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, 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
Registrants 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 September 30, 1999 Common Stock, without par value, 1,969,958 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
September 30, 1999 and March 31, 1999 1 & 2
Combined Condensed Statements of
Operations - Three Months and Six
Months ended September 30, 1999 and 1998
3
Combined Condensed Statements of
Cash Flows - Six Months Ended
September 30, 1999 and 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
<PAGE>
BLUE RIDGE REAL ESTATE COMPANY and SUBSIDIARIES
BIG BOULDER CORPORATION AND SUBSIDIARIES
COMBINED CONDENSED BALANCE SHEETS
(UNAUDITED)
ASSETS September 30, March 31,
1999 1999
Current Assets:
Cash and cash equivalents
(all funds are interest bearing) $120,266 $2,707,188
Accounts receivable 592,940 559,678
Inventories 343,405 283,946
Prepaid expenses, principally
insurance and real estate taxes 837,568 674,448
Deferred operating costs-net of
deferred revenue-ski facilities 3,312,499 0
Total current assets 5,206,678 4,225,260
Other non-current assets 0 36,797
Properties:
Land, principally unimproved 1,867,655 1,867,655
Land improvements, buildings
and equipment 51,750,706 50,533,623
53,618,361 52,401,278
Less accumulated depreciation
and amortization 33,348,937 32,855,580
20,269,424 19,545,698
$25,476,102 $23,807,755
See accompanying notes to unaudited financial statements.
1
<PAGE>
LIABILITIES AND SHAREHOLDERS' EQUITY
September 30, March 31,
1999 1999
Current Liabilities:
Notes Payable-Line of Credit $ 650,000 $ 0
Current installments of
long-term debt 839,829 461,609
Accounts and other payables 945,650 861,740
Accrued claims 26,750 68,943
Deferred revenue 391,656 328,207
Accrued income taxes 48,577 168,517
Accrued liabilities 749,646 1,005,919
Total current liabilities 3,652,108 2,894,935
Long-term debt, less
current installments 8,543,312 8,338,296
Deferred income taxes 2,509,392 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 Sept.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 the
business 10,217,490 9,782,983
12,338,682 11,904,175
LESS: Cost of 228,190 & 225,190
shares of capital stock in treasury as
of September 30, 1999 & March 31,1999
respectively. 1,567,392 1,538,503
10,771,290 10,365,672
$25,476,102 $23,807,755
See accompanying notes to unaudited financial statements.
2
<PAGE>
BLUE RIDGE REAL ESTATE COMPANY AND SUBSIDIARIES
BIG BOULDER CORPORATION and SUBSIDIARIES
COMBINED CONDENSED STATEMENTS OF OPERATIONS
(UNAUDITED)
Three Months Ended Six Months Ended
Sept. 30, Sept. 30, Sept. 30, Sept. 30,
1999 1998 1999 1998
Revenues:
Ski operations $ 0 $ 0 $ 0 $ 0
Real estate management 2,351,677 2,045,323 3,469,845 3,121,569
Rental income 508,780 455,066 922,601 842,359
2,860,457 2,500,389 4,392,446 3,963,928
Costs and expenses:
Ski operations 0 0 0 0
Real estate management 1,709,202 1,480,446 2,877,082 2,505,842
Rental operations 277,176 221,280 471,868 458,792
General & administra-
tive expenses 263,877 240,471 516,845 563,068
------- ------- ------- -------
2,250,255 1,942,197 3,865,795 3,527,702
========= ========= ========= =========
Income from operations 610,202 558,192 526,651 436,226
Other income (expense:)
Interest & other income 32,181 20,400 59,020 64,643
Interest expense (179,672) (178,925) (345,368) (355,307)
-------- -------- -------- --------
(147,491) (158,525) (286,348) (290,664)
-------- -------- -------- --------
Income before income taxes &
extraordinary item 462,711 399,667 240,303 145,562
------- ------- ------- -------
Provision for income
