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, 1998
( ) 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, 1998
Common Stock, without par value, 1,972,958
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 Bo both Corporations.
INDEX
Page No.
PART I - FINANCIAL INFORMATION
Item 1-Financial Statements
Combined Condensed Balance Sheets
December 31, 1998 and March 31, 1998 1 & 2
Combined Condensed Statements of
Operations - Three Months and Nine
Months ended December 31, 1998 and 1997
3
Combined Condensed Statements of
Cash Flows - Nine Months Ended
December 31, 1998 and 1997 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 8
BLUE RIDGE REAL ESTATE COMPANY and SUBSIDIARIES
COMBINED CONDENSED BALANCE SHEETS
(UNAUDITED)
[CAPTION]
ASSETS December 31, March 31,
1998 1998
Current Assets
Cash and cash equivalents
(all funds are interest bearing) $426,011 $2,799,777
Accounts receivable 498,798 230,482
Refundable income taxes 33,157 8,614
Inventories 449,981 221,210
Prepaid expenses, principally
insurance and real estate taxes 530,071 485,513
Deferred operating costs-net of
deferred revenue-ski facilities 3,923,159 0
Total current assets 5,861,177 3,745,596
Other non-current assets 36,797 36,797
Properties:
Land, principally unimproved 1,867,655 1,867,738
Land improvements, buildings
and equipment 49,675,486 48,907,191
51,543,141 50,774,929
Less accumulated depreciation
and amortization 32,314,116 30,977,716
19,229,025 19,797,213
$25,126,999 $23,579,606
See accompanying notes to unaudited financial statements.
LIABILITIES AND SHAREHOLDERS' EQUITY
December 31, March 31,
1998 1998
Current Liabilities:
Notes payable-line of credit $ 900,000 $ 0
Current installments of
long-term debt 540,942 457,503
Accounts and other payables 717,054 436,941
Accrued claims 109,736 78,423
Deferred revenue 698,145 236,598
Accrued income taxes 53,795 267,885
Accrued liabilities 1,119,000 559,575
Total current liabilities 4,138,672 2,036,925
Long-term debt, less
current installments 8,458,807 8,833,406
Deferred income taxes 2,319,073 2,295,417
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 Dec. 31,1998
and as of March 31, 1998 659,444 659,444
Capital in excess of stated
value 1,461,748 1,461,748
Earnings retained in the
business 9,627,758 9,629,902
11,748,950 11,751,094
LESS: Cost of 225,190 & 206,134
shares of capital stock in treasury as
of December 31, 1998 & March 31, 1998
respectively. 1,538,503 1,337,236
10,210,447 10,413.858
$25,126,999 $23,579,606
See accompanying notes to unaudited financial statements.
BLUE RIDGE REAL ESTATE COMPANY AND SUBSIDIARIES
BIG BOULDER CORPORATION and SUBSIDIARIES
COMBINED CONDENSED STATEMENTS OF OPERATIONS
(UNAUDITED)
[CAPTION]
Three Months Ended Nine Months Ended
Dec. 31, Dec. 31, Dec. 31, Dec. 31,
1998 1997 1998 1997
Revenues:
Ski operations $2,160,371 $2,576,759 $2,160,371 $2,576,759
Real estate management 790,319 929,612 3,911,888 3,749,377
Rental income 403,581 389,506 1,245,940 1,243,099
3,354,271 3,895,877 7,318,199 7,569,235
Costs and expenses:
Ski operations 2,414,304 2,929,594 2,414,304 2,929,594
Real estate management 791,738 846,846 3,297,580 3,218,466
Rental operations 186,613 215,336 645,405 594,074
General & administra-
tive expenses 286,185 246,932 849,253 770,323
3,678,840 4,238,708 7,206,542 7,512,457
Income(loss)from operations (324,569) (342,831) 111,657 56,778
Other income (expense):
Interest & other income 266 66,006 64,909 97,950
Interest expense (190,798) (216,381) (546,105) (627,026)
(190,532) (150,375) (481,196) (529,076)
Loss before income taxes &
extraordinary item (515,101) (493,206) (369,539) (472,298)
Benefit for income taxes (206,039) (195,818) (147,815) (187,455)
