UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
(X) ANNUAL REPORTS* PURSUANT TO SECTION 13 OR 15 (d) OF THE
SECURITIES ACT OF 1934 (FEE REQUIRED)
For the fiscal year ended MARCH 31, 2000
OR
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 (NO FEE REQUIRED)
For the transtion period from to
0-2844 (Blue Ridge)
Commission File No. 0-2843 (Big Boulder)
BLUE RIDGE REAL ESTATE COMPANY
________________________ BIG BOULDER CORPORATION___________________________
(exact name of Registrants as specified in their charters)
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
---------------
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act:
Common Stock, without par value, stated value $.30 per combined share*
<PAGE>
1
Indicate by check mark whether the registrant (1) has filed all reports to
be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months and (2) has been subject to such filing requirements for
the past 90 days:
Yes_X_ No___
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. (X)
The aggregate market value of common stock, without par value, stated value
$.30 per combined share, held by non-affiliates at June 16, 2000, was
$17,582,171. The market value per share is based upon the per share cost of
shares as indicated over the counter on March 31, 2000. There is no established
public trading market for the Companies' stock.
Number of shares outstanding of each of the issuer's classes of common
stock.
Class Outstanding June 16, 2000
Common Stock, without par value 1,925,758 Shares
stated value $.30 per
combined share
DOCUMENTS INCORPORATED BY REFERENCE
Specified portions of the Companies' 2000 Annual Report to Shareholders are
incorporated by reference into Part II hereof.
Specified portions of the Companies' definitive Proxy Statement for the
2000 Annual Meetings of Shareholders to be filed pursuant to Regulation 14A with
the Securities and Exchange Commission not later than 120 days after the end of
the fiscal year covered by this report and is incorporated herein by reference.
--------------------
*Under a Security Combination Agreement between Blue Ridge Real Estate
Company ("Blue Ridge") and Big Boulder Corporation ("Big Boulder") (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-K is being filed. Except as otherwise indicated, all information applies to
both Corporations.
<PAGE> 2
FORM 10-K
PART I
ITEM 1. BUSINESS
BLUE RIDGE REAL ESTATE COMPANY
Blue Ridge Real Estate Company ("Blue Ridge"), which was incorporated
in Pennsylvania in 1911, is believed to be one of the largest owners of
investment property in Northeastern Pennsylvania. It owns 18,841 acres of land
which are predominately located in the Pocono Mountains. These lands are held
entirely as investment property. Income is derived from these lands through
leases, selective timbering by others, condemnation, sales, and other
dispositions. Blue Ridge also owns the Jack Frost Mountain Ski Area which is
leased to Jack Frost Mountain Company, a 225-site campground, a retail store
leased to Wal-Mart and a shopping center. The ski area, campground retail store
and shopping center are more fully described under Item 2.
Jack Frost Mountain Company, a wholly-owned subsidiary of Blue Ridge
was incorporated in Pennsylvania in 1980 and commenced operations on June 1,
1981. It was created to lease and operate the Jack Frost Mountain Ski Area and
to provide certain services to other facilities, such as the Snow Ridge resort
community, and to operate recreational facilities located within the Jack Frost
Mountain tract.
Northeast Land Company, a wholly owned subsidiary of Blue Ridge, was
incorporated in Pennsylvania in 1967. The major assets of the company consist of
103 acres of land in Northeast Pennsylvania. Revenues are from managing the
rental homes at Snow Ridge, Blue Heron, Laurelwoods and Midlake as resort
accommodations, and from real estate commissions for the sale of homes at these
resort communities, and from Trust and Condo fees for Services to these resort
communities. Northeast Land Company also receives revenue from a land lease to a
Burger King franchise, and leased space on a 196 foot communication tower..
BRRE Holdings, Inc., a wholly-owned subsidiary of Blue Ridge, was
incorporated in Delaware in 1986. It was established for investment purposes.
Blue Ridge employs 29 full-time employees. Jack Frost Mountain Company,
which operates the Jack Frost Mountain Ski Area, has 43 full-time employees and
during the skiing season there are approximately 500 additional employees.
Northeast Land Company has 24 full-time employees.
3
<PAGE>
ITEM 1. BUSINESS - (continued)
BIG BOULDER CORPORATION
Big Boulder Corporation ("Big Boulder") was incorporated in
Pennsylvania in 1949. The major assets of the company are 929 acres of land,
which includes a 175 acre lake, the Big Boulder Ski Area, and the Mountains's
Edge. The principal source of revenue for Big Boulder is derived from the Big
Boulder Ski Area which is leased to Lake Mountain Company.
Lake Mountain Company, a wholly-owned subsidiary of Big Boulder
Corporation was incorporated in Pennsylvania in 1983 and commenced operations on
June 1, 1983. It was created to lease and operate the Big Boulder Ski Area, and
operate the recreational facilities as they are located within the Big Boulder
Lake tract.
BBC Holdings, Inc., a wholly-owned subsidiary of Big Boulder, was
incorporated in Delaware in 1986. It was established for investment purposes.
Big Boulder has no employees. Lake Mountain Company, which operates the
Big Boulder Ski Area, no longer has any employees. The Lake Mountain Company has
been merged with the payroll of Jack Frost Mountain Company. Big Boulder Ski
area has 21 full-time employees. During the skiing season, there are
approximately 525 additional employees.
INDUSTRY SEGMENT INFORMATION
Information with respect to business segments is presented in Note 11
to the Registrants' financial statements included in Item 8.
The quarterly results of operations for 2000, 1999 and 1998 reflect the
cyclical nature of the Companies' business 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.
ITEM 2. PROPERTIES
A. BLUE RIDGE REAL ESTATE COMPANY
The physical properties of Blue Ridge consist of approximately 18,944
acres owned by Blue Ridge and Northeast Land Company, the Jack Frost
<PAGE> 4
Mountain Ski Area, the Fern Ridge Campground, the Wal-Mart Store, the
Dreshertown Shopping Center, a sewage treatment facility, corporate headquarters
building, and other miscellaneous facilities.
SKI FACILITIES
The Jack Frost Mountain Ski Area, under lease to Jack Frost Mountain
Company since June 1, 1981, is located near White Haven, Carbon County,
Pennsylvania, and commenced operations in December 1972. The Jack Frost Mountain
Ski Area consists of twenty-one slopes and trails including a snowboard slope,
snowmobile course, snowtubing hill, five double chairlifts, two triple
chairlifts, one quad chairlift, and various buildings including a Summit Lodge
with food service, a cocktail lounge, a ski shop, and a ski rental shop. The
total lift capacity per hour is 12,000 skiers. These lifts are in good condition
and are operated as needed during the ski season. These facilities are situated
on approximately 473 acres owned by Blue Ridge and leased to Jack Frost Mountain
Company. The total capital investment in the ski area is $21,300,683, the major
portion of which represents the cost of the slopes and trails, chairlifts,
snowmaking equipment, water supply, roads and parking areas, and all buildings
including the Summit Lodge. The remainder is for furnishings and equipment for
the Summit Lodge, trucks, maintenance equipment, and miscellaneous outside
equipment. At March 31, 2000 the out-standing debt on the Jack Frost Mountain
Ski Area was $1,272,829.