taxes 181,220 159,865 97,695 58,224
------- ------- ------ ------
Income before
extraordinary item 281,491 239,802 142,608 87,338
------- ------- ------- ------
Extraordinary item-assets
contributed from sewer
line construction net of
income taxes of $202,845 214,147 126,005 291,899 126,005
------- ------- ------- -------
Net income $495,638 $365,807 $434,507 $213,343
======== ======== ======== ========
Basic earnings per weighted average combined share:
Before extraordinary item $0.14 $0.12 $0.07 $0.04
Extraordinary item 0.11 0.06 0.15 0.07
---- ---- ---- ----
Net income $0.25 $0.18 $0.22 $0.11
===== ===== ===== =====
Diluted earnings per weighted average combined share:
Before extraordinary item $0.14 $0.12 $0.07 $0.04
Extraordinary item 0.11 0.06 0.15 0.07
---- ---- ---- ----
Net income $0.25 $0.18 0.22 $0.11
===== ===== ==== =====
3
<PAGE>
BLUE RIDGE REAL ESTATE COMPANY
BIG BOULDER CORPORATION and SUBSIDIARIES
COMBINED CONDENSED STATEMENT OF CASH FLOWS FOR
SIX MONTHS ENDED SEPTEMBER 30, 1999 AND SEPTEMBER 30 1998
(UNAUDITED)
1999 1998
Cash Flows (used in) from Operating Activities:
Net income $ 434,507 $ 213,343
Adjustments to reconcile net income to net
cash used in operating activities:
Extraordinary item (291,899) (126,005)
Depreciation and amortization 294,523 300,523
Deferred income taxes 300,540 131,512
Deferred revenue 63,449 56,148
Changes in assets and liabilities:
Accounts & other receivables (33,262) (122,787)
Refundable income taxes 0 8,614
Prepaid expenses and other current assets (2,832,737) (2,617,657)
Accounts payable & accrued liabilities (214,556) (64,371)
Accrued income taxes (119,940) (214,120)
Net cash used by operating activities $(2,399,375) $(2,434,800)
Cash Flows (used in) from Investing Activities:
Additions to intangible assets (35,615) 0
Disposition of land 0 83
Contributed assets-sewer line construction 291,899 126,005
Additions to properties (1,648,178) (439,591)
Net cash used in investing activities (1,391,894) $(313,503)
Cash flows (used in) from Financing Activities:
Purchase of treasury stock (28,889) (162,221)
Proceeds from notes payable, bank 650,000 500,000
Proceeds from long term debt 800,000 0
Payment of notes payable, bank 0 0
Payment of long-term debt (216,764) (163,266)
Net cash from financing activities 1,204,347 $ 174,513
Net decrease in cash &
cash equivalents (2,586,922) $(2,573,790)
Cash & cash equivalents beginning of period 2,707,188 2,799,777
Cash and cash equivalents end of period $120,266 $225,987
Supplemental disclosures of cash
flow information:
Cash paid (rcv'd.) during period:
Interest $345,866 $ 354,684
Income taxes $120,000 $ 214,100
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 September 30, 1999, and the results of operations and the statements of cash
flows for the periods ended September 30, 1999 and September 30, 1998.
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. The provision for income taxes for the six months ended September 30,
1999 and September 30,1998 represents the estimated annual effective tax rate
for the year ending March 31, 2000 and 1999, respectively.The effective income
tax rate for the first six months of Fiscal 2000 was 40%, as compared to 34% for
the six months ended September 30, 1998. State taxes account primarily for the
Fiscal 2000 effective rates being greater than the federal statutory rate of
34%.
5
<PAGE>
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 2000 resulted in
net income of .25 and .22 per combined share compared to a net income of $.18
and .11 per combined share for the three and six months ended September 30,
1998.
