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 SEPTEMBER 13, 1998
( ) TRANSITION REPORT UNDER SECTION 13 OF 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 OCTOBER 23, 1998 THE NUMBER OF SHARES OUTSTANDING OF THE ISSUER'S COMMON
STOCK, NO PAR VALUE, WAS 1,008,368.
TRANSITION SMALL BUSINESS DISCLOSURE FORMAT YES NO X
----- ----
WINTER SPORTS, INC.
INDEX
PAGE NO.
PART I.FINANCIAL STATEMENTS
CONDENSED CONSOLIDATED BALANCE SHEETS
AT:
SEPTEMBER 13, 1998
SEPTEMBER 14, 1997
MAY 31, 1998
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE PERIODS:
JUNE 1, 1998 - SEPTEMBER 13, 1998
JUNE 1, 1997 - SEPTEMBER 14, 1997
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE PERIODS:
JUNE 1, 1998 - SEPTEMBER 13, 1998
JUNE 1, 1997 - SEPTEMBER 14, 1997
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITIONS
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
ITEM 5. OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
SIGNATURES
WINTER SPORTS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
9/13/98 9/14/97 5/31/98
UNAUDITED UNAUDITED NOTE 2
--------- --------- -------
ASSETS
CURRENT ASSETS
CASH AND CASH EQUIVALENTS $ 208,249 $ 91,776 $ 150,005
CERTIFICATES OF DEPOSIT 249,000 0 249,000
RECEIVABLES (NET OF RESERVE FOR
BAD DEBTS OF $11,090, $41,982
AND $14,690, RESPECTIVELY) 111,796 166,415 67,197
RECEIVABLES - RELATED PARTY 2,088 5,548 5,432
INCOME TAX REFUND RECEIVABLE 642,271 203,530 275,615
CURRENT DEFERRED TAX ASSET 51,767 55,020 51,767
INVENTORIES 364,612 394,455 405,566
PREPAID EXPENSES 82,295 89,896 163,567
---------- ---------- ----------
TOTAL CURRENT ASSETS 1,712,078 1,006,640 1,368,149
PROPERTY AND EQUIPMENT
PROPERTY AND EQUIPMENT,
AT COST 22,462,483 18,948,287 22,465,183
ACCUMULATED DEPRECIATION
AND AMORTIZATION (10,836,365) (9,764,531) (10,823,047)
----------- ---------- -----------
11,626,118 9,183,756 11,642,136
CONSTRUCTION IN PROGRESS 4,212,767 3,516,269 2,645,350
LAND AND DEVELOPMENT COSTS 2,115,106 2,191,795 2,115,106
---------- ---------- ----------
NET PROPERTY AND EQUIPMENT 17,953,991 14,891,820 16,402,592
OTHER ASSETS 281,102 303,685 282,044
---------- ---------- ----------
TOTAL ASSETS $19,947,171 $16,202,145 $18,052,785
========== ========== ==========
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
ACCOUNTS PAYABLE $ 885,285 $ 1,052,898 $ 1,044,474
ACCOUNTS PAYABLE -
RELATED PARTIES 15,781 12,114 79,065
EMPLOYEE COMPENSATION AND
RELATED EXPENSES 180,589 188,354 174,998
TAXES OTHER THAN PAYROLL
AND INCOME 188,274 220,130 120,140
INCOME TAXES PAYABLE 0 0 50
INTEREST PAYABLE 23,214 11,349 0
CURRENT PORTION OF
LONG-TERM DEBT 1,356,704 0 0
DEPOSITS AND OTHER
UNEARNED INCOME 809,605 626,180 451,507
OTHER CURRENT LIABILITIES 5,580 2,382 5,583
---------- ---------- ----------
TOTAL CURRENT LIABILITIES 3,465,032 2,113,407 1,875,817
LONG-TERM DEBT, LESS CURRENT
PORTION 7,190,000 4,233,616 6,334,945
DEFERRED INCOME TAXES 1,361,554 1,343,227 1,361,554
---------- ---------- ----------
TOTAL LIABILITIES 12,016,586 7,690,250 9,572,316
COMMITMENTS AND CONTINGENCIES
SHAREHOLDERS' EQUITY
PREFERRED STOCK (950 SHARES
AUTHORIZED; $100 PAR VALUE;
4% CUMULATIVE; 0, 245 AND
0 SHARES OUTSTANDING) $ 0 $ 24,500 $ 0
COMMON STOCK (5,000,000 SHARES
AUTHORIZED; NO PAR VALUE;
1,008,368, 1,008,368 AND
1,008,368 SHARES
OUTSTANDING) 4,099,174 4,099,174 4,099,174
