U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-QSB
(X) QUARTERLY REPORT UNDER SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF
1934
FOR THE QUARTERLY PERIOD ENDED FEBRUARY 25, 2001
( ) TRANSITION REPORT UNDER SECTION 13 OR 15(D) OF THE EXCHANGE ACT
FOR THE TRANSITION PERIOD FROM TO
------- -------
COMMISSION FILE NO. 0-15030
WINTER SPORTS, INC.
(EXACT NAME OF SMALL BUSINESS ISSUER AS SPECIFIED IN ITS CHARTER)
MONTANA 81-0221770
(STATE OF INCORPORATION) (I.R.S. EMPLOYER I.D. NO.)
P.O. BOX 1400, WHITEFISH, MONTANA 59937
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES)
ISSUER'S TELEPHONE NUMBER, INCLUDING AREA CODE (406) 862-1900
FORMER NAME, FORMER ADDRESS & FORMER FISCAL YEAR, IF CHANGED SINCE LAST REPORT
CHECK WHETHER THE ISSUER (1) FILED ALL REPORTS REQUIRED TO BE FILED BY SECTION
13 OR 15(D) OF THE EXCHANGE ACT DURING THE PAST 12 MONTHS, AND (2) HAS BEEN
SUBJECT TO SUCH FILING REQUIREMENTS FOR THE PAST 90 DAYS. YES X NO
AS OF APRIL 3, 2001 THE NUMBER OF SHARES OUTSTANDING OF THE ISSUER'S COMMON
STOCK, NO PAR VALUE, WAS 988,668.
TRANSITION SMALL BUSINESS DISCLOSURE FORMAT YES NO X
WINTER SPORTS, INC.
INDEX
PAGE NO.
PART I. FINANCIAL STATEMENTS
CONDENSED CONSOLIDATED BALANCE SHEETS
AT:
FEBRUARY 25, 2001(UNAUDITED)
FEBRUARY 27, 2000(UNAUDITED)
MAY 31, 2000
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE PERIODS:
DECEMBER 4, 2000 - FEBRUARY 25, 2001(UNAUDITED)
DECEMBER 6, 1999 - FEBRUARY 27, 2000(UNAUDITED)
JUNE 1, 2000 - FEBRUARY 25, 2001(UNAUDITED)
JUNE 1, 1999 - FEBRUARY 27, 2000(UNAUDITED)
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE PERIODS:
JUNE 1, 2000 - FEBRUARY 25, 2001(UNAUDITED)
JUNE 1, 1999 - FEBRUARY 27, 2000(UNAUDITED)
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITIONS
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
ITEM 5. OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
SIGNATURES
WINTER SPORTS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
2/25/01 2/27/00 5/31/00
(UNAUDITED) (UNAUDITED) SEE NOTE 2
ASSETS
CURRENT ASSETS
CASH AND CASH EQUIVALENTS $ 848,678 $ 350,530 $ 297,356
CERTIFICATES OF DEPOSIT 0 72,079 0
RECEIVABLES (NET OF RESERVE FOR
BAD DEBTS OF $17,680, $17,680
AND $17,680, RESPECTIVELY) 426,701 298,661 85,895
RECEIVABLES - RELATED PARTIES 40,262 12,187 17,258
INTEREST RECEIVABLE 0 3,758 0
INCOME TAX REFUND RECEIVABLE 0 164 190,284
CURRENT DEFERRED TAX ASSET 27,320 24,516 27,320
INVENTORIES 684,833 532,252 406,876
PREPAID EXPENSES 174,248 226,100 223,708
TOTAL CURRENT ASSETS 2,202,042 1,520,247 1,248,697
PROPERTY AND EQUIPMENT
PROPERTY AND EQUIPMENT, AT COST 24,287,398 23,729,107 24,350,639
ACCUMULATED DEPRECIATION
AND AMORTIZATION (14,157,800) (12,779,984) (13,346,404)
10,129,598 10,949,123 11,004,235
CONSTRUCTION IN PROGRESS 1,866,938 1,595,933 564,681
