,961,418 $2,252,551
Current installments of mortgage
notes receivable -0- 10,670
Accounts receivable 118,593 334,397
Inventories 300,579 123,257
Prepaid expenses, principally
insurance and real estate taxes 363,245 766,921
Deferred operating costs-net of
deferred revenue-ski facilities 236,227 ---
Total current assets 3,980,062 3,487,796
Mortgage notes receivable, less
current installments -0- 2,479
Other non- current asset 36,797 71,297
Properties:
Land, principally unimproved 1,867,766 1,867,766
Land Improvements, Buildings
and equipment 48,003,818 45,779,980
49,871,584 47,647,746
Less accumulated depreciation
and amortization 29,483,540 27,999,628
20,388,044 19,648,118
$24,404,903 $23,209,690
<FN>
<F1>See accompanying notes to unaudited financial statements.
</FN>
Page 3
LIABILITIES AND SHAREHOLDERS' EQUITY
February 28, May 31,
1997 1996
Current Liabilities:
Current installments of
long-term debt 541,856 504,681
Accounts and other payables 790,153 503,063
Accrued claims 158,905 204,147
Deferred revenue 23,531 293,095
Accrued income taxes 506,230 59,098
Accrued liabilities 487,095 684,835
Total current liabilities 2,507,770 2,248,919
Long-term debt, less
current installments 9,299,896 9,189,486
Deferred income taxes 2,157,823 2,157,823
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 November 30, 1996
and as of May 31, 1996 659,444 659,444
Capital in excess of stated
value 1,461,748 1,461,748
Earnings retained in the
business 9,574,455 8,748,503
11,695,647 10,869,695
LESS: Cost of 194,134
shares of capital
stock in Treasury 1,256,233 1,256,233
10,439,414 9,613,462
$24,404,903 $23,209,690
<FN>
<F2>See accompanying notes to unaudited financial statements.
</FN>
Page 4
BLUE RIDGE REAL ESTATE COMPANY and SUBSIDIARIES
BIG BOULDER CORPORATION and SUBSIDIARIES
COMBINED CONDENSED STATEMENTS OF OPERATIONS
(UNAUDITED)
Three Months Ended Nine Months Ended
Feb.28 Feb.29 Feb.28 Feb.29
1997 1996 1997 1996
Revenues:
Ski operations $10,045,864 $8,980,548 $ 10,119,275 $8,980,548
Real estate management 777,608 706,441 3,184,093 2,394,511
Rental income 471,951 404,544 1,291,731 1,182,106
11,295,423 10,091,533 14,595,099 12,557,165
Costs and expenses:
Ski operations 8,336,112 7,995,617 8,409,523 7,984,667
Real estate management 796,351 666,285 2,893,090 2,248,757
Rental operations 203,354 215,594 638,154 599,026
General & administra-
tive expenses 265,530 258,731 718,270 730,542
9,601,347 9,136,227 12,659,037 11,562,992
Income from
operations 1,694,076 955,306 1,936,062 994,173
Other income (expense:)
Interest & other income 13,011 11,901 49,991 57,101
Interest expense (218,396) (220,098) (653,871) (656,219)
(205,385) (208,197) (603,880) (599,118)
Income before
Income taxes 1,488,691 747,109 1,332,182 395,055
Provision for income taxes 565,703 283,901 506,230 150,120
Net Income $ 922,988 $ 463,208 $825,952 $ 244,935
Net Income per shares
outstanding 2,004,014
in 1997 and 199 $0.46 $0.23 $.41 $0.12
Page 5
BLUE RIDGE REAL ESTATE COMPANY
BIG BOULDER CORPORATION and SUBSIDIARIES
COMBINED CONDENSED STATEMENT OF CASH FLOWS
(UNAUDITED)
Nine Months ended February 28 & 29 1997 1996
Cash flows from Operating
Activities
Net Income $825,952 $ 244,935
Adjustments to reconcile net
income to net cash provided by
operating activities:
Depreciation and amortization 1,483,912 1,634,095
Deferred revenue (269,564) 253,351
Changes in assets and liabilities:
Accounts & other receivables 250,304 64,290
Prepaid expenses and other
current assets (9,873) (151,154)
Accounts Payable 287,090 599,457
Accrued liabilities 204,150 32,277
Net cash provided by
operating activities 2,771,971 2,677,251
Cash Flows used in
Investing Activities:
Collection of mortgage
receivables 13,149 10,445
Additions to properties (2,223,838) (907,409)
Net cash from investing
activities (2,210,689) (896,964)
Cash flows from financing activities:
Proceeds from notes payable 2,149,985 900,000
Payment of notes payable, bank (1,500,000) (900,000)
Payment of long-term debt (502,400) (337,483)
Net cash provided by
financing activities 147,585 (337,483)
Net increase in cash and
cash equivalents 708,867 (1,442,804)
Cash and cash equivalents
beginning of period 2,252,551 2,085,287
Cash and cash equivalents
end of period $2,961,418 $3,528,091
Supplemental disclosures of cash
flow information:
Cash paid during period:
Interest $ 653,871 $ 656,219
Income taxes $ 123,300 $ 16,232
<FN>
<F3>See accompanying notes to unaudited financial statements.
