UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended December 31, 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 December 31, 1997
Common Stock, without par value, 1,992,014
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.
INDEX
PART I - FINANCIAL INFORMATION
Item 1-Financial Statements
Combined Condensed Balance Sheets
December 31, 1997 and March 31, 1997 1 & 2
Combined Condensed Statements of
Operations - Three Months and Nine
Months ended December 31, 1997 and
November 30, 1996 3
Combined Condensed Statements of
Cash Flows - Nine Months Ended
December 31, 1997 and November 30, 1996 4
Notes to Financial Statements 5 & 6
Item 2-Management's Discussion and Analysis
of Financial Condition and Results
of Operations 7 & 8
PART II - OTHER INFORMATION 9
Signatures 10
BLUE RIDGE REAL ESTATE COMPANY and SUBSIDIARIES
COMBINED CONDENSED BALANCE SHEETS
(UNAUDITED)
ASSETS December 31, March 31,
1997 1997
Current Assets
Cash (including interest bearing
deposits of $1,768,825 at December 31 1997
and $2,084,101 at March 31, 1997 $1,768,825 $2,387,197
Accounts receivable 116,344 430,628
Refundable income taxes 0 23,146
Inventories 368,182 249,590
Prepaid expenses, principally
insurance and real estate taxes 559,146 623,561
Deferred operating costs-net of
deferred revenue-ski facilities 2,527,579 0
Total current assets 5,340,076 3,714,122
Deferred financing costs, net 78,151 0
Other non-current assets 36,797 36,797
Properties:
Land, principally unimproved 1,867,750 1,867,766
Land improvements, buildings
and equipment 48,617,242 47,146,625
50,484,992 49,014,391
Less accumulated depreciation
29,865,952 28,962,573
20,619,040 20,051,818
$26,074,064 $23,802,737
<FN>
<F1>See accompanying notes to unaudited financial statements.
</FN>
LIABILITIES AND SHAREHOLDERS' EQUITY
December 31, March 31,
1997 1997
Current Liabilities:
Notes payable-line of credit $2,000,000 0
Current installments of
long-term debt 456,543 $ 532,513
Accounts and other payables 1,420,398 430,814
Accrued claims 99,952 158,905
Deferred revenue 502,897 192,556
Accrued income taxes 23,583 138,566
Accrued liabilities 806,369 801,849
Total current liabilities 5,309,742 2,255,203
Long-term debt, less
current installments 9,016,007 9,245,918
Deferred income taxes 2,013,893 2,201,348
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 December
31, 1997 and as of March 31, 1997 659,444 659,444
Capital in excess of stated
value 1,461,748 1,461,748
Earnings retained in the
business 8,950,466 9,235,309
11,071,658 11,356,501
LESS: Cost of 206,134 & 194,134
shares of capital stock in treasury as
of December 31, 1997 and March 31, 1997,
respectively. 1,337,236 1,256,233
9,734,422 10,100,268
$26,074,064 $23,802,737
<FN>
<F2>See accompanying notes to unaudited financial statements.
</FN>
BLUE RIDGE REAL ESTATE COMPANY and SUBSIDIARIES
BIG BOULDER CORPORATION and SUBSIDIARIES
COMBINED CONDENSED STATEMENTS OF OPERATIONS
(UNAUDITED)
Three Months Ended Nine Months Ended
December 31, November 30, December 31, November 30,
1997 1996 1997 1996
Revenues:
Ski operations $2,576,759 $ 73,411 $2,576,759 $1,711,824
Real estate management 929,612 712,415 3,749,377 2,940,187
Rental income 389,506 329,230 1,243,099 1,399,486
3,895,877 1,115,056 7,569,235 6,051,497
Costs and expenses:
Ski operations 2,929,594 73,411 2,929,594 1,830,423
Real estate management 846,846 677,828 3,218,466 2,910,419
Rental operations 215,336 206,086 594,074 663,003
General & administra-
tive expenses 246,932 220,129 770,323 663,199
4,238,708 1,177,454 7,512,457 6,067,044
Income (loss)from
operations (342,831) (62,398) 56,778 (15,547)
Other income (expense:)
Interest & other income 66,006 15,815 97,950 67,939
Interest expense (216,381) (226,019) (627,026) (645,518)
(150,375) (210,204) (529,076) (577,579)
Loss before
income taxes (493,206) (272,602) (472,298) (593,126)
Benefit for
income taxes (195,818) (103,589) (187,455) (294,418)