LAND AND DEVELOPMENT COSTS 2,912,792 3,075,949 3,051,961
NET PROPERTY AND EQUIPMENT 14,909,328 15,621,005 14,620,877
OTHER ASSETS 219,576 405,690 209,824
TOTAL ASSETS $17,330,946 $17,546,942 $16,079,398
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
ACCOUNTS PAYABLE $ 767,360 $ 750,099 $ 844,126
ACCOUNTS PAYABLE - RELATED PARTIES 47,658 212 21,784
EMPLOYEE COMPENSATION
AND RELATED EXPENSES 414,474 377,112 166,983
TAXES OTHER THAN INCOME AND PAYROLL 224,794 279,457 142,440
INCOME TAXES PAYABLE 103,278 923,048 0
INTEREST PAYABLE 81,815 0 45,063
DEPOSITS AND OTHER UNEARNED INCOME 820,643 1,005,815 1,858,915
OTHER CURRENT LIABILITIES 13,073 16,882 15,338
TOTAL CURRENT LIABILITIES 2,473,095 3,352,625 3,094,649
LONG-TERM DEBT 3,946,520 3,255,000 1,996,319
DEFERRED INCOME TAXES 1,447,290 1,470,564 1,447,290
TOTAL LIABILITIES 7,866,905 8,078,189 6,538,258
STOCKHOLDERS' EQUITY
COMMON STOCK (5,000,000 SHARES
AUTHORIZED; NO PAR VALUE;
988,668, 1,008,368 AND
1,008,368 SHARES OUTSTANDING) 3,887,676 4,099,174 4,099,174
ADDITIONAL PAID-IN CAPITAL 0 20,519 20,519
RETAINED EARNINGS 5,576,365 5,349,060 5,421,447
TOTAL STOCKHOLDERS' EQUITY 9,464,041 9,468,753 9,541,140
TOTAL LIABILITIES
AND STOCKHOLDERS' EQUITY $17,330,946 $17,546,942 $16,079,398
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
WINTER SPORTS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
THIRD QUARTER YEAR TO DATE
12/3/00 12/6/99 6/1/00 6/1/99
TO TO TO TO
2/25/01 2/27/00 2/25/01 2/27/00
REVENUE
LIFTS $ 3,596,338 $ 3,750,748 $ 3,991,447 $ 4,150,967
FOOD, BEVERAGE & RETAIL 411,323 457,620 571,252 856,343
EQUIPMENT RENTAL & REPAIR 466,274 495,423 513,005 537,578
LODGING 102,147 120,194 180,116 180,207
LEASE, MANAGEMENT
& OTHER FEES 983,048 1,082,271 1,460,664 1,554,609
LEASE, MANAGEMENT & OTHER
FEES - RELATED PARTIES 116,298 132,780 142,583 180,502
REAL ESTATE SALES 232,000 2,087,000 2,041,200 3,874,240
TOTAL REVENUE 5,907,428 8,126,036 8,900,267 11,334,446
OPERATING COSTS AND EXPENSES
DIRECT EXPENSES - LIFTS 886,407 704,938 1,542,771 1,314,095
DEPRECIATION - LIFTS 492,479 462,547 492,479 462,547
COST OF FOOD, BEVERAGE & RETAIL 212,089 214,848 295,693 362,597
COST OF REAL ESTATE SALES 204,612 803,919 1,069,652 1,622,749
PAYROLL & RELATED EXPENSES 996,573 948,717 2,071,102 2,034,949
DIRECT EXPENSES 463,575 483,589 1,101,657 1,203,577
DIRECT EXPENSES -
RELATED PARTIES 25,781 7,435 66,561 37,778
MARKETING 312,109 334,383 728,874 792,253
MARKETING - RELATED PARTIES 1,600 0 1,600 0
DEPRECIATION & AMORTIZATION 346,557 307,849 373,727 334,453
GENERAL & ADMINISTRATIVE 199,050 195,439 701,165 602,287
GENERAL & ADMINISTRATIVE -
RELATED PARTIES 0 14,511 400 18,042
TOTAL OPERATING COSTS
AND EXPENSES 4,140,832 4,478,185 8,445,681 8,785,327
OPERATING INCOME (LOSS) 1,766,596 3,647,851 454,586 2,549,119
OTHER INCOME (EXPENSE)