</FN>
Page 6
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 condensed combined financial statements contain all adjustments
(consisting of only normal recurring accruals) necessary to present fairly
the financial position as of February 28, 1997, and the results of
operations and the statements of cash flows for the nine month periods
ended February 28, 1997 and February 29, 1996.
2. The results of operations for the three and nine months are not
necessarily indicative of the results to be expected for the full year
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 June through November are
deferred and recognized as revenue and operation expenses, ratably, over the
operating period.
3. The provision for income taxes for the nine months ended
February 28, 1997 & February 29, 1996 represents the allocation of the
estimated annual effective tax rate for the 10 months ending March 31, 1997
and 12 months ending May 31, 1996, respectively.
4. In July, 1996, the Companies secured a new loan in the amount of $650,000
with an interest rate of 7%. This loan is for additional capital
improvements at Jack Frost ski area. This loan will mature in July, 2001.
In September, 1997, the loan on the Dreshertown Plaza will mature.
Management has initiated refinancing of the loan, therefore $88,341 is
classified as current debt and the balance of $5,282,286 is included in
long-term debt.
Page 7
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
Results of Operations
Operations for the three months and nine months ended February 28, 1997
(Fiscal 1997) resulted in a net income of $.46 and $.41 per combined share
compared to a net income of $.23 and $.12 per combined share for the same
periods of the preceding year.
Combined revenue of $14,595,099 represents an increase of $2,037,934 for
nine months ending February 28, 1997, compared to the same period of the
previous year. Ski operations increased $1,138,727, Real Estate Management
increased $789,582 and Rental Income increased $109,625.
The increase in ski operations revenues for the three and nine months
ended February 28, 1997, is attributed to the increased number of skier
visits and additional profit centers.
Real Estate Management increase in revenue is from recreational activities
of $573,783, rental management operations of $184,409 and property
management of homes in our resort communities of $10,354. The increases
were offset with a decrease in marketing fees from resale of homes in our
resort communities.
Rental income increase in revenue is from investment properties.
Interest and Other Income decreased $7,110.
Operating costs increased by $1,096,045 during the first nine months of
Fiscal 1997 as compared to the same period in 1996. This was due to
increased expense in our recreational activities, rental operations and
investment properties. The increases were offset with decreases in our
property management and general and administrative expenses.
General and Administrative expenses for the first nine months of Fiscal
1997 as compared to the same period in 1996, decreased by $12,272,
primarily because of supplies and depreciation.
Interest expense for the first nine months of Fiscal 1997, as compared to
the same period in 1996, decreased by $2,348 because the retirement of
two loans in fiscal 1996 reduced our average outstanding debt compared to
the previous year.
Page 8
The effective income tax rate for the first nine months of Fiscal 1997
and Fiscal 1996 was 38%. State taxes account primarily for the Fiscal
1997 and 1996 effective rates being greater than the federal statutory
rate of 34%.
Financial Condition, Liquidity and Capital Resources
Working capital as of February 28, 1997, increased by $233,415 as compared
to May 31, 1996. This was due principally to an increase in cash.
The change in the balances of accounts receivable, deferred operating costs
and accrued liabilities from May 31, 1996 to February 28, 1997 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 Fiscal 1997 included expansion of our Tubing Hill
at Big Boulder and expansion of our snowmaking capacity at Jack Frost. The
Companies financed the air expansion with a bank note and the tubing
facilities with internal funds.
Change in Fiscal Accounting Period
At the July 24, 1996, Board of Directors meetings, a change in the fiscal
year end was approved from May 31 to March 31. This change will be
effective for each of the Companies' 1997 Fiscal Year. The purpose is to
have the fiscal reporting period coincide with the operating periods of the
profit centers initiated over the last several years.
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).
Page 9
FORM 10-Q
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by
the undersigned thereunto duly authorized:
BLUE RIDGE REAL ESTATE COMPANY
BIG BOULDER CORPORATION
(Registrant)
(Signature)
Gary A. Smith
President
(Signature)
Cynthia A. Barron
Chief Accounting Officer
Date: April 14, 1997
Page 10