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, 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 September 30, 1998
Common Stock, without par value, 1,976,958
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 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, 1998 and March 31, 1998 1 & 2
Combined Condensed Statements of
Operations - Three Months and Six
Months ended September 30, 1998 and 1997 3
Combined Condensed Statements of
Cash Flows - Six Months Ended
September 30, 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
PART II - OTHER INFORMATION 7
Signatures 8
BLUE RIDGE REAL ESTATE COMPANY and SUBSIDIARIES
COMBINED CONDENSED BALANCE SHEETS
[CAPTION]
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ASSETS September 30, March 31,
1998 1998
(UNAUDITED)
Current Assets
Cash and cash equivalents
(all funds are interest bearing 225,987 $2,799,777
Accounts receivable 353,269 230,482
Refundable income taxes 0 8,614
Inventories 219,192 221,210
Prepaid expenses, principally
insurance and real estate taxes 380,031 485,513
Deferred operating costs-net of
deferred revenue-ski facilities 3,444,606 0
Total current assets 4,623,085 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 49,296,594 48,907,191
51,164,249 50,774,929
Less accumulated depreciation
and amortization 31,947,500 30,977,716
19,216,749 19,797,213
$23,876,631 $23,579,606
See accompanying notes to unaudited financial statements.
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LIABILITIES AND SHAREHOLDERS' EQUITY
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September 30, March 31,
1998 1998
(UNAUDITED)
Current Liabilities:
Notes Payable-Line of Credit $ 500,000 $ 0
Current installments of
long-term debt 459,502 457,503
Accounts and other payables 262,649 436,941
Accrued claims 99,441 78,423
Deferred revenue 292,746 236,598
Accrued income taxes 53,765 267,885
Accrued liabilities 648,478 559,575
Total current liabilities 2,316,581 2,036,925
Long-term debt, less
current installments 8,668,141 8,833,406
Deferred income taxes 2,426,929 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 June 30,1998
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 9,843,245 9,629,902
11,964,437 11,751,094
LESS: Cost of 221,190 & 206,134
shares of capital stock in treasury as
of September 30, 1998 & March 31,1998
respectively. 1,499,457 1,337,236
10,464,980 10,413,858
$23,876,631 $23,579,606
See accompanying notes to unaudited financial statements.
</TABLE>
BLUE RIDGE REAL ESTATE COMPANY AND SUBSIDIARIES
BIG BOULDER CORPORATION and SUBSIDIARIES
COMBINED CONDENSED STATEMENTS OF OPERATIONS
(UNAUDITED)
[CAPTION]
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Three Months Ended Six Months Ended
Sept.30, Sept. 30, Sept. 30, Sept. 30,
1998 1997 1998 1997
Revenues:
Ski operations $ 0 $ 0 $ 0 $ 0
Real estate management 2,045,323 1,807,326 3,121,569 2,819,765
Rental income 455,066 363,800 842,359 853,593
2,500,389 2,171,126 3,963,928 3,673,358
Costs and expenses:
Ski operations 0 0 0 0
Real estate management 1,480,446 1,378,976 2,505,842 2,371,620
Rental operations 221,280 136,944 458,792 378,738
General & administra-
tive expenses 240,471 253,454 563,068 523,391
1,942,197 1,769,374 3,527,702 3,273,749
Income from operations 558,192 401,752 436,226 399,609
Other income (expense:)
Interest & other income 20,400 12,066 64,643 31,944
Interest expense (178,925) (173,552) (355,307) (410,645)
(158,525) (161,486) (290,664) (378,701)
Income before income taxes &
extraordinary item 399,667 240,266 145,562 20,908
Provision for income
Taxes 159,865 96,106 58,224 8,363
Income before
extraordinary item 239,802 144,160 87,338 12,545
Extraordinary item-assets
contributed from sewer
line construction net of
income taxes of $70,190 126,005 0 126,005 0
Net income $365,807 144,160 $213,343 $ 12,545
Basic earnings per weighted
average combined share:
Before extraordinary item $0.12 $0.07 $0.04 $0.01
Extraordinary item 0.06 .00 0.07 .00
Net income $0.18 $0.07 $0.11 $0.01
Diluted earnings per weighted
average combined share:
Before extraordinary item $0.12 $0.07 $0.04 $0.01
Extraordinary item 0.06 .00 0.07 .00
Net income $0.18 $0.07 $0.11 $0.01
</TABLE>
BLUE RIDGE REAL ESTATE COMPANY
BIG BOULDER CORPORATION and SUBSIDIARIES
COMBINED CONDENSED STATEMENT OF CASH FLOWS FOR
SIX MONTHS ENDED SEPTEMBER 30, 1998 AND SEPTEMBER 30 1997
(UNAUDITED)
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1998 1997
Cash Flows from Operating Activities:
Net income (loss) $ 213,343 $ 12,545
Adjustments to reconcile net income to net
cash used in operating activities:
Extraordinary item (126,005) 0
Depreciation and amortization 300,523 378,087
Deferred income taxes 131,512 8,363
Deferred revenue 56,148 18,150
Changes in assets and liabilities:
Accounts & other receivables (122,787) 274,422
Refundable income taxes 8,614 23,146
Prepaid expenses and other
current assets (cash) (2,617,657) (2,301,839)
Accounts payable & accrued liabilities (64,371) (265,845)
Accrued income taxes (214,120) (114,940)
Net cash used in operating activities $(2,434,800) $(1,967,911)
Cash Flows (used in) from Investing Activities:
Additions to intangible assets 0 (101,631)
Disposition of land 83 0
Contributed assets - sewer line construction 126,005 0
Additions to properties (439,591) (738,971)
Net cash used in investing activities $(313,503) $ (840,602)
Cash flows (used in) from Financing Activities:
Purchase of treasury stock (162,221) (81,003)
Proceeds from notes payable, bank 500,000 700,000
Payment of long-term debt (163,266) (192,397)
Net cash from financing activities $ 174,513 $ 426,600
Net decrease in cash &
cash equivalents $(2,573,790) $(2,381,913)
Cash & cash equivalents beginning of period 2,799,777 2,387,197
Cash and cash equivalents end of period 225,987 5,284
Supplemental disclosures of cash
flow information:
Cash paid during period:
Interest $ 354,684 $ 407,377
Income taxes $ 214,100 $ 90,684
</TABLE>
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 September 30, 1998, and the
results of operations and the statements of cash flows for the three and
six month periods ended September 30, 1998 and September 30, 1997.