INTEREST INCOME 0 0 0 0
INTEREST EXPENSE (83,894) (101,643) (205,273) (341,523)
GAIN (LOSS) ON
DISPOSAL OF ASSETS 0 0 0 4,645
OTHER INCOME (EXPENSE) 1,000 233 8,882 136,291
TOTAL OTHER INCOME (EXPENSE) (82,894) (101,410) (196,391) (200,587)
INCOME (LOSS) BEFORE
INCOME TAX 1,683,702 3,546,441 258,195 2,348,532
PROVISION FOR (RECOVERY OF)
INCOME TAX 673,481 1,304,318 103,278 922,884
NET INCOME (LOSS) $ 1,010,221 $ 2,242,123 $ 154,917 $ 1,425,648
EARNINGS(LOSS) PER
COMMON SHARE $ 1.02 $ 2.22 $ .15 $ 1.41
WEIGHTED AVERAGE SHARES
OUTSTANDING 992,353 1,008,368 1,001,376 1,008,368
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
WINTER SPORTS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOW
6/1/00 6/1/99
TO TO
2/25/01 2/27/00
NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES $(344,506) $3,545,009
CASH FLOWS FROM INVESTING ACTIVITIES:
PURCHASE OF CERTIFICATES OF DEPOSIT 0 (72,079)
REDEMPTION OF CERTIFICATES OF DEPOSIT 0 7,125
PROCEEDS FROM SALES OF ASSETS 63,241 4,645
DEPOSIT ON RENTAL PROPERTY PURCHASED (12,000) 0
PROPERTY AND EQUIPMENT ACQUISITIONS (873,597) (35,933)
NET CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES (822,356) (96,242)
CASH FLOWS FROM FINANCING ACTIVITIES
PROCEEDS FROM DRAWS ON LONG-TERM REVOLVER 4,160,201 4,457,399
STOCK REPURCHASE PLAN (232,017) 0
PRINCIPAL PAYMENTS ON LONG-TERM REVOLVER (2,210,000) (6,809,241)
PRINCIPAL PAYMENTS ON CONSTRUCTION LOAN 0 ( 982,527)
NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES 1,718,184 (3,334,369)
NET INCREASE IN CASH AND CASH EQUIVALENTS 551,322 114,398
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 297,356 236,132
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 848,678 $ 350,530
SUPPLEMENTAL DISCLOSURES OF CASH PAID YEAR-TO-DATE FOR:
INTEREST (NET OF CAPITALIZED INTEREST) $ 152,329 $ 236,824
INCOME TAXES (NET OF REFUNDS) $ 0 $ 0
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
WINTER SPORTS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1 - BASIS OF PRESENTATION
THE FINANCIAL STATEMENTS INCLUDED HEREIN ARE CONDENSED ACCORDING TO 10-QSB
REPORTING REQUIREMENTS. THEY DO NOT CONTAIN ALL INFORMATION REQUIRED BY
GENERALLY ACCEPTED ACCOUNTING PRINCIPLES TO BE INCLUDED IN A SET OF AUDITED
FINANCIAL STATEMENTS. THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
ARE PREPARED BY MANAGEMENT AND ARE UNAUDITED. ACCORDINGLY, THE FINANCIAL
STATEMENTS SHOULD BE READ IN CONJUNCTION WITH THE NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS CONTAINED HEREIN IN THE COMPANY'S ANNUAL REPORT FOR THE
YEAR ENDED MAY 31, 2000.
IN THE OPINION OF MANAGEMENT, THE ACCOMPANYING CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS CONTAIN ALL ADJUSTMENTS (CONSISTING OF NORMAL RECURRING ACCRUALS)
NECESSARY FOR THE FAIR PRESENTATION OF THE INTERIM PERIODS PRESENTED.