REAL ESTATE MANAGEMENT OPERATIONS
The Wal-Mart Store located in Laurens, South Carolina, was acquired in
September 1990 for cash consideration of $2,190,470 which was the total capital
investment at March 31,2000. The building consists of 70,000 square feet,
located on 10.217 acres of land and is leased to Wal-Mart on a triple net basis
through January 31, 2014. At March 31, 2000 a mortgage totaling $1,337,642 was
outstanding on this property.
The Dreshertown Plaza Shopping Center, Dresher, Montgomery County,
Pennsylvania, was acquired in July, 1986 for consideration of $4,592,579. The
center consists of approximately 101,233 square feet located on approximately 15
acres of land. On March 31, 2000, the center was 97% occupied under leases
expiring on various dates from April 30, 2000 to October 31, 2020. The total
capital investment in the shopping center is $5,459,641. At March 31, 2000, a
mortgage totaling $5,139,000 was out-standing on this property.
The Fern Ridge Campground is located at the intersection of Route 115
and Interstate 80 in Monroe County, Pennsylvania. This campground is built on 85
acres and consists of 225 campsites, 75 with water and electric, 25 with rustic
cabins and the remaining 125 are wilderness sites. Its operating period is from
April 1 through September 30. At March 31, 2000, the Companies' investment in
this facility was $776,538.
5
<PAGE>
ITEM 2. PROPERTIES - (Continued)
Blue Ridge owns 18,841 acres of land which are predominately located in
the Pocono Mountains. The majority of this property is leased to various hunting
clubs. Blue Ridge also owns several cottages in the area that are leased to
private individuals.
Blue Ridge owns and leases to Jack Frost Mountain Company a sewage
treatment facility to serve the resort housing at Jack Frost Mountain. The total
investment in this facility at March 31, 2000 was $1,227,655 with outstanding
debt of $125,711.
Blue Ridge also owns The Sports Complex at Jack Frost Mountain which
consists of a swimming pool, fitness trail, tennis courts, in-line skate park,
motocross/B.M.X. and A.T.V. (All Terrain Vehicle) park and accompanying
buildings. The Stretch is an exclusive fishing club. The Corporate Office
Building is located on Route 940 and Mosey Wood Road.
Northeast Land Company owns 103 acres of land which are located in the
Pocono Mountains and a 196 foot communication tower.
For the fiscal year ended March 31, 2000, revenues from operations of
Blue Ridge and its subsidiaries amounted to $11,717,099. Approximately 49% of
this revenue or $5,704,996 was derived from the Jack Frost Mountain Ski Area
which operated 86 days during the fiscal year.
B. BIG BOULDER CORPORATION
The physical properties owned by Big Boulder consist of approximately
929 acres, the Big Boulder Ski Area, a sewage treatment facility, a 200 foot
communications tower, and the Mountain's Edge.
SKI FACILITIES
The Big Boulder Ski Area's physical properties have been leased to Lake
Mountain Company since June 1, 1983, and are located in Kidder Township, Carbon
County, Pennsylvania. Big Boulder Ski Area commenced operations in 1947. The Big
Boulder Ski Area contains fourteen slopes and trails including a snowboard
slope, snowtubing hill, five double chairlifts, two triple chairlifts, and
various buildings including a base lodge, providing food service, a cocktail
lounge, a ski shop and a ski rental service. The total lift capacity per hour is
9,600 skiers. These lifts are in good condition and are operated as needed
during the ski season. These facilities are situated on approximately 90 acres
owned by Big Boulder. The total capital investment in the ski area is
$13,153,033. At March 31, 2000, the outstanding debt on the Big Boulder Ski Area
was $613,348.
<PAGE>
6
REAL ESTATE MANAGEMENT OPERATIONS
A sewage treatment facility was constructed by Big Boulder Corporation
to serve the resort housing within the Big Boulder tract. The facility has the
capacity of treating 225,000 gallons per day and is leased to Lake Mountain
Company for operation.
The capital investment in the facility at
March 31, 2000, was $1,511,847 with an outstanding debt of $330,625 at that
date.
Big Boulder Corporation constructed the Mountain's Edge which consists
of 8,800 square feet and is located on the east shore of Big Boulder Lake,
Kidder Township, Carbon County, Pennsylvania. The facility, leased to a private
operator, commenced operations in May 1986. The restaurant has dining capacity
for 100 patrons. The capital investment in the facility at March 31, 2000 was
$1,584,801.
Big Boulder owns 929 acres of land which are located in the Pocono
Mountains. The Big Boulder Lake Club includes a 175 acre lake, swimming pool,
tennis courts, boat docks and accompanying buildings.
For the fiscal year ended March 31, 2000, revenues from operations of
Big Boulder amounted to $7,048,071. Approximately 82% of this revenue of
$5,773,973 was derived from the Big Boulder Ski Area which operated 95 days
during that fiscal year.
ITEM 3. LEGAL PROCEEDINGS
Not applicable.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
Not applicable.
ITEM 4A. EXECUTIVE OFFICERS OF THE REGISTRANTS
Age Office Held Since
Michael J. Flynn 65 1991
Chairman of the Board
Gary A. Smith 57 1992
President
Melanie Murphy 40 1996
Vice President-Operations
All officers of the Registrants serve for a one-year period or until
their election at the first meeting of the Board of Directors after the Annual
Meeting of Shareholders.
7
<PAGE>
Michael J. Flynn was elected Chairman of the Board of the Registrants on
July 11, 1991. He is Vice Chairman of the Board of Kimco Realty Corporation
since January 1996. Mr. Flynn serves as a Director of Kimco Realty Corporation.
Mr. Flynn was formerly Chairman of the Board and President of Slattery
Associates, Inc. and Director of Slattery Group, Inc. From 1987 to December
1995.
Gary A. Smith was appointed President in July, 1992. He has been
employed by the Registrants on a full-time basis since September 1982; he was
appointed Vice President and Treasurer in July 1983 and Senior Vice President in
September 1987.
Melanie Murphy was appointed Vice President-Operations in June, 1996.
She has been employed by the Registrants on a full-time basis since July, 1984.
ITEM 5. MARKET FOR THE REGISTRANT'S COMMON STOCK AND
_______RELATED STOCKHOLDER MATTERS__________
Information required with respect to Registrants' common stock and
related shareholder matters is incorporated herein by reference to the caption
entitled "Price Range of Common Shares and Dividend Information" on Page 12 of
the Fiscal 2000 Annual Report to Shareholders.
ITEM 6. SELECTED FINANCIAL DATA
Information required with respect to the specified financial data is
incorporated herein by reference to Page 13 of the Fiscal 2000 Annual Report to
Shareholders.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
________CONDITION AND RESULTS OF OPERATIONS______
Information required with respect to Registrants' financial condition,
changes in financial condition and results of operations is incorporated herein
by reference to Pages 13 and 14 of the Fiscal 2000 Annual Report to
Shareholders.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The required financial statements are incorporated herein by reference to
Pages 2 through 12 of the Fiscal 2000 Annual Report to Shareholders.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS
_ON ACCOUNTING AND FINANCIAL DISCLOSURES_____
Not applicable.
<PAGE>
8
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANTS
The information concerning Directors required by Item 10 of Form 10-K
is set forth under the caption "Election of Directors" in the Registrants'
definitive Proxy Statement for the 2000 Annual Meetings of Shareholders to be
filed pursuant to Regulation 14A with the Securities and Exchange Commission not
later than 120 days after the end of the fiscal year covered by this report and
is incorporated herein by reference.