ADDITIONAL PAID-IN CAPITAL 20,519 20,519 20,519
RETAINED EARNINGS 3,810,892 4,367,702 4,360,776
---------- ---------- ----------
TOTAL SHAREHOLDERS' EQUITY 7,930,585 8,511,895 8,480,469
TOTAL LIABILITIES & EQUITY $19,947,171 $16,202,145 $18,052,785
========== ========== ==========
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS
WINTER SPORTS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
QUARTER AND YEAR TO DATE
6/ 1/98 6/ 1/97
TO TO
9/13/98 9/14/97
---------- ----------
REVENUE
LIFTS $ 235,033 $ 238,098
FOOD, BEVERAGE AND RETAIL 358,565 344,728
EQUIPMENT RENTAL AND REPAIR 20,632 13,595
LODGING 55,672 52,211
LEASE, MANAGEMENT AND OTHER FEES 186,311 134,227
LEASE, MANAGEMENT AND OTHER FEES -
RELATED PARTIES 20,546 26,454
REAL ESTATE SALES 0 582,792
---------- ----------
TOTAL REVENUE 876,759 1,392,105
OPERATING COSTS AND EXPENSES
DIRECT EXPENSE - LIFTS 213,066 254,924
COST OF FOOD, BEVERAGE AND RETAIL 138,242 132,956
COST OF REAL ESTATE SALES 0 136,926
PAYROLL AND RELATED EXPENSES 604,769 569,937
DIRECT EXPENSES 285,077 281,785
MARKETING 230,836 227,584
MARKETING - RELATED PARTY 591 0
DEPRECIATION AND AMORTIZATION 15,261 15,548
GENERAL AND ADMINISTRATIVE 254,049 224,563
GENERAL AND ADMINISTRATIVE -
RELATED PARTIES 12,667 2,511
------------- ----------
TOTAL OPERATING COSTS AND EXPENSES 1,754,558 1,846,734
OPERATING INCOME (LOSS) (877,799) (454,629)
OTHER INCOME (EXPENSE)
INTEREST INCOME 5,450 1,410
INTEREST EXPENSE (144,499) (61,710)
OTHER INCOME (EXPENSE) 100,307 2
---------- ----------
TOTAL OTHER INCOME (EXPENSE) (38,742) (60,298)
INCOME (LOSS) BEFORE INCOME TAXES (916,541) (514,927)
PROVISION FOR (RECOVERY OF)
INCOME TAXES (366,656) (203,021)
------------- ----------
NET INCOME (LOSS) $ (549,885) $ (311,906)
========== ==========
EARNINGS (LOSS) PER COMMON SHARE $ (0.55) $ (0.31)
=========== ==========
WEIGHTED AVERAGE SHARES OUTSTANDING 1,008,368 1,008,368
========= ==========
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS
WINTER SPORTS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOW
(UNAUDITED)
QUARTER AND YEAR TO DATE
6/ 1/98 6/ 1/97
TO TO
9/13/98 9/14/97
------- ----------
NET CASH FLOW PROVIDED BY
(USED IN) OPERATING ACTIVITIES: $ (1,905,114) $ 276,057
CASH FLOWS FROM INVESTING ACTIVITIES
PROPERTY AND EQUIPMENT ACQUISITIONS (248,109) (1,896,168)
---------------- -----------
NET CASH (USED IN) FINANCING ACTIVITIES: (248,109) (1,896,168)
CASH FLOWS FROM FINANCING ACTIVITIES:
PROCEEDS FROM DRAWS ON LONG-TERM REVOLVER 1,905,120 2,372,513
PROCEEDS FROM DRAWS ON CONSTRUCTION LOAN 1,195,639 0
PRINCIPAL PAYMENTS ON LONG-TERM REVOLVER (889,292) (782,947)
---------------- -----------
NET CASH PROVIDED BY FINANCING ACTIVITIES: 2,211,467 1,589,566
NET INCREASE (DECREASE)
IN CASH AND CASH EQUIVALENTS 58,244 (30,545)
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 150,005 122,322
--------- -----------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $208,249 $91,777
======= ======
SUPPLEMENTAL DISCLOSURES OF CASH PAID YEAR TO DATE FOR:
INTEREST (NET OF CAPITALIZED INTEREST) $ 126,578 $ 49,784
INCOME TAXES (NET OF REFUNDS) $ 50 $ 157,323
NON-CASH OPERATING AND FINANCING ACTIVITIES IN QUARTER ENDED SEPTEMBER 13, 1998
CONSIST OF FINANCING A PORTION OF THE INCREASE IN CONSTRUCTION IN PROGRESS
THROUGH $480,983 OF TRADE ACCOUNTS PAYABLE.