2. 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 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 now being calculated over
the 12 month period. The expense is deferred until the operating period,
at which time it will be recognized ratably. Previously, depreciation was
calculated only during the operating period.
4. The provision for income taxes for the six months ended September 30,
1998 and September 30,1997 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 Second Quarter and First Half of Fiscal 1999 resulted in
net income of $.18 and $.11 per combined share compared to a net income of
$.07 and $.01 per combined share for the three and six months ended
September 30, 1997.
Combined revenue of $3,963,928 represents an increase of $329,263 and
$290,570 as compared to the three and six months ended September 30, 1997.
Ski operations remained unchanged at $0. Real Estate Management increased
$237,997 and $301,804 for the first three and six months of Fiscal 1999 as
compared to the three and six months ended September 30,1997. Rental
Income increased $91,266 and decreased $11,234 for the first three and six
months of Fiscal 1999 as compared to the three and six months ended
September 30, 1997.
Real Estate Management increase in revenue is attributed to festival
revenues, recreational activities, and property and rental management of
homes in our resort communities.
Rental income decrease for the first six months of Fiscal 1999 as compared
to the six months ended September 30, 1997 is due to a reduction in rental
income received from Blakeslee Village.
Interest and Other Income increased $8,334 and $32,699 for the first three
and six months of fiscal 1999 as compared to the three and six months ended
September 30, 1997.
Operating costs (net of G & A) increased by $185,806 and $214,276 for the
first three and six months of Fiscal 1999 as compared to the three and six
months ended September 30, 1997. This increase was primarily due to the
opening of a new operating center and the expansion of existing operations.
General and Administrative expenses decreased by $12,983 for the first
three months of Fiscal 1999 and increased by $39,677 for the first six
months of Fiscal 1999 as compared to the three and six months ended
September 30, 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 first three months of Fiscal 1999 increased by
$5,373 as compared to the three months ended September 30, 1997, and
decreased by $55,338 for the first six months of Fiscal 1999, as compared
to the six months ended September 30, 1997. The three month increase is
due to a reclassification in the prior fiscal year and the six month
decrease is due to the re-financing of the Dreshertown Plaza and the
principal pay down on various notes.
The effective income tax rate for the first six months of Fiscal 1999 was
40%, as compared to 34% for the six months ended September 30, 1997. State
taxes account primarily for the Fiscal 1999 effective rates being greater
than the federal statutory rate of 34%.
[CAPTION]
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Per Share Data
Earnings per share are computed as follows:
6 Mos. Ended 6 Mos. ended
September 30, September 30,
1998 1997
Net income $213,343 $12,545
Weighted average combined shares of common
stock outstanding used to compute basic
earnings per combined common share 1,988,453 1,994,014
Additional combined common shares to be
issued assuming exercise of stock options,
net of combined shares assumed reacquired 13,751 2,294
Combined shares used to compute dilutive
effect of stock option 2,002,204 1,996,308
Basic earnings per combined common share $0.11 $0.01
Diluted earnings per combined common share $0.11 $0.01
</TABLE>
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 September 30, 1998 increased by $587,833 as compared
to March 31, 1998. This was due principally to an increase in accounts
receivable and an increase in deferred operating costs due to the ski
facility.
The change in the balances of accounts receivable and deferred operating
costs from March 31, 1998 to September 30, 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 Half 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: November 5, 1998
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> MAR-31-1999
<PERIOD-END> SEP-30-1998
<CASH> 225,987
<SECURITIES> 0
<RECEIVABLES> 353,269
<ALLOWANCES> 0
<INVENTORY> 219,192
<CURRENT-ASSETS> 4,623,085
<PP&E> 49,296,594
<DEPRECIATION> 31,947,500
<TOTAL-ASSETS> 23,876,631
<CURRENT-LIABILITIES> 2,316,581
<BONDS> 0
0
0
<COMMON> 1,976,958
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 23,876,631
<SALES> 3,963,928
<TOTAL-REVENUES> 3,963,928
<CGS> 0
<TOTAL-COSTS> 3,527,702
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> (355,307)
<INCOME-PRETAX> 145,562
<INCOME-TAX> 58,224
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 126,005
<CHANGES> 0
<NET-INCOME> 213,343
<EPS-PRIMARY> .11
<EPS-DILUTED> .11
</TABLE>
