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 September 30, 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 September 30, 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
Page No.
PART I - FINANCIAL INFORMATION
Item 1-Financial Statements
Combined Condensed Balance Sheets
September 30, 1997 and March 31, 1997 1 & 2
Combined Condensed Statements of
Operations - Three Months and Six
Months ended September 30, 1997 and
August 31, 1996
3
Combined Condensed Statements of
Cash Flows - Six Months Ended
September 30, 1997 and August 31, 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
BLUE RIDGE REAL ESTATE COMPANY and SUBSIDIARIES
COMBINED CONDENSED BALANCE SHEETS
(UNAUDITED)
[CAPTION]
<TABLE>
ASSETS September 30, March 31,
1997 1997
<S> <C> <C>
Current Assets
Cash (including interest bearing
deposits of $5,284 at September 30, 1997
and $2,084,101 at March 31, 1997 $ 5,284 $2,387,197
Accounts receivable 156,206 430,628
Refundable income taxes 0 23,146
Inventories 299,332 249,590
Prepaid expenses, principally
insurance and real estate taxes 532,999 623,561
Deferred operating costs-net of
deferred revenue-ski facilities 2,342,659 -
Total current assets 3,336,480 3,714,122
Other non-current assets 36,797 36,797
Properties:
Land, principally unimproved 1,867,766 1,867,766
Land improvements, buildings
and equipment 47,987,227 47,146,625
49,854,993 49,014,391
Less accumulated depreciation
and amortization 29,340,660 28,962,573
20,514,333 20,051,818
$23,887,610 $23,802,737
<FN>
<F1>See accompanying notes to unaudited financial statements.
</FN>
</TABLE>
LIABILITIES AND SHAREHOLDERS' EQUITY
<TABLE>
September 30, March 31,
1997 1997
<S> <C> <C>
Current Liabilities:
Notes Payable-Line of Credit $ 700,000 $ -
Current installments of
long-term debt 427,949 532,513
Accounts and other payables 643,726 430,814
Accrued claims 112,570 158,905
Deferred revenue 210,706 192,556
Accrued income taxes 23,626 138,566
Accrued liabilities 369,427 801,849
Total current liabilities 2,488,004 2,255,203
Long-term debt, less
current installments 9,158,085 9,245,918
Deferred income taxes 2,209,711 2,201,348
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 September
30, 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 9,247,854 9,235,309
11,369,046 11,356,501
LESS: Cost of 206,134 & 194,134
shares of capital stock in treasury as
of September 30, 1997 and March 31, 1997,
respectively. 1,337,236 1,256,233
10,031,810 10,100,268
$23,887,610 $23,802,737
<FN>
<F2>See accompanying notes to unaudited financial statements.
</FN>
</TABLE>
BLUE RIDGE REAL ESTATE COMPANY and SUBSIDIARIES
BIG BOULDER CORPORATION and SUBSIDIARIES
COMBINED CONDENSED STATEMENTS OF OPERATIONS
(UNAUDITED)
[CAPTION]
<TABLE>
Three Months Ended Six Months Ended
September 30, August 31, September 30, August 31,
1997 1996 1997 1996
<S> <C> <C> <C> <C>
Revenues:
Ski operations $ - $ - $ - $1,638,413
Real estate management 1,807,326 1,694,070 2,819,765 2,227,772
Rental income 363,800 490,550 853,593 1,070,256
2,171,126 2,184,620 3,673,358 4,936,441
Costs and expenses:
Ski operations - - - 1,757,012
Real estate management 1,378,976 1,418,911 2,371,620 2,232,591
Rental operations 136,944 228,714 378,738 456,917
General & administra-
tive expenses 253,454 232,611 523,391 443,070
1,769,374 1,880,236 3,273,749 4,889,590
Income from operations 401,752 304,384 399,609 46,851
Other income (expense:)
Interest & other income 12,066 21,165 31,944 52,124
Interest expense (173,552) (209,456) (410,645) (419,499)
(161,486) (188,291) (378,701) (367,375)
Income (Loss)
before income taxes 240,266 116,093 20,908 (320,524)
Provision (Benefit)
for income taxes 96,106 44,100 8,363 (279,045)
Net Income (Loss) $ 144,160 $ 71,993 $ 12,545 $ (41,479)
Average Common Shares
Outstanding 1,992,014 2,004,014 1,995,073 2,004,014
Net Income (loss) per
shares outstanding $ .07 $ .04 $ .01 $(.02)
</TABLE>
<TABLE>
BLUE RIDGE REAL ESTATE COMPANY
BIG BOULDER CORPORATION and SUBSIDIARIES
COMBINED CONDENSED STATEMENT OF CASH FLOWS FOR
SIX MONTHS ENDED SEPTEMBER 30, 1997 AND AUGUST 31, 1996
(UNAUDITED)
<CAPTION>
<S> <C> <C>
1997 1996
Cash Flows from Operating Activities:
Net income (loss) $ 12,545 $(129,679)
Adjustments to reconcile net income (loss)to
net cash used in operating activities:
Depreciation and amortization 378,087 678,515
Deferred income taxes 8,363 (267,306)
Write-off of project development costs - 178,818
Deferred revenue 18,150 (345,298)
Changes in assets and liabilities:
Accounts & other receivables 274,422 598
Refundable income taxes 23,146 10,000
Prepaid expenses and other current assets (2,301,839) (1,177,602)
Accounts payable & accrued liabilities (265,845) (703,312)
Accrued income taxes (114,940) 89,824
Net cash used in operating
activities $(1,967,911) $(1,665,442)
Cash Flows (used in) from Investing Activities:
Marketable securities - (293,588)
Collection of mortgage receivables - 3,980
Additions to intangible assets (101,631) -
Additions to properties (738,971) (1,085,424)
Net cash used in investing activities $(840,602) $(1,375,032)
Cash flows (used in) from Financing Activities:
Purchase of treasury stock (81,003) -
Proceeds from notes payable, bank 700,000 363,946
Payment of long-term debt (192,397) (344,606)
Net cash used in financing activities $ 426,600 $ 19,340
Net (decrease) in cash and
cash equivalents $(2,381,913) $(3,021,134)
Cash and cash equivalents beginning
of period $2,387,197 $3,528,091
Cash and cash equivalents end of period $ 5,284 $ 506,957
Supplemental disclosures of cash
flow information:
Cash paid during period:
Interest $ 407,377 $ 416,675
Income taxes, net $ 90,684 $ 92,859
<FN>
<F3>See accompanying notes to unaudited financial statements.