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS
WINTER SPORTS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
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. ACCORDINGLY, THE FINANCIAL STATEMENTS SHOULD BE READ IN
CONJUNCTION WITH THE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS CONTAINED IN THE
COMPANY'S ANNUAL REPORT FOR THE YEAR ENDED MAY 31, 1998.
IN THE OPINION OF MANAGEMENT, THE ACCOMPANYING CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS CONTAIN ALL ADJUSTMENTS (CONSISTING OF NORMAL RECURRING ACCRUALS)
NECESSARY FOR A FAIR PRESENTATION OF THE INTERIM PERIODS PRESENTED.
CERTAIN AMOUNTS IN THE SEPTEMBER 14, 1997 FINANCIAL STATEMENTS HAVE BEEN
RECLASSIFIED TO CONFORM WITH THE SEPTEMBER 13, 1998 PRESENTATION.
NOTE 2 - MAY 31, 1998
THE BALANCE SHEET AT MAY 31, 1998 HAS BEEN CONDENSED FROM THE AUDITED FINANCIAL
STATEMENTS AT THAT DATE.
NOTE 3 - (LOSS) PER COMMON SHARE
(LOSS) PER COMMON SHARE IS BASED ON NET INCOME (LOSS) AFTER DEDUCTING DIVIDENDS
PAID ON PREFERRED STOCK OF $0 FOR THE QUARTER ENDED SEPTEMBER 14, 1997. THE
WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING WERE, 1,008,368 AND
1,008,368 FOR THE QUARTERS ENDED SEPTEMBER 13, 1998 AND SEPTEMBER 13, 1997.
NOTE 4 - SEASONAL NATURE OF OPERATIONS
THE COMPANY'S OPERATIONS ARE HIGHLY SEASONAL IN NATURE. REVENUES, EARNINGS AND
CASH FLOW ARE GENERATED PRINCIPALLY FROM THE WINTER OPERATIONS 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 REVENUES DURING THE COMPANY'S MAIN
PERIODS OF BUSINESS. THE COMPANY ALSO GENERATES REVENUES FROM THE SALE OF REAL
ESTATE WHICH IS ONGOING THROUGHOUT THE FISCAL YEAR. THEREFORE, THE RESULTS OF
OPERATIONS FOR THE INTERIM PERIODS ENDED SEPTEMBER 13, 1998 AND SEPTEMBER 14,
1997 ARE NOT NECESSARILY INDICATIVE OF THE RESULTS TO BE EXPECTED FOR THE FULL
YEAR.
NOTE 5 - 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 6 - 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
SEPTEMBER 13, 1998 $2,560,000 WAS UNUSED OF THE $8,750,000 AVAILABLE UNDER THE
INSTRUMENT. AT SEPTEMBER 14, 1997 $4,516,384 WAS UNUSED OF THE $8,750,000
AVAILABLE UNDER THE INSTRUMENT. THE LOAN BEARS INTEREST AT OR BELOW SEAFIRST'S
PRIME RATE.
