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 June 30, 1999
( ) 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: (570)-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 June 30, 1999
Common Stock, without par value, 1,971,958
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.
<PAGE>
INDEX
PAGE NO.
PART I - FINANCIAL INFORMATION
Item 1-Financial Statements
Combined Condensed Balance Sheets June 30, 1999
and March 31, 1999 1 & 2
Combined Condensed Statements of
Operations - Three Months ended
June 30, 1999 & 1998 3
Combined Condensed Statements of
Cash Flows - Three Months Ended
June 30, 1999 & 1998 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
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BLUE RIDGE REAL ESTATE COMPANY AND SUBSIDIARIES
COMBINED CONDENSED BALANCE SHEETS
(UNAUDITED)
<TABLE>
<CAPTION>
ASSETS June 30, March 31,
1999 1999
Current Assets
<S> <C> <C>
Cash and cash equivalents
(all funds are interest bearing) ............ $1,040,392 $2,707,188
Accounts receivable ...................... 411,153 559,678
Refundable income taxes .......... ......... 0 0
Inventories ................................. 294,439 283,946
Prepaid expenses, principally
insurance and real estate taxes .......... 782,933 674,448
Deferred operating costs-net of
deferred revenue-ski facilities ........... 1,706,490 0
Total current assets .................. 4,235,407 4,225,260
Other non-current assets ..................... 36,797 36,797
Properties:
Land, principally unimproved ............. 1,867,655 1,867,655
Land improvements, buildings
and equipment ........................... 50,660,280 50,533,623
52,527,935 52,401,278
Less accumulated depreciation ............ 32,664,203 32,855,580
and amortization ........................ 19,863,732 19,545,698
$24,135,936 $23,807,755
See accompanying notes to unaudited financial statements.
</TABLE>
1
<PAGE>
<TABLE>
<CAPTION>
LIABILITIES AND SHAREHOLDERS' EQUITY
JUNE 30, MARCH 31,
1999 1999
Current Liabilities:
<S> <C> <C>
Current installments of long-term debt ......... $ 622,704 $ 461,609
Accounts and other payables .................... 569,185 861,740
Accrued claims ................................. 39,329 68,943
Deferred revenue ............................... 492,085 328,207
Accrued income taxes ............................. 168,547 168,517
Accrued Liabilities .............................. 895,599 1,005,919
Total current Liabilities ................... 2,787,449 2,894,935
Long-term debt, less current installments 8,874,600 8,338,296
Deferred income taxes ................... 2,179,358 2,208,852
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, 1999
and as of March 31, 1999 ......................... 659,444 659,444
Capital in excess of stated value .................. 1,461,748 1,461,748
Earnings retained in business ...................... 9,721,852 9,782,983
11,843,044 11,904,175
LESS: Cost of 226,190 & 225,190 shares of
capital stock in treasury as of June 30, 1999 &
March 31, 1999 respectively ................... 1,548,515 1,538,503
10,294,529 10,365,672
$24,135,936 $23,807,755
See accompanying notes to unaudited financial statements.
</TABLE>
2
<PAGE>
BLUE RIDGE REAL ESTATE COMPANY and SUBSIDIARIES
BIG BOULDER CORPORATION and SUBSIDIARIES
COMBINED CONDENSED STATEMENTS OF OPERATIONS
THREE MONTHS ENDED JUNE 30, 1999 & JUNE 30, 1998
(UNAUDITED)
<TABLE>
<CAPTION>
June 30, June 30,
<S> <C> <C>
1999 1998
Revenues:
Ski operations $ 0 $ 0
Real estate management 1,118,168 1,076,246
Rental income ........................... 413,821 387,293
1,531,989 1,463,539
Costs and expenses:
Ski operations ................. 0 0
Real estate management ....... 1,167,880 1,025,396
Rental operations ........................... 194,692 237,512
General & administrative expenses .. 252,968 322,597
1,615,540 1,585,505
Loss from operations
(83,551) (121,966)
Other income (expense):
Interest & other income 26,839 44,243
Interest expense (165,696) (176,382)
(138,857) (132,139)
Loss before income taxes (222,408) (254,105)
Benefit for income taxes (83,525) (101,641)
Loss before extraordinary income (138,883) (152,464)
Extraordinary item-assets contributed from sewer
line construction net of income taxes of
$54,031 for the three months ended June 30, 1999 77,752 0
Loss (61,131) (152,464)
Basic loss per weighted average combined share:
Before extraordinary item (0.07) (0.08)
Extraordinary item 0.04 0.00
Net loss (0.03) (0.08)
Diluted loss per weighted average combined share:
Before extraordinary item (0.07) (0.08)
Extraordinary item 0.04 0.00
Net loss (0.03) (0.08)
</TABLE>
3
<PAGE>
BLUE RIDGE REAL ESTATE COMPANY
BIG BOULDER CORPORATION and SUBSIDIARIES
COMBINED CONDENSED STATEMENT OF CASH FLOWS
THREE MONTHS ENDED JUNE 30, 1999 & JUNE 30, 1998
(UNAUDITED)
<TABLE>
<CAPTION>
1999 1998
<S> <C> <C>
Cash Flows from Operating Activities:
Net Income (Loss) .............................. (61,131) (152,464)
Adjustments to reconcile net income to net
cash provided
by operating activities:
Depreciation and amortization ................ 473,833 488,945
Deferred income taxes ........................ (29,494) (101,641)
Deferred revenue ............................. 163,878 247,096
Changes in assets and liabilities:
Accounts & other receivables ................. 148,525 73,668
Prepaid expenses and other current assets .... (1,825,468) (1,839,066)
Accounts Payable & accrued liabilities ....... (432,489) (21,280)
Accrued income taxes ......................... 30 (214,150)
Net cash used in operating activities ............ $(1,562,316) $(1,518,892)
Cash Flows (used in) from Investing Activities:
Additions to properties ........................ (791,867) (175,563)
Net cash used in investing activities ............ $ (791,867) $ (175,563)
Cash flows (used in) from Financing Activities:
Purchase of Treasury stock ...................... (10,012) (1,220)
Proceeds from notes payable, bank ............... 800,000 0
Payment of long-term debt ....................... (102,601) (81,514)
Net cash used in financing activities ............ $ 687,387 $ (82,734)
Net increase (decrease) in cash & cash
equivalents ...................................... $(1,666,796) $(1,777,189)
Cash and cash equivalents, beginning of period .. $ 2,707,188 2,799,777
Cash and cash equivalents, end of period $1,040,392 $1,022,588
Supplemental disclosures of cash flow information:
Cash paid (rcv'd) during period:
Interest $ 166,253 $ 177,204
Income taxes $ 214,100
See accompanying notes to unaudited financial statements
</TABLE>
4
<PAGE>
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 June 30, 1999, and the results of operations and the statements of cash flows
for the three month period ended June 30, 1999 and June 30, 1998.