CERTAIN AMOUNTS IN THE FEBRUARY 27, 2000 FINANCIAL STATEMENTS HAVE BEEN
RECLASSIFIED TO CONFORM TO THE FEBRUARY 25, 2001 PRESENTATION.
NOTE 2 - MAY 31, 2000
THE BALANCE SHEET AT MAY 31, 2000 HAS BEEN CONDENSED FROM THE AUDITED FINANCIAL
STATEMENTS OF THAT DATE.
NOTE 3 - SEASONAL NATURE OF OPERATIONS
THE COMPANY'S OPERATIONS ARE HIGHLY SEASONAL IN NATURE. REVENUES, EARNINGS AND
CASH FLOW ARE GENERATED PRINCIPALLY FROM THE WINTER OPERATION OF LIFTS AND
RELATED FACILITIES. IT IS THE COMPANY'S PRACTICE TO RECOGNIZE SUBSTANTIALLY ALL
OF THE YEAR'S DEPRECIATION EXPENSE IN THE THIRD AND FOURTH QUARTERS IN ORDER TO
BETTER MATCH EXPENSES INCURRED IN GENERATING REVENUE DURING THE COMPANY'S MAIN
PERIODS OF BUSINESS. THE COMPANY ALSO GENERATES REVENUES FROM THE SALE OF REAL
ESTATE THAT IS ONGOING THROUGHOUT THE FISCAL YEAR. THEREFORE, THE RESULTS OF
OPERATIONS FOR THE INTERIM AND YEAR-TO-DATE PERIODS ENDED FEBRUARY 25, 2001 AND
FEBRUARY 27, 2000 ARE NOT NECESSARILY INDICATIVE OF THE RESULTS TO BE EXPECTED
FOR THE FULL YEAR.
NOTE 4 - LEGAL PROCEEDINGS AND CONTINGENCIES
FROM TIME TO TIME, THE COMPANY HAS BEEN A DEFENDANT IN UNRELATED LAWSUITS FILED
BY INDIVIDUALS WHO ARE EACH SEEKING DAMAGES OF SPECIFIED AMOUNTS, FOR ALLEGED
PERSONAL INJURIES RESULTING FROM ACCIDENTS OCCURRING ON THE COMPANY'S PROPERTY
OR WHILE SKIING. THE COMPANY'S INSURANCE CARRIER PROVIDES DEFENSE AND COVERAGE
FOR THESE CLAIMS AND THE COMPANY'S PARTICIPATION HAS BEEN LIMITED TO ITS POLICY
DEDUCTIBLE. SUCH AMOUNTS ARE CHARGED TO GENERAL AND ADMINISTRATIVE EXPENSE UPON
SETTLEMENT.
NOTE 5 - NOTES PAYABLE
THE COMPANY CURRENTLY HAS A LOAN AGREEMENT WITH BANK OF AMERICA NATIONAL TRUST
AND SAVINGS ASSOCIATION, DOING BUSINESS AS SEAFIRST BANK (SEAFIRST). THE
AGREEMENT PROVIDES FOR A $9,750,000 REVOLVING REDUCING LINE OF CREDIT, WHICH
MATURES ON JUNE 1, 2008. THE AGREEMENT CONTAINS COVENANTS THAT REQUIRE MINIMUM
NET WORTH, A FIXED CHARGE COVERAGE RATIO AND RESTRICTS INVESTMENT, DISPOSITION
OF ASSETS, CAPITAL EXPENDITURES, OUTSIDE BORROWING AND PAYMENT OF DIVIDENDS.
EACH JUNE 1, THE AMOUNT AVAILABLE UNDER THE LINE REDUCES BY $750,000. AT
FEBRUARY 25, 2001 $4,303,480 WAS UNUSED AND AVAILABLE UNDER THE $8,250,000
INSTRUMENT. AT FEBRUARY 27, 2000 $5,745,000 WAS UNUSED OF THE $9,000,000 THEN
AVAILABLE UNDER THE INSTRUMENT. THE LOAN BEARS INTEREST AT OR BELOW SEAFIRST'S
PRIME RATE.