The information concerning Executive Officers required by Item 10 of
Form 10-K is set forth in Item 4A of this report.
CERTAIN SIGNIFICANT EMPLOYEES OF THE REGISTRANTS
Employed in Present
Age __Position Since___
Carl V. Kerstetter, Director of Marketing 49 1991
Eldon D. Dietterick, Secretary/Treasurer 54 1996
Carl V. Kerstetter and Eldon D. Dietterick have been employed
by the Registrants on a full-time basis for more than five years.
ITEM 11. EXECUTIVE COMPENSATION
The information concerning Executive Compensation required by Item 11
of Form 10-K is set forth under the caption "Remuneration of Executive Officers
and Directors" in the registrant's definitive Proxy Statement for the 2000
Annual Meetings of Shareholders to be filed pursuant to Regulation 14A with the
Securities and Exchange Commission not later than 120 days after the end of the
fiscal year covered by this report and is incorporated herein by reference.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL
__________OWNERS AND MANAGEMENT_________
The information required by Item 12 of Form 10-K is set forth under the
caption "Holdings of Common Stock" in the Registrants' definitive Proxy
Statement for the 2000 Annual Meetings of Shareholders to be filed pursuant to
Regulation 14A with the Securities and Exchange Commission not later than 120
days after the end of the fiscal year covered by this report and is incorporated
herein by reference.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Not applicable.
9
<PAGE>
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES
________AND REPORTS ON FORM 8-K________
A. (1) Financial statements included in Registrants' Fiscal 1997 Annual Report
to Shareholders on Pages 2 through 12 are incorporated by reference. The Report
of Independent Auditors for the combined financial statements appears on Page 14
of this Form 10-K.
A. (2) Financial Statement Schedules
The following is a list of financial statement schedules filed as part
of this Annual Report on Form 10-K. The report of Independent Auditors for the
financial statement schedule appears on Page 14 of this Form 10-K. All other
schedules omitted herein are so omitted because either (1) they are not
applicable, (2) the required information is shown in the financial statements,
or (3) conditions are present which permit their omission, as set forth in the
instructions pertaining to the content of financial statements:
Schedules: III. Real Estate and Accumulated Depreciation
A. (3) Exhibits, Including Those Incorporated by Reference
The following is a list of Exhibits filed as part of this
Annual Report on Form 10-K. Where so indicated by footnote, Exhibits that were
previously filed are incorporated by reference. For Exhibits incorporated by
reference, the location of the Exhibit in the previous filing is indicated in
parentheses.
Legend for
Documents
Incorporated Page
Articles of Incorporation and By-Laws By Reference Number
3( 1).1 Articles of Incorporation (1)
3( 1).4 Articles of Amendment (2)
3(ii).1 By-Laws of Blue Ridge Real Estate Company
as amended through July 25, 1990 (8)
3(ii).2 By-Laws of Big Boulder Corporation
as amended through July 25, 1990 (8)
Instruments Defining the Rights of Security
________Holders including Indentures_____
4.1 Specimen Certificate for Shares of (1)
Common Stock
10
<PAGE>
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES
________AND REPORTS ON FORM 8-K________ -(Continued)
Legend for
Documents
Incorporated
By Reference
4.2 Security Combination Agreement (1)
4.3 Revised Specimen Unit Certificates
for shares of common stock (7)
Material Contracts
Financial Agreements
10.1.1 Mortgage Relating to the Construction
of the Jack Frost Mountain Ski Area (2)
10.1.2 Construction Loan - Jack Frost
Mountain Ski Area (3)
10.1.3 Loan from PNC Bank, Wilkes-Barre (4)
10.1.4 First Mortgage, Principal Mutual,
Building leased to Wal-Mart (8)
10.1.16 First Mortgage, CoreStates Bank, NA,
Dreshertown Plaza Shopping Center,
Montgomery County
Acquisition of Properties
10.2.1 Acquisition of Dreshertown Plaza
Shopping Center (6)
10.2.2 Acquisition of Building leased to
Wal-Mart (8)
Lease
10.3.1 Building leased to Wal-Mart (10)
Agreement with Executive Officers and Director
10.4.1 Stock Option - Michael J. Flynn (9)
Stock Option Agreement - Michael J. Flynn
Subsidiaries of the Registrants
21.1 List of the Subsidiaries of the Registrants (6)
(1) Filed September 23, 1966 as an Exhibit to Form 10 and
incorporated herein by reference
(2) Filed August 22, 1973 as an Exhibit to Form 10-K and
incorporated herein by reference
(3) Filed August 27, 1975 as an Exhibit to Form 10-K and
incorporated herein by reference
11
<PAGE>
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES,
_______AND REPORTS ON FORM 8-K__________ - (Continued)
(4) Filed February 7, 1975 as an Exhibit to Form 8-K and incorporated
herein by reference
(5) Northeast Land Company - Incorporated in Commonwealth of Pennsylvania
Jack Frost Mountain Company - Incorporated in Commonwealth of Pennsylvania Lake
Mountain Company - Incorporated in Commonwealth of Pennsylvania Big Boulder
Lodge, Inc. - Incorporated in Commonwealth of Pennsylvania BRRE Holdings, Inc. -
Incorporated in State of Delaware BBC Holdings, Inc. - Incorporated in State of
Delaware
(6) Filed August 28, 1987 as an Exhibit to Form 10-K and incorporated
herein by reference
(7) Filed August 28, 1990 as an Exhibit to Form 10-K and incorporated
herein by reference
(8) Filed August 26, 1991 as an Exhibit to Form 10-K and incorporated
herein by reference
(9) Filed August 26, 1994 as an Exhibit to Form 10-K and incorporated
herein by reference
(10) Filed August 29, 1995 as an Exhibit to Form 10-K and incorporated
herein by reference.
Copies of Exhibits are available to Shareholders by
contacting Eldon D. Dietterick, Secretary, Blakeslee,
PA 18610. A charge of $.25 per page to cover the
Registrants' expenses will be made.
B. Reports on Form 8-K
None
12
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrants have duly caused this report to be signed
on their behalf by the undersigned, thereunto duly authorized.
BLUE RIDGE REAL ESTATE COMPANY BLUE RIDGE REAL ESTATE COMPANY
BIG BOULDER CORPORATION BIG BOULDER CORPORATION
By:___________________________ By:___________________________
Gary A. Smith Cynthia A. Barron
President Chief Accounting Officer
Dated:________________________ Dated:________________________
Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed by the following persons on behalf of the
Registrants and in the capacities and on the dates indicated.
Each person in so signing also makes, constitutes and appoints Gary A.
Smith, President, his true and lawful attorney-in-fact, in his name, place and
stead to execute and cause to be filed with the Securities and Exchange
Commission any or all amendments to this report.