2. The results of operations for the three 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.
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.
3. The provision for income taxes for the three months ended June 30,1999
and 1998 represents the estimated annual effective tax rate for the year ending
March 31, 2000 and 1999, respectively.
5
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
Rsults of Operations
Operations for the three months ended June 30, 1999 (Fiscal 2000) resulted
in a net loss of $(.03) per combined share compared to a net loss of $(.08) per
combined share for the three months ended June 30, 1998
Combined revenue of $1,531,989 represents an increase of $ 68,450 as
compared to the three months ended June 30, 1998. Ski operations remained
unchanged at $0. Real Estate Management increased $41,922 and Rental Income
increased $26,528.
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.
Rental income increase in revenue is from investment properties.
Interest and Other Income decreased $17,404. This decrease was due to a
reclassification in the first three months of Fiscal 1999.
Operating costs increased by $99,664 during the first three months of
Fiscal 2000 as compared to the three months ended June 30, 1998. This increase
was due primarily to a reclassification of salaries, wages and related employee
benefits and payroll taxes to summer activities from deferred ski operating
expenses for the first three months of fiscal 2000.
General and Administrative expenses for the first three months of Fiscal
2000 as compared to the three months ended June 30, 1998, decreased by $69,629,
this fluctuation is the result of timing differences in the purchase of supplies
and a reduction in consulting fees. Several items are non-recurring services
related to repair and maintenance.
Interest expense for the first three months of Fiscal 2000, as compared to
the three months ended June 30, 1998, decreased by $10,686. This decrease is due
to the principal pay down on various notes.
6
<PAGE>
The effective income tax rate for the first three months of Fiscal 2000 was
38% as compared to 40% for the three months ended June 30, 1998. State taxes
account primarily for the Fiscal 2000 effective rate being greater than the
federal statutory rate of 34%.
Per Share Data
Earnings per share are computed as follows:
3 Mos ended 3 Mos ended
June 30, June 30,
1999 1998
.................................. $ (61,131) $ (131,615)
Weighted average combined shares of common
stock outstanding used to compute basic
earnings per combined common share ....... 1,972,291 1,991,970
Additional combined common shares to be
issued assuming exercise of stock options,
net of combined shares assumed reacquired 10,921 14,120
Combined shares used to compute dilutive
effect of stock option ................... 1,983,212 2,006,089
Basic earnings per combined common share .. $ (.03) $ (.08)
Diluted earnings per combined common share $ (.03) $ (.08)
Risks and Uncertanties (see back)
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 already 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 June 30, 1999, increased by $117,633 as compared to
March 31, 1999. 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, 1999 to June 30, 1999 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 Quarter of Fiscal 2000 were for various
equipment purchases. The Companies, in Fiscal 2000, will install a sewer line
for the Pennsylvania Department of Transportation's planned rest area and the
East Mountain chairlift at Jack Frost Mountain will be upgraded to a dual double
lift. Each ski area will also receive a new groomer.
7
<PAGE>
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: August 15, 1999
8
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<CIK> 0000012779
<NAME> blue ridge real estate co
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 3-mos
<FISCAL-YEAR-END> MAR-31-2000
<PERIOD-END> JUN-30-1999
<CASH> 1,040,392
<SECURITIES> 0
<RECEIVABLES> 411,153
<ALLOWANCES> 0
<INVENTORY> 294,439
<CURRENT-ASSETS> 4,235,407
<PP&E> 50,660,280
<DEPRECIATION> 32,664,203
<TOTAL-ASSETS> 24,135,936
<CURRENT-LIABILITIES> 2,787,449
<BONDS> 0
0
0
<COMMON> 1,971,958
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 24,135,936
<SALES> 1,531,989
<TOTAL-REVENUES> 1,531,989
<CGS> 0
<TOTAL-COSTS> 1,615,540
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> (165,696)
<INCOME-PRETAX> (222,408)
<INCOME-TAX> (83,525)
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 77,752
<CHANGES> 0
<NET-INCOME> (61,131)
<EPS-BASIC> (.03)
<EPS-DILUTED> (.03)
</TABLE>