NOTE 6 - BUSINESS SEGMENT INFORMATION
THE COMPANY OPERATES PRINCIPALLY IN TWO INDUSTRIES: THE OPERATION OF A SKI AREA
AND THE SALE OF REAL ESTATE. FINANCIAL INFORMATION BY INDUSTRY SEGMENT FOR THE
THIRD QUARTER AND YEAR-TO-DATE FOR 2001 AND 2000 IS SUMMARIZED AS FOLLOWS:
SKI AREA REAL ESTATE CONSOLIDATED
THIRD QUARTER
QUARTER ENDED 2/25/01
TOTAL REVENUE $ 4,693,751 $ 1,213,677 $ 5,907,428
OPERATING PROFIT $ 801,325 $ 965,271 $ 1,766,596
DEPRECIATION AND AMORTIZATION $ 831,876 $ 7,160 $ 839,036
IDENTIFIABLE ASSETS $ 14,510,623 $ 2,820,322 $ 17,330,945
CAPITAL EXPENDITURES $ 0 $ 0 $ 0
QUARTER ENDED 2/27/00
TOTAL REVENUE $ 4,958,136 $ 3,167,899 $ 8,126,035
OPERATING PROFIT $ 1,327,663 $ 2,320,187 $ 3,647,850
DEPRECIATION AND AMORTIZATION $ 763,236 $ 7,160 $ 770,396
IDENTIFIABLE ASSETS $ 13,803,276 $ 3,743,666 $ 17,546,942
CAPITAL EXPENDITURES $ 35,933 $ 0 $ 35,933
6/1/00 TO 2/25/01
TOTAL REVENUE $ 6,713,427 $ 2,186,840 $ 8,900,267
OPERATING PROFIT $ (378,559) $ 833,145 $ 454,586
DEPRECIATION AND AMORTIZATION $ 847,598 $ 18,608 $ 866,206
IDENTIFIABLE ASSETS $ 14,510,623 $ 2,820,322 $ 17,330,945
CAPITAL EXPENDITURES $ 873,597 $ 0 $ 873,597
6/1/99 TO 2/27/00
TOTAL REVENUE $ 7,291,289 $ 4,043,157 $ 11,334,446
OPERATING PROFIT (LOSS) $ 383,527 $ 2,165,592 $ 2,549,119
DEPRECIATION AND AMORTIZATION $ 780,567 $ 16,433 $ 797,000
IDENTIFIABLE ASSETS $ 13,803,276 $ 3,743,666 $ 17,546,942
CAPITAL EXPENDITURES $ 35,933 $ 0 $ 35,933
WINTER SPORTS, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND
RESULTS OF OPERATIONS
FOR THE FOR THE
PERIOD PERIOD
6/1/00 6/1/99
TO TO
2/25/01 2/27/00
GROSS REVENUE $ 8,900,267 $ 11,334,446
NET INCOME $ 154,917 $ 1,425,648
INCOME PER COMMON SHARE $ .15 $ 1.41
TOTAL ASSETS $ 17,330,946 $ 17,546,942
LONG-TERM DEBT $ 3,946,520 $ 3,255,000
RESULTS OF OPERATIONS, THIRD QUARTER AND YEAR-TO-DATE
REVENUES
TOTAL REVENUES FOR THE THIRD QUARTER WERE $5,907,428, A DECREASE OF $2,218,608
OR 27% FROM THE SAME QUARTER OF THE PRIOR YEAR. THE DECREASE IS DUE PRIMARILY
TO A DECREASE IN LIFT REVENUE FROM $3,750,748 IN THE THIRD QUARTER OF LAST YEAR
TO $3,596,338 DURING THE THIRD QUARTER THIS YEAR, A DECREASE OF 4%.