Loss before
extraordinary item (309,062) (297,388) (221,724) (284,843)
Extraordinary item-assets
contributed from sewer line
costruction net of income
taxes of $65,027 & $135,217
for the three & nine months
ended December 31, 1999 93,575 0 219,580 0
Loss ($215,487) ($297,388) ($2,144) ($284,843)
Basic loss per weighted average
combined share:
Before extraordinary item ($0.16) ($0.15) ($0.11) ($0.14)
Extraordinary item 0.05 0.00 0.11 0.00
Net loss ($0.11) ($0.15) $0.00 ($0.14)
Diluted loss per weighted average
combined share:
Before extraordinary item ($0.16) ($0.15) ($0.11) ($0.14)
Extraordinary item 0.05 0.00 0.11 0.00
Net loss ($0.11) ($0.15) $0.00 ($0.14)
BLUE RIDGE REAL ESTATE COMAPNY AND SUBSIDIARIES
BIG BOULDER CORPORATION and SUBSIDIARIES
COMBINED CONDENSED STATEMENT OF CASH FLOWS
(UNAUDITED)
[CAPTION]
Nine Months Ended December 31, 1998 1997
Cash Flows from Operating Activities:
Net loss ($2,144) ($284,843)
Adjustments to reconcile net income to net
cash provided by operating activities:
Extraordinary item (219,580) 0
Depreciation and amortization 729,557 919,009
Deferred income taxes 23,656 (187,455)
Deferred revenue 461,547 310,341
Changes in assets and liabilities:
Accounts & other receivables (268,316) 314,284
Refundable income taxes (24,543) 23,146
Prepaid expenses and other current assets (3,468,944) (2,581,756)
Accounts payable & accrued liabilities 870,851 935,151
Accrued income taxes (214,090) (114,983)
Net cash used in operating activities $(2,112,006) $ (667,106)
Cash Flows from Investing Activities:
Additions to intangible assets 0 (93,781)
Disposition of land 83 0
Contributed assets-sewer line construction 219,580 0
Additions to properties (888,996) (1,470,601)
Net cash used in investing activities $(669,333) $(1,564,382)
Cash flows from Financing Activities:
Purchase of treasury stock (201,267) (81,003)
Proceeds from notes payable, bank 1,950,000 2,000,000
Payment of notes payable, bank (1,050,000) 0
Payment of long-term debt (291,160) (305,881)
Net cash provided by financing activities $ 407,573 $1,613,116
Net increase (decrease) in cash &
cash equivalents $(2,373,766) $ (618,372)
Cash & cash equivalents beginning of period 2,799,777 2,387,197
Cash and cash equivalents end of period $426,011 $1,768,825
Supplemental disclosures of cash
flow information:
Cash paid during period:
Interest $ 539,559 $ 619,889
Income taxes $ 214,100 $ 90,684
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, 1998, and the
results of operations and the statements of cash flows for the three and
nine month periods ended December 31, 1998 and 1997.
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. Depreciation of ski facility fixed assets is being calculated over
the 12 month period. The expense is deferred until the operating period,
at which time it will be recognized ratably.
4. The provision for income taxes for the nine months ended December 31,
1998 and 1997 represents the estimated annual effective tax rate for the
year ending March 31, 1999 and 1998, respectively.
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 1999
resulted in net loss of $(.11) and $(.00) per combined share compared to a
net loss of $(.15) and $(.14)per combined share for the three and nine
months ended December 31, 1997.
Combined revenue of $3,354,271 and $7,318,199 represents a decrease of
$541,606 and $251,036 for the three and nine months ended December 31,
1998 as compared to the three and nine months ended December 31, 1997.
Ski operations revenue decreased $416,388 for the three and nine months
ended December 31, 1998, as compared to the three and nine months ended
December 31, 1997.