THE COMPANY ALSO HAS A LOAN AGREEMENT WITH WHITEFISH CREDIT UNION FOR FINANCING
OF THE CONSTRUCTION OF A MIXED-USE CONDOMINIUM PROJECT. THE AGREEMENT PROVIDES
FOR A $3,900,000 LINE OF CREDIT WHICH IS DUE AND PAYABLE ON SEPTEMBER 1, 1999.
AT SEPTEMBER 13, 1998 $2,543,296 WAS UNUSED AND AVAILABLE FOR BORROWING UNDER
THE INSTRUMENT. THE LOAN BEARS INTEREST AT PRIME PLUS 0.5%.
NOTE 7 - 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
FIRST QUARTERS OF 1998 AND 1999 IS SUMMARIZED AS FOLLOWS:
SKI AREA REAL ESTATE CONSOLIDATED
-------- ----------- ------------
QUARTER ENDED 9/13/98
TOTAL REVENUE $ 876,759 $ 0 $ 876,758
OPERATING PROFIT (LOSS) $ (789,579) $ (88,220) $ (877,799)
DEPRECIATION AND AMORTIZATION $ 10,177 $ 5,084 $ 15,261
IDENTIFIABLE ASSETS $ 14,767,036 $ 5,180,135 $ 19,947,171
CAPITAL EXPENDITURES $ 248,109 $ 0 $ 248,109
QUARTER ENDED 9/14/97
TOTAL REVENUE $ 807,314 $ 584,792 $ 1,392,106
OPERATING PROFIT (LOSS) $ (847,050) $ 392,421 $ (454,628)
DEPRECIATION AND AMORTIZATION $ 9,640 $ 5,908 $ 15,548
IDENTIFIABLE ASSETS$ $ 13,658,322 $ 2,543,823 $ 16,202,145
CAPITAL EXPENDITURES $ 1,896,168 $ 0 $ 1,896,168
WINTER SPORTS, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND
RESULTS OF OPERATIONS
FOR THE PERIOD
6/ 1/98 6/ 1/97
TO TO
9/13/98 9/14/97
----------- -----------
GROSS REVENUES $ 876,759 $ 1,392,106
NET LOSS $ (549,885) $ (311,906)
LOSS PER COMMON SHARE $ (0.55) $ (0.31)
TOTAL ASSETS $ 19,947,171 $ 16,202,145
LONG-TERM DEBT LESS CURRENT PORTION $ 7,190,000 $ 4,233,616
RESULTS OF OPERATIONS, FIRST QUARTER AND YEAR TO DATE
REVENUES
TOTAL REVENUES FOR THE FIRST QUARTER THAT ENDED SEPTEMBER 13, 1998 WERE
$876,759, A DECREASE OF $515,347 OR 37% FROM THE QUARTER THAT ENDED SEPTEMBER
14, 1997. REAL ESTATE SALES ACCOUNTED FOR THE DECREASE. NO REAL ESTATE WAS
SOLD IN THE FIRST QUARTER OF THE CURRENT YEAR COMPARED WITH REAL ESTATE SALES OF
$582,792 IN THE FIRST QUARTER OF THE PRIOR YEAR. SKI AREA REVENUE INCREASED
FROM THE SAME QUARTER LAST YEAR DUE TO INCREASES IN MOUNTAIN BIKE RENTALS,
RETAIL SALES, CONCERT PROCEEDS AND LODGING RECEIPTS. MOUNTAIN BIKE RENTALS
INCREASED BY OVER 50% FROM THE SAME QUARTER IN THE PRIOR YEAR.
OPERATING EXPENSES
TOTAL OPERATING COSTS AND EXPENSES IN THE QUARTER ENDED SEPTEMBER 13, 1998
DECREASED BY $92,178 FROM THE SAME QUARTER LAST YEAR. THE DECREASE IS DUE TO
REDUCTIONS IN COST OF REAL ESTATE SALES AND DIRECT EXPENSES - LIFTS. THE COST
OF REAL ESTATE SALES DECREASED DUE TO THE LACK OF ANY REAL ESTATE SALES IN THE
QUARTER ENDED SEPTEMBER 13, 1998. THE REDUCTION IN DIRECT EXPENSES - LIFTS IS
DUE TO THE COST ASSOCIATED WITH NON-RECURRING MAINTENANCE ON THE COMPANY'S
GROOMING VEHICLES IN THE FIRST QUARTER OF THE PRIOR FISCAL YEAR.