</FN>
</TABLE>
NOTES TO UNAUDITED FINANCIAL STATEMENTS
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 September 30,
1997, and the results of operations and the statements of cash flows
for the six month periods ended September 30, 1997 and August 31,
1996. Due to the change in the fiscal year end the most comparable
six month prior year information is the six month period ended August
31, 1996. The restatement of prior year quarters was not cost
justifiable.
The results of operations for the three and six 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 operating expenses, ratably,
over the operating period.
The provision (credit) for income taxes for the six months ended
September 30, 1997 and August 31, 1996 represents the allocation of
the estimated annual effective tax rate for the year ending March 31,
1998 and 1997, respectively.
In September 1997, the loan on the Dreshertown Plaza matured and was
subsequently refinanced with CoreStates Bank.
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. If
the Statement had been effective for the periods ended June 30, 1997
and May 31, 1996 there would have been no significant change in
earnings per share as presented in the accompanying Combined Statements
of Income.
On July 1, 1997, the Board of Directors granted the Chairman of the
Companies options to acquire 25,000 shares of the Companies Common stock.
The options were issued at the fair market value on July 1 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 Second Quarter and First Half of Fiscal 1998 resulted in
Net Income of $.07 and $.01 per combined share compared to a Net Income
(Net loss) of $.04 and ($.02) per combined share for the six months ended
August 31, 1996.
Combined revenue of $3,673,358 represents a decrease of $1,263,083 for six
months ending September 30, 1997, compared to the six months ended August
31, 1996 of the previous year. Ski operations decreased $1,638,413, Real
Estate Management increased $591,993 and Rental Income decreased $216,663.
The decrease in Ski operation revenues for the six months ended September
30, 1997 as compared to August 31, 1996 is attributed to the change in
fiscal year end which results in non-conforming quarterly comparisons. The
six months ended September 30, 1997, does not reflect any ski operation
income whereas the six months ended August 31, 1996 does. Ski operation
income is generated December through March annually.
Real Estate Management increase in revenue is attributed to festival
revenues, recreational activities, rental management operations and
property management of homes in our resort communities. The increases
were offset with a decrease in marketing fees from resale of homes in our
resort communities.
Rental income decrease in revenue is from investment properties.
Interest and Other Income decreased $20,180.
Operating costs decreased by $1,615,841 during the first six months of
Fiscal 1998 as compared to the six months ended August 31, 1996. This was
primarily due to the non-conforming quarterly comparison. The six months
ended September 30, 1997 does not reflect any ski operation expenses
whereas the six months ended August 31, 1996 does. Ski operations are
encompassed December through March annually.
General and Administrative expenses for the first six months of Fiscal 1998
as compared to the six months ended August 31, 1996, increased by $80,321
primarily because of supplies. Several items are non-recurring services
related to expansion.
Interest expense for the first six months of Fiscal 1998, as compared to
the six months ended August 31, 1996, decreased by $8,854 because of the
re-financing of the Dresheertown Plaza loan.
The effective income tax rate for the First six months of Fiscal 1998 was
40%, as compared to 38% for the six months ended August 31, 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 September 30, 1997 decreased by $610,443 as compared
to March 31, 1997. This was due principally to a decrease in accounts
receivable, an increase in payables and renovations to the properties.
The change in the balances of accounts receivable, deferred operating costs
and accrued liabilities from March 31, 1997 to September 30, 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 Half 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
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).
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: November 12, 1997
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> MAR-31-1998
<PERIOD-END> SEP-30-1997
<CASH> 5,284
<SECURITIES> 0
<RECEIVABLES> 156,206
<ALLOWANCES> 0
<INVENTORY> 299,332
<CURRENT-ASSETS> 3,336,480
<PP&E> 47,987,227
<DEPRECIATION> 29,340,660
<TOTAL-ASSETS> 23,887,610
<CURRENT-LIABILITIES> 2,488,004
<BONDS> 0
0
0
<COMMON> 1,992,014
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 23,887,610
<SALES> 3,673,358
<TOTAL-REVENUES> 3,673,358
<CGS> 0
<TOTAL-COSTS> 3,273,749
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> (410,645)
<INCOME-PRETAX> 20,908
<INCOME-TAX> 88,363
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 112,545
<EPS-PRIMARY> .01
<EPS-DILUTED> 0
</TABLE>