_______Signature_______ __________Title___________ ____Date___
----------------------- -----------
Michael J. Flynn Chairman of the Board
Principal Executive Officer
----------------------- -----------
Gary A. Smith President
Chief Operating Officer
Principal Financial Officer
---------------------- -----------
Milton Cooper Director
---------------------- -----------
Allen J. Model Director
----------------------
Wolfgang Traber Director ___________
13
<PAGE>
INDEPENDENT AUDITORS' REPORT ON
FINANCIAL STATEMENT SCHEDULES
To the Board of Directors of
Blue Ridge Real Estate Company
and Big Boulder Corporation:
We have audited the combined financial statements of Blue Ridge Real Estate
Company and subsidiaries and Big Boulder Corporation and subsidiaries (the
"Companies") as of March 31, 2000 and for the year then ended, and have issued
our report thereon dated June 21, 2000; such financial statements and report are
included in your 2000 Annual Report to Shareholders and are incorporated herein
by reference. Our audit also included the combined financial statement schedules
of the Companies listed in Item 14. These financial statement schedules are the
responsibility of the Companies' management. Our responsibility is to express an
opinion based on our audit. In our opinion, such combined financial statement
schedules, when considered in relation to the basic combined financial
statements taken a whole, present fairly in all material respects the
information set therein.
Parente Randolph, P.C.
June 21, 2000
Wilkes-Barre, Pennsylvania
14
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
To Shareholders of
Blue Ridge Real Estate Company
and Big Boulder Corporation
In our opinion, the accompanying combined balance sheet and the related combined
statements of operations and earnings retained in the business and cash flows
present fairly, in all material respects, the financial position of Blue Ridge
Real Estate Company and subsidiaries and Big Boulder Corporation and
subsidiaries (the "Companies") at March 31, 1999, and the results of their
operations and their cash flows for the years ended March 31, 1999 and 1998 in
conformity with accounting principles generally accepted in the United States.
These financial statements are the responsibility of the Companies' management;
our responsibility is to express an opinion on these financial statements based
on our audits. We conducted our audits of these statements in accordance with
auditing standards generally accepted in the United States, which require that
we plan and perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements, assessing the accounting principles used and
significant estimates made by management, and evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for the opinion expressed above.
As discussed in Note 14, the March 31, 1999 financial statements have been
restated.
PricewaterhouseCoopers LLP
15
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS ON
FINANCIAL STATEMENT SCHEDULED
To the Board of Directors of
Blue Ridge Real Estate Company
and Big Boulder Corporation
Our audits of the combined financial statements referred to in our report dated
June 4, 1999 appearing in the 1999 Annual Report to Shareholders of Blue Ridge
Real Estate Company and Big Boulder Corporation (which report and combined
dinancial statements are incorporated by reference in this Annual Report on Form
10-K) also included an audit of the combined financial statements schedules
listed in Item 14 (a)(2) of the Form 10-K. In our opinion, these combined
financial statement schedules present fairly, in all material respects, the
information set forth therein when read in conjunction with the related combined
financial statements.
PricewaterhouseCoopers LLP
16
<PAGE>
COMBINED SCHEDULE III.
REAL ESTATE AND ACCUMULATED DEPRECIATION March 31, 2000
COLUMN A COLUMN B COLUMN C COLUMN D
Initial Cost Cost Capitalized
to Company Subsequent To
Acquisition
BUILDINGS &
DESCRIPTION ENCUMBRANCES LAND IMPROVEMENTS IMPROVEMENTS
Land located
in N E PA including
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
various improvements 1,867,766 49,915 4,142,339
Corporate
Building 282,918 187,989
Buildings Leased
to Others
Eastern PA
Exchanged Asset-
Shopping Center 5,700,000 780,700 4,554,235 124,706
Other 0 0 0 2,412,766
Laurens,SC 1,600,000 276,000 1,914,470 0
TOTAL 7,300,000 2,924,466 6,801,538 6,867,800
COLUMN E COLUMN F
Gross Amount at which Carried
at Close of Period (1)(2)
Land located in
N E PA including BUILDING ACCUMULATED
Various improvements LAND IMPROVEMENTS TOTAL DEPRECIATION
1,869,711 4,626,270 6,495,981 2,713,433
Corporate Building 470,907 470,907 251,664
Buildings Leased to
Others Eastern PA
Exchanged Asset-
Shopping Center 780,700 4,661,271 5,441,971 2,663,813
Other 0 2,412,766 2,412,766 1,247,552
Laurens, SC 276,000 1,914,470 2,190,470 595,612
TOTAL 2,926,411 14,085,684 17,012,095 7,472,074
17
<PAGE>
COLUMN G COLUMN H COLUMN I
LIFE ON WHICH
DEPRECIATION
DATE OF DATE IN LATEST INCOME
CONTSTRUCTION ACQUIRED STATEMENT IS
COMPUTED
Land located in NE PA
Including various
improvements Various Various 5 to 30 Yrs
Corporate Building 1982 10 to 30 Yrs
Buildings leased to others
Eastern PA Exchanged Asset
Shopping Center N/A Various 5 to 30 Yrs
Other N/A Various 5 to 30 Yrs
Laurens, SC N/A Various 5 to 30 Yrs
TOTAL
(1) Activity for the fiscal years ended March 31, 2000, March 31, 1999 & March
31, 1998 is as follows:
2000 1999 1998
---- ---- ----
Balance at beginning of year 16,159,756 15,927,399 17,477,744
Additions during year:
Improvements 418,407 232,439 181,369
(reclassify) 434,015 0 (1,731,686)
17,012,178 16,159,838 15,927,427
Deductions during year:
Cost of real estate sold 83 82 28
Balance at end of year 17,012,095 16,159,756 15,927,399
(2) The aggregate cost for Federal Income Tax purposes at March 31, 2000 is
$15,549,463
(3) Activity for the fiscal years ended March 31, 2000, March 31, 1999 & March
31, 1998 is as follows:
2000 1999 1998
---- ---- ----
Balance at beginning of year 6,754,807 6,366,443 7,029,213
Additions during year:
(Reclassification) 304,923 0 (920,651)
Current year depreciation 412,344 388,364 257,881
Less retirements 0 0
Balance at end of year 7,472,074 6,754,807 6,366,443
</TABLE>
<PAGE>
18
BLUE RIDGE REAL ESTATE COMPANY
BIG BOULDER CORPORATION
To Our Shareholders,
The Companies report net income of $480,640 or $.24 per combined share
for fiscal 2000 compared to a loss of <$79,199> and <$.04> for the previous
year. The prior year financial statement has been restated to reflect a
different accounting treatment for the PennDOT project.
The ski areas experienced a profitable season with 346,000 visitors.
Skiers and snowboarders combined visits totaled 256,000 and snowtubers added
another 90,000. Sixty to seventy degree temperatures in early March caused an
abrupt end to the season. Big Boulder, after closing for the season, initiated a
use for the snow remaining on the slopes. The ski area hosted a motorcycle hill
climb and a snowmobile hill climb, adding to the total number of visitors for
the season.
The $800,000 renovation and addition to our Jack Frost's East Mountain
chairlift was well received by our skiing public and Snow Ridge homeowners. We
increased our uphill capacity by 1200 skiers per hour on our most popular
slopes.
Tubing continues to grow in popularity and has become a major
contributing factor to our ski areas.
Efforts to expand our market are paying off with an increasing
percentage of visitors from New York and New Jersey. Our efforts include
television, billboards and group leader contacts.
Winter sports remains our primary business, however, profit centers
introduced during the non-ski season have made sizable contributions to the
companies' overall performance.