OTHER EXPENSES
INTEREST EXPENSE FOR THE QUARTER ENDED SEPTEMBER 13, 1998 WAS $144,499, AN
INCREASE OF $82,789 OR 134% HIGHER THAN THE FIRST QUARTER LAST YEAR. DESPITE
LOWER BORROWING COSTS INTEREST EXPENSE INCREASED DUE TO SIGNIFICANTLY HIGHER
DEBT LEVELS ON THE COMPANY'S OPERATING LINE OF CREDIT. THE HIGHER DEBT LEVELS
ARE A RESULT OF THE COMPANY'S CAPITAL EXPANSION PROGRAM FROM THE PRIOR FISCAL
YEAR. INTEREST EXPENSE FOR THE FIRST QUARTER OF 1999 AND 1998 ARE NET OF
CONSTRUCTION PERIOD INTEREST OF $16,446 AND $10,733, RESPECTIVELY.
LIQUIDITY AND CAPITAL RESOURCES
WORKING CAPITAL AT THE END OF THE QUARTER WAS $(1,752,953) WHICH IS A DECREASE
OVER THE PRIOR YEAR'S $(1,106,676). THE DECREASE IS PRIMARILY DUE TO THE
CURRENT MATURITY OF $1,356,704 OF CONSTRUCTION LOAN DEBT DURING THE QUARTER
ENDED SEPTEMBER 13, 1998.
TOTAL LIABILITIES OF $12,016,586 REPRESENTS 152% OF SHAREHOLDERS' EQUITY AT
SEPTEMBER 13, 1998, UP FROM $7,690,249 OR 90% OF SHAREHOLDERS' EQUITY AT
SEPTEMBER 14, 1997.
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 REQUIREMENTS AND CAPITAL
ACQUISITIONS. THE COMPANY HAS A REVOLVING, REDUCING CREDIT AGREEMENT WHICH
PROVIDES FINANCIAL RESOURCES ALLOWING THE COMPANY TO MEET SHORT-TERM OPERATING
NEEDS AND FUND CAPITAL EXPENDITURES. THE $9.75 MILLION AGREEMENT REDUCES
AVAILABLE CAPACITY BY $750,000 EACH JUNE 1. AT SEPTEMBER 13, 1998, THERE WAS
$7,556,096 BORROWED WITH $2,193,904 OF UNUSED CAPACITY ON
THE $9,750,000 LINE OF CREDIT. IN ORDER TO FINANCE THE CONSTRUCTION OF A
CONDOMINIUM PROJECT THE COMPANY HAS OBTAINED A CONSTRUCTION LOAN IN THE FORM OF
A LINE OF CREDIT. THE $3,900,000 LINE OF CREDIT MATURES ON SEPTEMBER 1, 1999.
AT SEPTEMBER 13, 1998, THERE WAS $1,356,704 BORROWED WITH $2,543,296 OF UNUSED
CAPACITY ON THE $3,900,000 CONSTRUCTION LOAN.
YEAR 2000
THE COMPANY HAS INITIATED A COMPANY-WIDE PROJECT TO ASSESS THE POTENTIAL ISSUES
ASSOCIATED WITH COMPUTER PROGRAMMING CODES IN ITS EXISTING COMPUTER SYSTEMS
WITH RESPECT TO A TWO-DIGIT VALUE FOR THE YEAR 2000. THIS PROJECT CONSISTS OF
AN EVALUATION OF THE TECHNOLOGY AND DATA USED IN THE COMPANY'S INTERNAL
OPERATIONS AND THE CREATION AND DELIVERY OF ITS PRODUCTS AND SERVICES IN ORDER
TO IDENTIFY POTENTIAL YEAR 2000 ISSUES. THE PROJECT ALSO INCLUDES ASSESSING
ANY YEAR 2000 ISSUES THAT MAY BE CAUSED BY THE COMPANY'S CUSTOMERS AND VENDORS,
BUT THERE CAN BE NO ASSURANCE THAT SUCH THIRD PARTIES WILL SUCESSFULLY
REMEDIATE THEIR OWN YEAR 2000 ISSUES OVER WHICH THE COMPANY HAS NO CONTROL.