Loss $(297,388) $(169,013) $(284,843) $(298,708)
Loss per shares
outstanding:
diluted $(.15) $(.08) $(.14) $(.15)
basic $(.15) $(.08) $(.14) $(.15)
BLUE RIDGE REAL ESTATE COMPANY
BIG BOULDER CORPORATION and SUBSIDIARIES
COMBINED CONDENSED STATEMENT OF CASH FLOWS FOR
NINE MONTHS ENDED DECEMBER 31, 1997 AND NOVEMBER 30, 1996
(UNAUDITED)
1997 1996
Cash Flows from Operating Activities:
Loss $(284,843) $(298,708)
Adjustments to reconcile loss to
net cash used in operating activities:
Depreciation and amortization 919,009 853,551
Deferred income taxes (187,455) (244,847)
Write-off of project development costs 0 178,816
Deferred revenue 310,341 (364,706)
Changes in assets and liabilities:
Accounts & other receivables 314,284 27,402
Refundable income taxes 23,146 10,000
Prepaid expenses and other current assets (2,581,756) (2,594,075)
Accounts payable & accrued liabilities 935,151 (297,210)
Accrued income taxes (114,983) 0
Net cash used in operating
activities $ (667,106) $(2,729,777)
Cash Flows (used in) from Investing Activities:
Collection of mortgage receivables 0 16,379
Deferred financing costs ( 93,781) 0
Additions to properties (1,470,601) (2,172,704)
Net cash used in investing activities $(1,564,382) $(2,156,325)
Cash flows (used in) from Financing Activities:
Purchase of treasury stock (81,003) 0
Proceeds from notes payable, bank 2,000,000 2,060,401
Repayment of long-term debt (305,881) (482,375)
Net cash used in financing activities $1,613,116 $1,578,026
Net (decrease) in cash and
cash equivalents $ (618,372) $(3,308,076)
Cash and cash equivalents beginning
of period $2,387,197 $3,528,091
Cash and cash equivalents end of period $1,768,825 $ 220,015
Supplemental disclosures of cash
flow information:
Cash paid during period:
Interest $ 619,889 $ 642,694
Income taxes, net $ 90,684 $ 92,859
<FN>
<F3>See accompanying notes to unaudited financial statements.
</FN>
NOTES TO UNAUDITED FINANCIAL STATEMENTS
1. The combined financial statements include the accounts of Blue Ridge
Real Estate Company and its wholly-owned subsidiaries (Northeast Land
Company, Jack Frost Mountain Company and BRRE Holdings, Inc.) and Big
Boulder Corporation and its wholly-owned subsidiaries (Lake Mountain
Company and BBC Holdings, Inc.). In the opinion of management, the
accompanying unaudited combined condensed financial statements contain all
adjustments (consisting of only normal recurring accruals) necessary to
present fairly the financial position as of December 31, 1997, and the
results of operations and the statements of cash flows for the nine month
periods ended December 31, 1997 and November 30, 1996. Due to the change
in the fiscal year end the most comparable nine month prior year
information is the nine month period ended November 30, 1996. The
restatement of prior year quarters was not cost justifiable.
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 April through November are deferred and
recognized as revenue and operating expenses, ratably, over the operating
period.
3. The credit for income taxes for the nine months ended December 31,
1997 and November 30, 1996 represents the allocation of the estimated
annual effective tax rate for the year ending March 31, 1998 and 1997,
respectively.
4. In September 1997, the loan on the Dreshertown Plaza matured and was
subsequently refinanced.
5. Basic earnings per share are computed by dividing net income by the
weighted average number of common shares outstanding, which have only been
affected by the purchase of 12,000 shares of Treasury Stock in May 1997.
There are no items that have a dilutive effect on earnings per share. In
February 1997, the Financial Accounting Standards Board issued Statement
No. 128, "Earnings per Share," which establishes new standards for
computations of earnings per share. The Statement is effective for periods
ending after December 15, 1997, with prior periods restated at that time to
comply with the new standards.