Big Boulder has developed a reputation for music festivals with
top-rated entertainers. Our nationally acclaimed Blues Festival is rated as one
of the top five in the country while the Pocono Gathering and the Bikers
Festival continue to grow in popularity and attendance.
Jack Frost's summer operations cater to the 12 to 25 year old echo
boomer market with extreme sports.
During fiscal 2000, we introduced Traxx, a motocross and ATV park. This
facility contains four separate areas that represent different riding abilities
plus an enduro trail. The park has been well received and has introduced Jack
Frost to a new customer base. Attendance at this motocross complex is young
families.
Our Splatter Paintball Games, In-line Skate Park and Mountain Bike
Center attract customers to Jack Frost Mountain during the spring, summer and
fall months.
The Fernridge Campground with 225 sites, including 25 wilderness
cabins, continues to grow in occupancy, primarily because of Big Boulder's
festivals and the NASCAR races at the neighboring Pocono Track. We are cross
selling accommodations at the campground with Traxx and Splatter.
The Pennsylvania Department of Transportation's (PennDOT) plans for a
rest area on Interstate 80 in our Core Area is moving forward with a planned
contract letting this fall. Our company's involvement is to build a sewer line
from our Jack Frost Mountain plant to the rest area and provide service. This is
an $841,000 project with completion scheduled this summer.
The growth in cellular communication has created an opportunity for us
in the form of leased space on towers. The companies' vast landholdings have
strategic locations for communication sites. Four towers have been constructed
with municipal approval for a fifth tower adjacent to our Fernridge Campground.
Leases with major wireless communication companies have been secured.
We continue to explore possible real estate ventures in an effort to
realize the companies' major potential, i.e. future development opportunities of
its large landholdings. Municipal approval for home sites adjacent to our ski
areas and permits for a golf course are in place. Municipal sewage is now
available to company lands located at the intersection of the Pennsylvania
Turnpike and Interstate 80.
The growth and success of our companies is a result of the creativity
and dedication of our employees. I would like to thank them for their hard work
and loyalty throughout the year.
Gary A. Smith
President
Blakeslee, Pennsylvania
June 16, 2000
19
<PAGE>
<TABLE>
<CAPTION>
BLUE RIDGE REAL ESTATE COMPANY AND SUBSIDIARIES
AND
BIG BOULDER CORPORATION AND SUBSIDIARIES
COMBINED BALANCE SHEETS
March 31, 2000 and 1999
ASSETS 2000 1999
Current Assets:
Cash and cash equivalents (all funds are
<S> <C> <C>
interest bearing) 2,553,510 $2,707,188
Accounts receivable 448,838 559,678
Inventories 213,215 283,946
Prepaid expenses and other current assets 620,284 674,448
Total current assets 3,835,847 4,225,260
Other non-current assets 0 36,797
Properties:
Land, principally unimproved (19,873
and 19,875, respectively, acres per
land ledger) 1,869,709 1,867,655
Land improvements, buildings and equipment 52,025,096 50,533,623
53,894,805 52,401,278
Less accumulated depreciation & amortization 33,774,181 32,855,580
20,120,624 19,545,698
$23,956,471 $23,807,755
LIABILITIES AND SHAREHOLDERS' EQUITY 2000 1999
Current liabilities:
Current installments of long-term debt $842,152 $ 461,609
Accounts and other payables 410,430 861,740
Accrued claims 46,601 68,943
Accrued income taxes 293,113 168,517
Accrued pension expense 494,837 329,334
Accrued liabilities 659,800 676,585
Deferred revenue 216,899 328,207
Total current liabilities 2,963,832 2,894,935
Long-term debt, less current installments 7,976,642 8,338,296
Deferred income taxes 2,149,945 2,192,945
Deferred income 502,433 248,187
Commitments and contingencies
Combined shareholders' equity:
Capital stock, without par value, stated
value $.30 per combined share, Blue Ridge
and Big Boulder each authorized 3,000,000
shares, each issued 2,198,148 shares 659,444 659,444
Capital in excess of stated value 1,461,748 1,461,748
Earnings retained in the business 10,031,343 9,550,703
12,152,535 11,671,895
Less cost of 250,790 and 225,190 shares of
capital stock in treasury as of March 31,
2000 and 1999, respectively 1,788,916 1,538,503
10,363,619 10,133,392
$23,956,471 $23,807,755
The accompanying notes are an integral part of the combined financial
statements.
</TABLE>
20
<PAGE>
BLUE RIDGE REAL ESTATE COMAPNY AND SUBSIDIARIES AND BIG BOULDER CORPORATION AND
SUBSIDIARIES COMBINED STATEMENTS OF OPERATIONS AND EARNINGS RETAINED IN THE
BUSINESS for the years ended March 31, 2000,1999 & 1998
<TABLE>
<CAPTION>
<S> <C> <C> <C>
2000 1999 1998
Revenues:
Ski operations $11,565,643 $11,124,018 $12,298,893
Real estate management 5,417,962 4,926,533 4,610,779
Rental income 1,903,314 1,736,929 1,746,323
18,886,919 17,787,480 18,655,995
Costs and expenses:
Ski operations 11,135,115 11,293,011 11,395,132
Real estate management 4,798,647 4,230,279 3,941,009
Rental income 936,870 868,536 826,504
General and administration 1,084,649 1,064,167 1,068,163
17,955,281 17,455,993 17,230,808
Income from operations 931,638 331,487 1,425,187
Other income (expense):
Interest and other income 620,203 246,745 131,397
Interest expense (732,201) (698,913) (818,994)
(111,998) (452,168) (687,597)
Income (loss)before income taxes 819,640 (120,681) 737,590
Provision(credit)for income taxes:
Current 382,000 144,357 248,927
Deferred (43,000) (185,839) 94,070
339,000 (41,482) 342,997
Net income (loss), as restated in 1999 480,640 (79,199) 394,593
Earnings retained in business:
Beginning of year 9,550,703 9,629,902 9,235,309
End of year $10,031,343 $9,550,703 $9,629,902
Basic and diluted earnings (loss)per
weighted average combined share
as restated in 1999 $0.24 ($0.04) $0.20
The accompanying notes are an integral part of the combined financial
statements.