ACCOMPANYING THE DECREASE IN LIFT REVENUE, THE COMPANY ALSO EXPERIENCED A
DECREASE IN LEASE, MANAGEMENT & OTHER FEES REVENUE OF 9% OVER THE SAME TIME LAST
YEAR. THE COMPANY ALSO EXPERIENCED A DECREASE OF $46,297 IN FOOD, BEVERAGE &
RETAIL OVER THE SAME QUARTER LAST YEAR. THE DECREASE IN REVENUES IS A RESULT OF
LOWER THAN NORMAL SNOWFALL EXPERIENCED AT THE RESORT DURING THE THIRD QUARTER
AND THUS A DECREASE IN THE NUMBER OF SKIER VISITATIONS COMPARED WITH THE
PREVIOUS YEAR.
REAL ESTATE SALES DECREASED FROM THE THIRD QUARTER LAST YEAR. REVENUES
DECREASED BY OVER 88% TO $232,000 DURING THE THIRD QUARTER OF THIS YEAR COMPARED
TO $2,087,000 AT THIS TIME LAST YEAR. THIS DECREASE IS DUE TO LESS REAL ESTATE
PRODUCT AVAILABLE DUE TO STRONG SALES DURING THE LAST FISCAL YEAR.
OPERATING COSTS AND EXPENSES
TOTAL OPERATING COSTS AND EXPENSES DECREASED BY $337,353 (7.5%) FROM THE SAME
QUARTER OF THE PREVIOUS YEAR. THE DECREASE WAS PRIMARILY DUE TO A FEWER NUMBER
OF REAL ESTATE SALES IN THE CURRENT QUARTER COMPARED TO THAT OF LAST YEAR. COST
OF REAL ESTATE SALES DECREASED FROM $803,919 DURING THE QUARTER ENDING FEBRUARY
27, 2000 TO $204,612 FOR THE QUARTER ENDING FEBRUARY 25, 2001. THE COMPANY
EXPERIENCED AN INCREASE IN DIRECT EXPENSES- LIFTS OF $181,469 OR 25.7% FROM THE
SAME TIME LAST YEAR DUE TO AND INCREASE IN SNOWMAKING AND GROOMING BECAUSE OF
LESS NATURAL SNOWFALL. THE COMPANY ALSO INSTALLED A NEW T-BAR LIFT WHICH
INCREASED THE SKI TERRAIN OVER THE SUMMER MONTHS. THE INCREASED COSTS IN
OPERATING THIS LIFT AS WELL AS OVERALL INCREASES IN UTILITIES AND REGULAR
MAINTENANCE OF OUR FACILITIES ALSO ACCOUNTED FOR THE INCREASE IN OPERATING
COSTS.
YEAR TO DATE OPERATING COSTS AND EXPENSES HAVE DECREASED 3.8% OR $339,646. A
DECREASE IN THE COST OF REAL ESTATE SALES DUE TO LOWER REAL ESTATE SALES FROM
THE PREVIOUS YEAR ACCOUNTS FOR MOST OF THIS DECREASE. THE COMPANY IS
EXPERIENCING HIGHER FUEL AND UTILITY BILLS AS WELL AS OTHER OCCUPANCY EXPENSES
WHICH ACCOUNTS FOR THE INCREASE OF 16% IN GENERAL & ADMINISTRATIVE EXPENSES.
OTHER INCOME AND EXPENSE
INTEREST EXPENSE FOR THE QUARTER ENDED FEBRUARY 25, 2001 WAS $83,894; A DECREASE
OF $14,602 OR 14.8% LOWER THAN THE THIRD QUARTER OF LAST YEAR. INTEREST EXPENSE
DROPPED BY $136,116 OR 40% OVER THE FIRST THREE QUARTERS OF THE CURRENT FISCAL
YEAR. THESE DECREASES ARE DUE TO LOWER LEVELS OF BORROWING ON THE COMPANY'S LINE
OF CREDIT, AS A RESULT OF POSITIVE CASH FLOW AND LOWER INTEREST RATES ON THE
OPERATING LINE OF CREDIT.