The calculations of earnings per share are as follows:
Three Months Ended Nine Months Ended
December 31, 1997 December 31, 1997
Basic Diluted Basic Diluted
Net Loss $ (297,388) $ (297,388) $ (284,843) $(284,843)
Weighted average
number of common
shares outstanding 1,992,014 1,992,014 1,993,716 1,993,716
Effect of shares
issuable under
stock option plans:
Shares issued
under option 0 35,000 0 35,000
Less shares
effected by dilution 0 20,543 0 27,500
Diluted shares 0 14,457 0 7,500
Weighted average
common shares 1,992,014 2,006,471 1,993,716 2,001,216
Earnings per share $ (.15) $ (.15) $ (.14) $ (.14)
6. On July 1, 1997, the Board of Directors granted the Chairman of the
Companies options to acquire 25,000 shares of each of the Companies Common
stock. The options were issued at the fair market value on July 1, 1997 of
$6.75. The options expire July 1, 2003.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
Results of Operations
Operations for the Third Quarter and First nine months of Fiscal 1998
resulted in Loss of $(.15) and $(.14) per combined share compared to a
Loss of $(.08) and $(.15) per combined share for the three and nine months
ended November 30, 1996.
Combined revenue of $7,569,235 represents an increase of $1,517,738 for the
nine months ended December 31 1997, compared to the nine months ended
November 30, 1996 of the previous year. Ski operations increased $864,935,
Real estate management increased $809,190 and Rental income decreased
$156,387.
Combined revenue of $3,895,877 represents an increase of $2,780,821 for the
third quarter of Fiscal 1998, compared to the three months ended November
30, 1996 of the previous year. Ski operations increased $2,503,348, Real
estate management increased $217,197 and Rental income increased $60,276.
The increase in Ski operation revenues for the three and nine months ended
December 31, 1997 as compared to November 30,1996 is attributed to the
change in fiscal year end which results in non-conforming quarterly
comparisons.
Real estate management increase in revenue for the first nine months of
Fiscal 1998 is attributed to festival revenues, recreational activities,
rental management operations and property management of homes in our resort
communities.
Real estate management increase in revenue for the third quarter of Fiscal
1998 as compared to the three months ended November 30, 1996 is attributed
to the third quarter of Fiscal 1998 containing one month of ski operations,
whereas the three month period ended November 30, 1996 does not.
Rental income decrease in revenue for the first nine months of Fiscal 1998
is from investment properties. Rental income increase for the third
quarter of Fiscal 1998 compared to the three month period ended November
30, 1996 is due to the non-conforming quarterly comparisons.
Interest and other Income increased $30,011 for the nine months ended
December 31, 1997 and $50,191 for the three months ended December 31, 1997
compared to the three and nine months ended November 30, 1996.
Operating costs increased by $1,338,289 during the first nine months of
Fiscal 1998 as compared to the nine months ended November 30, 1996.
Operating cost increased by $3,061,254 for the third quarter of Fiscal 1998
as compared to the three months ended November 30, 1996. These increases
are primarily due to the non-conforming quarterly comparison.
General and Administrative expenses for the first nine months of Fiscal
1998 as compared to the nine months ended November 30, 1996, increased by
$107,124. General and Administrative expenses increased by $26,803 for the
third quarter of Fiscal 1998 as compared to the three months ended November
30, 1996. These increases are because of supplies. Several items are non-
recurring services related to costs incurred in connection with possible
expansion.
Interest expense for the first nine months of Fiscal 1998, as compared to
the nine months ended November 30, 1996, decreased by $18,492. Interest
expense also decreased by $9,638 for the third quarter of Fiscal 1998, as
compared to the three month period ended November 30, 1996. The decreases
are due to the re-financing of the Dreshertown Plaza loan.
The effective income tax rate for the nine months of Fiscal 1998 was 40%,
as compared to 38% for the nine months ended November 30, 1996. State taxes
account primarily for the Fiscal 1998 and 1997 effective rates being
greater than the federal statutory rate of 34%.
Financial Condition, Liquidity and Capital Resources
Working capital as of December 31, 1997 decreased by $1,428,585 as compared
to March 31, 1997. This was due principally to the repayment of the
seasonal line of credit and to a decrease in accounts receivable, and an
increase in payables due to the comparison of non-conforming periods and
renovations to the properties.
The change in the balances of accounts receivable, deferred operating costs
and accrued liabilities from March 31, 1997 to December 31, 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 the First nine months of Fiscal 1998 were for
various equipment purchases. The Companies, in Fiscal 1998, will expand
camping sites at Fernridge Campground and continue snow tubing and snow
making expansion at Big Boulder and Jack Frost.
Change in Fiscal Accounting Period
This change became effective for each of the Companies' 1997 Fiscal Years.
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).
FORM 10-Q
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by
the undersigned thereunto duly authorized:
BLUE RIDGE REAL ESTATE COMPANY
BIG BOULDER CORPORATION
(Registrant)
(Signature)
Gary A. Smith
President
(Signature)
Cynthia A. Barron
Chief Accounting Officer
Date: February 9, 1998