</TABLE>
21
<PAGE>
BLUE RIDGE REAL ESTATE COMPANY AND SUBSIDIARIES
AND
BIG BOULDER CORPORATION AND SUBSIDIARIES
COMBINED STATEMENTS OF CASH FLOWS
For the years ended March 31, 2000, 1999 & 1998
<TABLE>
<CAPTION>
<S> <C> <C> <C>
2000 1999 1998
Cash Flows From Operating Activities:
Net income (loss) $480,640 ($79,199) $394,593
Adjustments to reconcile net income (loss)
to net cash provided by
operating activities:
Depreciation and amortization 1,921,237 2,003,891 2,059,272
Deferred income taxes (43,000) (102,471) 94,070
Gain on sale of assets (19,006) (4,930) (33,746)
Changes in operating assets and liabilities:
Accounts receivable 110,840 35,178 (164,228)
Refundable income taxes 0 8,614 14,532
Prepaid expenses & other current assets 161,692) (251,671) 166,428
Accounts payable & accrued liabilities (324,934) 497,289 47,746
Accrued income taxes 124,596) (99,368) 129,319
Deferred revenue (111,308) 91,609 44,042
Net cash provided by operating activities 2,300,757 2,098,942 2,752,028
Cash Flows From (used in) Investing Activities:
Marketable securities 0 0 303,096
Deferred income 254,246 248,187 0
Proceeds from disposition of assets 19,089 16,150 33,773
Additions to properties (2,496,246) (1,763,597) (1,804,696)
Net cash used in investing activities (2,222,911) (1,499,260) (1,467,827)
Cash Flows From (used in) Financing
Activities:
Borrowings under short-term financing 2,550,000 1,950,000 2,000,000
Payment of short-term financing (2,550,000) (1,950,000) (2,000,000)
Additions to long-term debt 800,000 0 5,331,999
Payment of long-term debt (781,111) (491,004) (5,819,521)
Purchase of treasury stock (250,413) (201,267) (81,003
Net cash used in financing activities (231,524) (692,271) (568,525)
Net increase (decrease) in cash & cash
equivalents (153,678) (92,589) 715,676
Cash & cash equivalents, beginning of year 2,707,188 2,799,777 2,084,101
Cash & cash equivalents, end of year $2,553,510 $2,707,188 $2,799,777
Supplemental disclosures of cash flow
information:
Cash paid during year for:
Interest $732,458 $714,107 $826,330
Income taxes $335,395 $214,100 $141,898
</TABLE>
The accompanying notes are an integral part of the combined financial
statements.
22
<PAGE>
NOTES TO COMBINED FINANCIAL STATEMENTS
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
BASIS OF COMBINATION:
The combined financial statements include the accounts of Blue Ridge
Real Estate Company (Blue Ridge) and its wholly-owned subsidiaries,
Northeast Land Company, Jack Frost Mountain Company, and BRRE Holdings, Inc.;
and Big Boulder Corporation (Big Boulder) and its wholly-owned subsidiaries,
Lake Mountain Company and BBC Holdings, Inc. Under a Security Combination
Agreement between Blue Ridge and Big Boulder and under the bylaws of both
Companies, shares of the Companies are combined in unit certificates, each
certificate representing concurrent ownership of the same number of shares of
each company; shares of each company may be transferred only together with an
equal number of shares of the other company. All significant intercompany
accounts and transactions are eliminated. DISPOSITION OF LAND AND RESORT HOMES:
The Companies recognize income on the disposition of real estate in
accordance with the provisions of Statement of Financial Accounting Standards
No. 66, "Accounting for Sales of Real Estate" (SFAS 66). Down payments of less
than 20% are accounted for as deposits as required by SFAS No 66.
The costs of developing land for resale as resort homes and the costs
of constructing certain related amenities are allocated to the specific parcels
to which the costs relate. Such costs, as well as the costs of construction of
the resort homes, are charged to operations as sales occur. Land held for resale
and resort homes under construction are stated at lower of cost or market.
PROPERTIES AND DEPRECIATION:
Properties are stated at cost. Depreciation and amortization is
provided principally using the straight-line method over the following years:
Land improvements 10-30
Buildings 3-30
Equipment and furnishings 3-20
Ski facilities:
Land improvements 10-30
Buildings 5-30
Machinery and equipment 5-20
Upon sale or retirement of depreciable property, the cost and related
accumulated depreciation are removed from the related accounts, and resulting
gains or losses are reflected in income.
Interest, real estate taxes, and insurance costs, including those costs
associated with holding unimproved land, are normally charged to expense as
incurred. Interest cost incurred during construction of facilities is
capitalized as part of the cost of such facilities.
Maintenance and repairs are charged to expense, and major renewals and
betterments are added to property accounts.
Impairment losses are recognized in operating income as they are
determined. The Companies periodically review their property and equipment to
determine if its carrying cost will be recovered from future operating cash
flows. In cases when the Companies do not expect to recover their carrying cost,
the Companies recognize an impairment loss. No such losses were recognized in
the three years ended March 31, 2000.
INVENTORIES:
Inventories consist of food, beverage and retail merchandise and are
stated at cost which approximates market, with cost determined using the
first-in, first-out method.
23
<PAGE>
DEFERRED REVENUE:
Deferred revenues include revenues billed in advance for services and
dues which are not yet earned.
INCOME TAXES:
The Companies' account for income taxes utilizing the asset and
liability method of recognizing the tax consequence of transactions that have
been recognized for financial reporting or income tax purposes. Among other
things, this method requires current recognition of the effect of changes in
statutory tax rates on previously provided deferred taxes. Valuation allowances
are established, when necessary, to reduce tax assets to the amount expected to
be realized. Blue Ridge, including its subsidiaries, and Big Boulder, including
its subsidiaries, report as separate entities for federal income tax purposes.
State income taxes are reported on a separate company basis.
DEFERRED INCOME:
Amounts received under a contract for reimbursement of the cost of a
constructed asset are deferred. The amounts will be recognized as income over
the period in which depreciation on those assets is charged.
ADVERTISING COSTS:
Advertising costs are charged when incurred. Advertising expense for
the years ended March 31, 2000, 1999 and 1998 was $1,488,268, $1,580,385 and
$1,487,194, respectively.
USE OF ESTIMATES AND ASSUMPTIONS:
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the dates of the financial
statements and the reported amounts of revenues and expenses during the
reporting periods. Actual results could differ from those estimates.
STATEMENT OF CASH FLOWS:
For purposes of reporting cash flows, the Companies consider cash
equivalents to be all highly liquid investments with maturities of three months
or less when acquired.
CONCENTRATION OF CREDIT RISK:
Financial instruments which potentially subject the Companies to
concentration of credit risk consist principally of temporary cash investments.
The Companies' temporary cash investments are held by financial institutions.
The Companies have not experienced any losses related to these investments.
EARNINGS (LOSS) PER SHARE:
Basic earnings (loss) per share is calculated based on the
weighted-average number of shares outstanding. Diluted earnings (loss) per
share includes the dilutive effect of stock options.
RECLASSIFICATION
Certain reclassifications have been made to conform to current year
presentation.
2. CONDENSED FINANCIAL INFORMATION:
Condensed financial information of the constituent Companies, Blue
Ridge and its subsidiaries and Big Boulder and its subsidiaries, at March 31,
2000, 1999 and 1998 and for each of the periods then ended is as follows:
24
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C> <C>
BLUE RIDGE AND SUBSIDIARIES
------------------------------------------------------------------------------------------------------------------------------------
2000 1999 1998
------------------------------------------------------------------------------------------------------------------------------------
FINANCIAL POSITION:
Current assets $1,293,937 $1,839,683 $1,902,941
Total assets 16,237,715 16,096,555 15,896,492
Current liabilities 2,523,048 2,403,281 1,864,255
Shareholders'equity 4,445,461 4,384,868 4,699,630
OPERATIONS:
Revenues 11,798,218 11,468,148 10,914,914
Income(loss)before taxes 464,004 (185,036) 94,741
Provision(credit)for
income taxes 153,000 (71,540) 110,495
Net income (loss) 311,004 (113,496) (15,754)
BIG BOULDER AND SUBSIDIARIES
------------------------------------------------------------------------------------------------------------------------------------
2000 1999 1998
------------------------------------------------------------------------------------------------------------------------------------
Current assets $2,541,910 $2,385,577 $2,207,029
Total assets 7,718,756 7,711,200 8,047,488
Current liabilities 440,784 491,654 537,044
Shareholders'equity 5,918,158 5,748,524 5,714,228
OPERATIONS:
Revenues 7,088,701 6,319,332 7,741,081
Income(loss)before taxes 355,636 64,355 642,849
Provision(credit)for
income taxes 186,000 30,058 232,502
Net income (loss) 169,636 34,297 410,347
3. SHORT-TERM FINANCING:
At March 31, 2000, Blue Ridge had an unused line of credit aggregating
$2,000,000 available for short-term financing, expiring August 31, 2000, which
management expects to be renewed. The line of credit bears interest at .25% less
than the prime rate.