OTHER INCOME
OTHER INCOME, YEAR-TO-DATE FOR FISCAL YEAR 2000 REFLECT REVENUES EARNED FROM
SALES OF TIMBER ON THE COMPANY'S BASE AREA LANDS. THE REVENUE RECEIVED IS OF A
ONE-TIME NATURE, AS THE COMPANY DOES NOT EXPECT TO HARVEST ANY MORE TIMBER IN
THE NEAR FUTURE.
NET INCOME
THE THIRD QUARTER NET INCOME OF $1,010,221 WAS $1,231,902 OR 55% LESS THAN THE
SAME QUARTER LAST YEAR. THE YEAR TO DATE NET INCOME OF $154,917 WAS $1,270,731
LESS THAN DURING THE SAME TIME PERIOD LAST YEAR. THIS WAS PRIMARILY DUE TO A
DECREASE IN REAL ESTATE SALES COUPLED WITH A DECREASE IN SKIER VISITATION AND
THE ASSOCIATED REVENUES.
THE COMPANY'S MAIN PERIODS OF BUSINESS OCCUR IN ITS FISCAL THIRD QUARTER, FROM
MID-NOVEMBER THROUGH MID-APRIL. DUE TO THE SEASONAL NATURE OF THE COMPANY'S
BUSINESS, RESULTS IN ANY ONE QUARTER ARE NOT NECESSARILY INDICATIVE OF THE
RESULTS FOR THE ENTIRE YEAR.
LIQUIDITY AND CAPITAL RESOURCES
WORKING CAPITAL AT THE END OF THE THIRD QUARTER OF 2001 WAS $(271,054). THIS
REPRESENTS AN INCREASE OF $1,561,325 FROM THE END OF THE SAME QUARTER LAST YEAR.
THE INCREASE IS PRIMARILY DUE TO INCREASES IN CASH AND INVENTORY COUPLED WITH
HIGHER DEFERRED REVENUE COMPARED TO THE END OF THE SAME QUARTER LAST YEAR.
TOTAL LIABILITIES OF $7,866,905 REPRESENT 83% OF STOCKHOLDERS' EQUITY AT
FEBRUARY 25, 2001 COMPARED TO $8,078,189 OR 85% OF STOCKHOLDERS' EQUITY AT
FEBRUARY 27, 2000.
MANAGEMENT CONTINUALLY EVALUATES THE COMPANY'S CASH AND FINANCING REQUIREMENTS.
OVER THE YEARS, THE COMPANY HAS OBTAINED FAVORABLE FINANCING FROM FINANCIAL
INSTITUTIONS WHEN NECESSARY TO FUND OFF-SEASON CASH REQUIREMENTS AND CAPITAL
ACQUISITIONS. THE COMPANY HAS A REDUCING REVOLVING CREDIT AGREEMENT THAT
PROVIDES FLEXIBLE FINANCIAL RESOURCES ALLOWING THE COMPANY TO MEET SHORT-TERM
NEEDS AND FUND CAPITAL EXPENDITURES. THE $9.75 MILLION AGREEMENT REDUCES
AVAILABLE CAPACITY BY $750,000 EACH JUNE 1. AT FEBRUARY 25, 2001, THERE WAS
$3,946,520 OUTSTANDING ON THE AVAILABLE LINE OF CREDIT OF $8,250,000. FINANCING
OF FUTURE DEVELOPMENT AND BUSINESS OPPORTUNITIES IS ANTICIPATED TO INCLUDE CASH
GENERATED FROM OPERATIONS, ISSUANCE OF ADDITIONAL DEBT AND MAY ALSO INCLUDE
ADDITIONAL EQUITY FINANCING.
THE COMPANY'S BOARD OF DIRECTORS AUTHORIZED A STOCK REPURCHASE PROGRAM ON MAY
19, 2000. UNDER THIS PROGRAM THE COMPANY COULD REPURCHASE UP TO 40,000 SHARES
OF THE COMPANY'S OUTSTANDING COMMON STOCK AT PREVAILING MARKET PRICES FROM TIME
TO TIME OVER A SIX TO EIGHT MONTH TIME PERIOD. ON DECEMBER 20, 2000 THE BOARD
OF DIRECTORS EXTENDED THIS PROGRAM FOR AN ADDITIONAL SIX MONTHS AS OF APRIL 3,
2001, THE COMPANY HAD REPURCHASED 19,700 SHARES UNDER THIS PROGRAM.