THE COMPANY BELIEVES THAT IT WILL COMPLETE ITS ASSESSMENT AS WELL AS IMPLEMENT
ANY NECESSARY PROGRAMMING MODIFICATIONS PRIOR TO THE COMMENCEMENT OF YEAR 2000
AND, ASSUMING THAT THE COMPANY'S CUSTOMERS AND VENDORS SUCCESSFULLY REMEDIATE
THEIR OWN YEAR 2000 ISSUES, THE COMPANY BELIEVES IT WILL HAVE NO MATERIAL
BUSINESS RISK FROM SUCH YEAR 2000 ISSUES. MANAGEMENT BELIEVES THAT ANY COST
ASSOCIATED WITH THE ASSESSMENT OF YEAR 2000 ISSUES AS WELL AS NECESSARY
MODIFICATIONS TO ITS SYSTEMS WILL NOT HAVE A MATERIAL ADVERSE IMPACT ON THE
COMPANY'S FINANCIAL POSITION, RESULTS OF OPERATIONS OR CASH FLOWS.
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 WHICH 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 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
AT THE REGULAR ANNUAL MEETING OF SHAREHOLDERS HELD ON OCTOBER 13,
1998, THE SHAREHOLDERS RE-ELECTED 9 CURRENT DIRECTORS TO ONE YEAR
TERMS. WHEN VOTING FOR DIRECTORS, SHAREHOLDERS ARE ENTITLED TO
CAST NINE VOTES FOR EACH SHARE OF COMMON STOCK HELD WITH
CUMULATIVE VOTING ALLOWED. THE SHAREHOLDERS ALSO VOTED TO AMEND
THE COMPANY'S ARTICLES OF INCORPORATION TO UPDATE THE COMPANY'S
INDEMNIFICATION OF DIRECTORS, OFFICERS AND EMPLOYEES AS WELL AS
RATIFY JORDAHL & SLITER PLLC AS INDEPENDENT AUDITORS. THE TABLES
BELOW SUMMARIZE THE VOTING RESULTS:
ELECTION OF DIRECTORS
VOTES FOR VOTES WITHHELD
---------- --------------
CHARLES R. ABELL 1,056,570 121,843
BRIAN T. GRATTAN 691,890 167,754
DENNIS L. GREEN 692,970 166,406
CHARLES P. GRENIER 692,855 166,523
JERRY J. JAMES 665,794 186,885
MICHAEL T. JENSON 1,621,101 61,357
DARREL R. MARTIN 699,447 163,857
MICHAEL J. MULDOWN 841,668 161,853
CALVIN S. ROBINSON 677,940 185,236
AMENDMENT OF THE ARTICLES OF INCORPORATION
SHARES VOTED FOR 795,120
SHARES VOTED AGAINST 12,744
SHARES ABSTAINING 42,884
RATIFICATION OF AUDITORS
SHARES VOTED FOR 828,070
SHARES VOTED AGAINST 699
SHARES ABSTAINING 21,979
ITEM 5. OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
NO REPORTS ON FORM 8-K WERE FILED DURING THE QUARTER ENDED
SEPTEMBER 13, 1998.
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: OCTOBER 27, 1998 /S/MICHAEL J. COLLINS
MICHAEL J. COLLINS
PRESIDENT & CHIEF EXECUTIVE OFFICER
(PRINCIPAL EXECUTIVE OFFICER)
DATE: OCTOBER 27, 1998 /S/JOANN M. GOULD
JOANN M. GOULD
CONTROLLER & ASSISTANT SECRETARY
(PRINCIPAL ACCOUNTING OFFICER)
DATE: OCTOBER 27, 1998 /S/THOMAS E. CULLEN
THOMAS E. CULLEN
TREASURER
(PRINCIPAL FINANCIAL OFFICER)