4. LONG-TERM DEBT:
Long-term debt as of March 31, 2000 and 1999 consists of the following:
2000 1999
Mortgage note payable to bank, interest is LIBOR
plus 160 basis points (7.73% at March 31, 2000)
payable monthly with principal
reduction of $18,000 through August 2001. 5,138,999 5,298,499
Mortgage note payable to bank, interest at 80%
of the bank's prime rate (7.0% at March 31, 2000)
payable in monthly installments of
$24,187 through Fiscal 2005 1,572,168 1,862,414
Mortgage note payable to insurance company,
interest fixed at 10.5% payable in
monthly installments of $15,351 including
interest through Fiscal 2014 1,337,642 1,379,007
Mortgage note payable to bank, interest at
7% payable monthly with principle
reduction at $32,500 per month December to
March through 2001 129,985 259,985
25
<PAGE>
Mortgage note payable to bank, interest at e
6.84% payable monthly with principl
reduction at $40,000 per month December to
March through 2004 640,000 0
8,818,794 8,799,905
Less current installments 842,152 461,609
$7,976,642 8,338,296
Properties at cost, which have been pledged as collateral for long-term debt,
include the following at March 31, 2000:
Investment properties leased to others 7,650,111
Ski facilities 19,783,966
The aggregate amount of long-term debt maturing in each of the five years ending
subsequent to March 31, 2000, is as follows: 2001-$842,152; 2002- $5,424,227;
2003-$506,847; 2004-$513,085; 2005-$360,010.
5. INCOME TAXES:
The provision (credit) for income taxes is as follows:
2000 1999 1998
Currently payable
Federal $382,000 $141,749 $246,896
State 0 2,608 2,031
382,000 144,357 248,927
Deferred:
Federal (43,000) (185,839) 94,070
State 0 0 0
(43,000) (185,839) 94,070
$339,000) ($41,482) $342,997
A reconciliation between the amount computed using the statutory federal income
tax rate and the provision (credit) for income taxes is as follows:
2000 1999 1998
Computed at statutory rate $279,000 ($41,032) $248,272
State net operating losses
subject to valuation allowance 46,000 0 27,311
State income taxes, net of federal
income tax 0 1,721 1,341
Other 6,000 5,228 0
AMT (utilization) tax 8,000 (7,399) 66,073
Provision(credit)for income taxes ($339,000) ($41,482) $342,997
The components of the deferred tax assets and liabilities as of March 31, 2000
and 1999 are as follows:
2000 1999
Deferred tax asset:
Reimbursement of cost of sewer line (note 14) $201,275 $99,275
Accrued expenses 52,472 $74,897
Net operating loss and AMT credit carryforward 653,977 563,948
Contribution carryforward 1,073 1,384
908,797 739,504
Less valuation allowance (297,336) (170,702)
611,461 568,802
Deferred tax liability:
Depreciation (2,761,406) (2,761,747)
(2,761,406) (2,761,747)
Net deferred tax liability ($2,149,945) ($2,192,945)
26
<PAGE>
At March 31, 2000, the Companies have $385,048 of Alternative Minimum Tax (AMT)
credit carryforward available to reduce future federal income taxes. The AMT
credit has no expiration date. For state income tax purposes, the Companies have
available state net operating loss carryforwards of $3,317,268 which start to
expire between Fiscal 2001 and 2010. The valuation allowance increased by
$126,634 during Fiscal 2000 due to additional state net operating losses which
are not expected to be utilized.
6. PENSION BENEFITS:
ASSUMPTIONS 2000 1999 1998
Discount Rates used to determine projected
benefit obligations as of March 31, 7.50% 6.75% 7.00%
Expected long-term rates of return on assets 8.50% 8.50% 8.50%
Rates of increase in compensation levels 5.00% 5.00% 5.00%
CHANGE IN BENEFIT OBLIGATION 2000 1999
Benefit obligation at beginning of year $3,102,102 $2,708,402
Service cost(net of expenses) 216,936 184,417
Interest cost 208,672 186,169
Plan amendments 0 0
Actuarial (gain) loss (322,519) 161,653
Benefit payments (139,976) (138,539)
Benefit obligation at end of year $3,065,215 $3,102,102
CHANGE IN PLAN ASSETS 2000 1999
Fair value of plan assets at
beginning of year $3,145,730 $3,070,947
Actual return on plan assets 491,996 243,655
Employer contributions 0 0
Benefits paid (139,976) (138,539)
Actual expenses paid during the year (23,929) (30,333)
Fair value of plan assets at end of year $3,473,821 $3,145,730
RECONCILIATION OF FUNDED STATUS OF THE PLAN 2000 1999
Funded status at end of year $408,606 $43,628
Unrecognized transition obligation 111,652 120,132
Unrecognized net prior service cost 9,881 10,492
Unrecognized net actuarial gain (1,025,015) (501,089)
Net amount recognized at end of year ($494,876) ($326,837)
COMPONENTS OF NET PERIODIC BENEFIT COST 2000 1999 1998
Service Cost $240,936 240,717 177,661
Interest Cost 208,672 186,169 170,907
Expected return of plan assets 282,286 250,562 194,539
Net amortization and deferral:
Amortization of transition obligation 8,480 8,480 8,480
Amortization of prior service cost 611 611 611
Amortization of accumulated gain (8,374) (19,911) (12,463)
Net amortization and deferral $ 717 ($10,820) ($3,372)
Total net periodic pension cost $168,039 $165,504 $150,657
27
<PAGE>
7. PROPERTIES:
Properties consist of the following at March 31, 2000 and 1999:
2000 1999
Land, principally unimproved $1,869,709 $1,867,655
Land improvements 4,626,270 3,879,885
Corporate buildings 470,907 470,907
Buildings leased to others 10,076,083 10,035,091
Ski facilities:
Land 4,552 4,552
Land improvements 8,769,371 7,107,257
Buildings 6,515,956 7,405,053
Machinery & equipment 19,163,807 19,267,786
Equipment & furnishings 2,398,150 2,363,092
53,894,805 52,401,278
Less accumulated depreciation 33,774,181 32,855,580
$20,120,624 $19,545,698
Buildings leased to others include land of $1,056,700 at March 31, 2000, 1999
and 1998.