Combined revenue of $4,392,446 represents an increase of $360,068 and
428,518 as compared to the three and six months ended September 30, 1998. Ski
operations remained unchanged at $0. Real Estate Management increased $306,354
and $348,276 for the second quarter and first half of Fiscal 2000 as compared to
the three and six months ended September 30, 1998. Rental Income increased
$53,714 and $80,242 for the second quarter and first half of Fiscal 2000 as
compared to the three and six months ended September 30, 1998.
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 for the first six months of Fiscal 2000 as compared
to the six months ended September 30, 1998 is due to increased rental income
from the Dreshertown Plaza Shopping Center.
Interest and Other Income increased $11,781 and decreased $5,623 for the
second quarter and first half of Fiscal 2000 as compared to the three and six
months ended September 30, 1998.
Operating costs (net G & A) increased by $284,652 and $384,316 for the
second quarter and first half of Fiscal 2000 as compared to the three and six
months ended September 30, 1998. This increase was primarily due to the
expansion of existing operations, including the introduction of a new summer
festival-Pocono Biker's Music Rally.
General and Administrative expenses increased by $23,406 for the second
quarter of Fiscal 2000 and decreased by $46,223 for the first half of Fiscal
2000 as compared to the three and six months ended September 30, 1998. This
fluctuation is the result of timing difference in the purchase of supplies.
Several items are non-recurring services related to repair and maintenance.
Interest expense for the second quarter of Fiscal 2000 increased by $747 as
compares to the three months ended September 30, 1998 and decreased by $9,939
for the first half of Fiscal 2000 as compared to the six months ended September
30, 1998. The six months decrease is due to principal pay down on various notes.
6
<PAGE>
Per Share Data
Earnings per share are computed as follows:
6 Mos. Ended 6 Mos.Ended
September 30, September 30,
1999 1998
---- ----
Net Income $ 434,507 $ 213,343
---------- -----------
Weighted average combined shares of common
stock outstanding used to compute basic
earnings per combined common share 1,971,791 1,988,453
Additional combined common shares to be
issued assuming exercise of stock options,
net of combined shares assumed reacquired 11,037 13,751
Combined shares used to complete dilutive
effect of stock option 1,982,828 2,002,204
--------- ---------
Basic earnings per combined common share $0.22 $0.11
----- -----
Diluted earnings per combined common share $0.22 $0.11
----- -----
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, 1999 increased by $224,245 as compared
to March 31, 1999. This was due principally to 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, 1999 to September 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.
In June 1999, the Companies secured an $800,000 loan for the East Mountain
Lift project.
Moving Forward
Capital expenditures for the First Half of Fiscal 2000 were for the
continued expansion of campsites at Fern Ridge Campground, the upgrade of the
new dual double lift on East Mountain at Jack Frost Mountain and the purchase of
a new groomer for each Ski Area. The Companies, in Fiscal 2000, will continue to
install a sewer line for the Pennsylvania Department of Transportation's planned
rest area and construct TRAXX, a 50 acre Motocross complex.
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).
7
<PAGE>
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, 1999
8
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<CIK> 0000012779
<NAME> BLUE RIDGE REAL ESTATE COMPANY
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> MAR-31-2000
<PERIOD-END> SEP-30-1999
<CASH> 120,266
<SECURITIES> 0
<RECEIVABLES> 592,940
<ALLOWANCES> 0
<INVENTORY> 343,405
<CURRENT-ASSETS> 5,206,678
<PP&E> 51,750,706
<DEPRECIATION> 33,348,937
<TOTAL-ASSETS> 25,476,102
<CURRENT-LIABILITIES> 3,652,108
<BONDS> 0
0
0
<COMMON> 1,969,958
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 25,476,102
<SALES> 4,392,446
<TOTAL-REVENUES> 4,392,446
<CGS> 0
<TOTAL-COSTS> 3,865,795
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> (345,368)
<INCOME-PRETAX> 240,303
<INCOME-TAX> 97,695
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 291,899
<CHANGES> 0
<NET-INCOME> 434,507
<EPS-BASIC> .22
<EPS-DILUTED> .22
</TABLE>