The decrease in ski operation revenue for the three and nine months of
Fiscal 1999 as compared to the three and nine months ended December 31,
1997 is attributable to the late opening date of December 19, 1998 as
compared to November 22, 1997. Real Estate Management decreased $139,293
and increased $162,511 for the three and nine months ended December 31,
1998 as compared to the three and nine months ended December 31,1997.
Real Estate Management increase in revenue for the first nine months of
Fiscal 1999 as compared to nine months ended December 31, 1997 is
attributed to festival revenues, recreational activities, and property and
rental management of homes in our resort communities.
Rental income increased $14,075 and $2,841 for the three and nine months
ended December 31, 1998 as compared to the three and nine months ended
December 31, 1997. Rental income increase for the first nine months of
Fiscal 1999 as compared to the nine months ended December 31 1997 is due
to an increase in Dreshertown rental income.
Interest and Other Income decreased $65,740 and $33,041 for the first
three and nine months of Fiscal 1999 as compared to the three and nine
months ended December 31, 1997. This decrease is due to the gain on
disposition of assets in Fiscal 1998.
Operating costs (net of G & A) decreased by $599,121 and $384,845 for the
three and nine months ended December 31, 1998 as compared to the three and
nine months ended December 31, 1997. This decrease was primarily due to
the delayed opening of the ski facilities as mentioned above.
General and Administrative expenses increased by $39,253 and $78,930 for the
three and nine months ended Decemer 31, 1998 as compared to the three and
nine months ended December 31, 1997. This fluctuation is the result of
timing differences in the purchase of supplies. Several items are
non-recurring services related to repair and maintenance.
Interest expense for the three and nine months ended December 31, 1998
decreased by $25,583 and $80,921 as compared to the three and nine months
ended December 31, 1997. This decrease is due to the principal pay down
on various notes and the reduction on the advance line of credit. The
line of credit balance at December 31, 1998 is $900,000 as compared to
$2,000,000 as at December 31, 1997.
The effective income tax rate for the first nine months of Fiscal 1999 was
40%, as compared to 34% for the nine months ended December 31, 1997. State
taxes account primarily for the Fiscal 1999 effective rates being greater
than the federal statutory rate of 34% due to net operating losses
available in the periods ended December 31, 1997.
[CAPTION]
Per Share Data
Earnings per share are computed as follows:
9 Mos. Ended 9 Mos. Ended
December 31, December 31,
1998 1997
Net Income $ (2,144) $ (284,843)
Weighted average combined shares of common
stock outstanding used to compute basic
earnings per combined common share 1,983,288 1,993,347
Additional combined common shares to be
issued assuming exercise of stock options,
net of combined shares assumed reacquired 12,946 6,117
Combined shares used to complete dilutive
effect of stock option 1,996,234 1,999,465
Basic earnings per combined common share $(0.00) $(0.14)
Diluted earnings per combined common share $(0.00) $(0.14)
Risks and Uncertainties
The companies have taken steps to make its products, systems and
infrastructure Year 2000 compliant and have installed new hardware and
financial software effective April 1, 1998. The Companies have also
initiated the process of upgrading the ticketing system to a Year 2000
compliant product. Management has and will continue to obtain
representation from its vendors that any new or existing systems are Year
2000 compliant. Management does not believe the cost for the balance of
the Year 2000 implementation will be material.
Financial Condition, Liquidity and Capital Resources
Working capital as of December 31, 1998 increased by $13,834 as compared
to March 31, 1998. This was due principally to an increase in deferred
operating costs applicable to the ski facilities.
The change in the balances of accounts receivable and deferred operating
costs from March 31, 1998 to December 31, 1998 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 1999 were for
various equipment purchases. The Companies, in Fiscal 1999, will expand
camping sites at Fernridge Campground, construct a communications tower
and install a sewer line for the Pennsylvania Department of
Transportation's planned rest 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)
Gary A. Smith
President
(Signature)
Cynthia A. Barron
Chief Accounting Officer
Date: February 5, 1999