ON MARCH 19, 2001, THE COMPANY ANNOUNCED THAT HINES RESORTS, A DIVISION OF
INTERNATIONAL REAL ESTATE FIRM HINES, WAS SELECTED AS THE DEVELOPER FOR THE
VILLAGE AT BIG MOUNTAIN SKI & SUMMER RESORT. PLANS CALL FOR A PEDESTRIAN-SCALE
VILLAGE WITH MORE THAN 700 RESIDENTIAL/LODGING UNITS, AT LEAST ONE HOTEL,
CONDOMINIUMS AND TOWN HOMES, EMPLOYEE HOUSING, AS WELL AS ADDITIONAL COMMERCIAL
SPACE AND A CONFERENCE CENTER. GROUND BREAKING FOR THE FIRST PROJECTS, AS WELL
AS PRE-SALES WILL BEGIN THIS SUMMER. THE COMPANY FILED FORM 8-K ON THIS DATE TO
ANNOUNCE THIS SELECTION.
THE COMPANY HAS ENTERED INTO NEGOTIATIONS WITH CERTAIN OWNERS OF PROPERTIES
LOCATED WITHIN THE VILLAGE TO PURCHASE THEIR UNITS AS WELL AS THE BUSINESS
ASSOCIATED WITH THOSE UNITS. THESE NEGOTIATIONS ARE SUBJECT TO THE COMPANY'S
DUE DILIGENCE PROCEDURES AND AT THIS POINT HAVE NOT BEEN FINALIZED. THE COMPANY
PLANS TO OPERATE THE PROPERTIES AS THEY HAVE BEEN OPERATED IN THE PAST.
FORWARD-LOOKING STATEMENTS
THIS REPORT CONTAINS FORWARD-LOOKING STATEMENTS REGARDING MATTERS THAT ARE
SUBJECT TO RISKS AND UNCERTAINTIES. FOR SUCH STATEMENTS, THE COMPANY CLAIMS THE
PROTECTION OF THE SAFE HARBOR FOR FORWARD-LOOKING STATEMENTS CONTAINED IN
SECTION 21E OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED. THE COMPANY'S
RESULTS COULD DIFFER MATERIALLY FROM THOSE DISCUSSED IN EACH FORWARD-LOOKING
STATEMENT DUE TO VARIOUS FACTORS THAT ARE OUTSIDE THE COMPANY'S CONTROL.
WINTER SPORTS, INC.
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
REFERENCE IS MADE TO NOTE 5 OF THE CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS OF THIS FORM 10-QSB, WHICH IS INCORPORATED HEREIN BY
REFERENCE.
ITEM 5. OTHER INFORMATION
NONE
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
THE COMPANY FILED FORM 8K ON DECEMBER 20,2000 TO REPORT A CONTINUATION
OF THE STOCK REPURCHASE PROGRAM FOR AN ADDITIONAL SIX MONTHS.
WINTER SPORTS, INC.
FORM 10-QSB
SIGNATURES
IN ACCORDANCE WITH THE REQUIREMENTS OF THE EXCHANGE ACT, THE REGISTRANT CAUSED
THIS REPORT TO BE SIGNED ON ITS BEHALF BY THE UNDERSIGNED, THEREUNTO DULY
AUTHORIZED.
WINTER SPORTS, INC.
(REGISTRANT)
DATE: APRIL 10, 2001 /S/ MICHAEL COLLINS
MICHAEL COLLINS
PRESIDENT AND CHIEF EXECUTIVE OFFICER
(PRINCIPAL EXECUTIVE OFFICER)
DATE: APRIL 10, 2001 /S/ JAMI M. PHILLIPS
JAMI M. PHILLIPS
CHIEF FINANCIAL OFFICER AND TREASURER
(PRINCIPAL FINANCIAL OFFICER)