8. LEASES:
The Companies are lessors under various operating lease agreements for
the rental of land, land improvements and investment properties leased to
others. Rents are reported as income over the terms of the leases as they are
earned. A shopping center is leased to various tenants for renewable terms
averaging 3.62 years with options for renewal. A store has been net leased until
January 2014. Information concerning rental properties and minimum future
rentals under current leases as of March 31, 2000, is as follows:
Properties Subject To Lease
Accumulated
Cost Depreciation
Investment properties leased to
others $7,956,599 $3,332,328
Land and land improvements 3,980,540 1,178,647
Minimum future rentals:
Fiscal years ending March 31: 2001 1,643,397
2002 1,200,090
2003 1,121,414
2004 1,001,436
2005 855,838
Thereafter 10,046,580*
$15,868,755
*Includes $1,422,750 under a land lease expiring in 2072 and $1,708,250 under a
net lease for a store expiring in 2014. There were no contingent rentals
included in income for Fiscal 2000, 1999 or 1998.
9. FAIR VALUE:
The Companies have estimated the fair value of their financial
instruments at March 31, 2000 and 1999 as follows: The carrying values of cash
and cash equivalents, accounts receivable, accounts payable and accrued expenses
are reasonable estimates of their fair values. The carrying values of variable
and fixed rate long-term debt are reasonable estimates of their fair values
based on their discounted cash flows at discount rates currently available to
the Companies for debt with similar terms and remaining maturities.
</TABLE>
28
<PAGE>
10. QUARTERLY FINANCIAL INFORMATION (UNAUDITED)
The results of operations for each of the quarters in the last two
years are presented below.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
INCOME(LOSS) NET NET
OPERATING FROM INCOME (LOSS) INCOME (LOSS)
QUARTER REVENUES OPERATIONS AS REPORTED ADJUSTED
2000
1st $1,531,989 ($83,551) ($61,131) $(87,119)
2nd 2,860,457 610,202 495,638 424,036
3rd 3,715,629 (77,467) 3,731 (50,925)
4th 10,778,844 482,454 194,648 194,648
$18,886,919 $931,638 $632,886 $480,640
EARNINGS(LOSS) EARNINGS (LOSS)
PER WEIGHTED PER WEIGHTED
AVG. COMBINED AVG.COMBINED
SHARE SHARE
QUARTER AS REPORTED ADJUSTED
2000
($0.03) ($0.05)
0.25 0.22
(0.00) (0.03)
(0.14) 0.10
$0.08 $0.24
INCOME(LOSS) NET NET
OPERATING FROM INCOME (LOSS) INCOME (LOSS)
QUARTER REVENUES OPERATIONS AS REPORTED ADJUSTED
1999
1st $1,463,539 $(121,966) $(152,464) ($152,464)
2nd 2,500,389 558,192 365,807 280,097
3rd 3,354,271 (324,569) (215,487) (279,138)
4th 10,469,281 219,830 155,225 72,306
$17,787,480 $331,487 $153,081 $(79,199)
EARNINGS(LOSS) EARNINGS (LOSS)
PER WEIGHTED PER WEIGHTED
AVG. COMBINED AVG.COMBINED
SHARE SHARE
QUARTER AS REPORTED ADJUSTED
2000
($0.08) ($0.08)
0.18 0.14
(0.11) (0.14)
0.09 0.04
$0.08 ($0.04)
</TABLE>
The quarterly results of operations for 2000 and 1999 reflect the
cyclical nature of the Companies' business since (1) the Companies' two ski
facilities operate principally during the months of December through March and
(2) 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. The net income and earnings per share have been adjusted
quarterly to reflect the reclassification of the previously reported
extraordinary item as referenced in note 14.
29
<PAGE>
11. BUSINESS SEGMENT INFORMATION:
The following information is presented in accordance with SFAS No. 131,
"Disclosures about Segments of an Enterprise and Related Information." In
accordance with SFAS No. 131, the Companies' business segments were determined
from the Companies' internal organization and management reporting, which are
based primarily on differences in services.
The Companies and the subsidiaries, under SFAS No.131, operate in two
business segments consisting of the following:
SKI OPERATIONS:
Two ski areas located in the Pocono Mountains of Northeastern
Pennsylvania.
REAL ESTATE MANAGEMENT/RENTAL OPERATIONS:
Investment properties leased to others located in Eastern Pennsylvania
and South Carolina, fees from managing investor-owned properties, principally
resort homes, recreational club activities and services to the trusts that
operate resort communities, sales of land held for resale and investment
purposes, and rental of land and land improvements.
Income or loss for each segment represents total revenue less operating
expenses. General and administrative expenses, other income, and interest
expense are allocated to each business segment based on percentage of revenue.
Identifiable assets are those utilized in the operation of the respective
segments; corporate assets consist principally of cash and non-revenue producing
properties held for investment purposes.
<TABLE>
<CAPTION>
<S> <C> <C> <C>
3/31/00 03/31/99 03/31/98
Revenues:
Ski operations $11,565,643 $11,124,018 $12,298,893
Real estate management/
Rental operations 7,321,276 6,663,462 6,357,102
$18,886,919 $17,787,480 $18,655,995
Income:(loss)
Ski operations $430,528 ($168,993) $ 903,761
Real estate management/
Rental operations 1,585,759 1,564,647 1,589,589
$2,016,287 $1,395,654 $2,493,350
General & administrative expenses:
Ski Operations ($661,636) ($670,425) ($672,943)
Real estate management/
Rental operations (423,013) (393,742) (395,220)
($1,084,649) ($1,064,167) ($1,068,163)
Interest and other income:
Ski Operations $378,324 $155,449 $82,780
Real estate management/
Rental operations 241,879 91,296 48,617
$620,203 $246,745 $131,397
Interest expense:
Ski operations ($446,643) ($440,315) ($515,966)
Real estate management/
rental operations (285,558) (258,598) (303,028)
($732,201) ($698,913) ($818,994)
Income (loss) before income taxes,
as restated in 1999: $819,640 ($120,681) $737,590
30
<PAGE>
In Fiscal 2000, 1999 and 1998, no one customer represented 10% or more of
total revenues.
Identifiable assets, net of accumulated depreciation at March 31, 2000,
1999 and 1998 and depreciation expense and capital expenditures for the years
then ended by Business segment are as follows:
Identifiable Depreciation Capital
2000 Assets Expense Expenditure
Ski Operations $11,480,288 $1,397,361 $2,080,192
Real Estate Management/Rental
Operations 11,079,448 426,243 330,347
Other Corporate 1,396,735 97,633 85,707
Total $23,956,471 $1,921,237 $2,496,246
1999
Ski Operations $11,622,619 $1,485,975 $1,249,973
Real Estate Management/Rental
Operations $9,858,387 419,891 321,087
Other Corporate 2,326,749 98,025 192,537
Total $23,807,755 $2,003,891 $1,763,597
1998
Ski Operations $12,203,047 $1,417,719 $1,382,580
Real Estate Management/Rental
Operations 9,730,578 449,728 181,369
Other Corporate 2,010,355 191,825 240,747
Total $23,943,980 $2,059,272 $1,804,696
</TABLE>
12. CONTINGENT LIABILITIES AND COMMITMENTS:
The Companies are party to various legal proceedings incidental to
their business. Certain claims, suits, and complaints arising in the ordinary
course of business have been filed or are possible of assertion against the
Companies. In the opinion of management, all such matters are without merit or
are of such kind, or involve such amounts, that are not expected to have a
material effect on the combined financial position or results of operations of
the Companies.
Blue Ridge has pledged approximately 20 acres of its leased land (cost
$144,786) to serve as collateral, together with the lessee's land improvements,
for the lessee's mortgage loan which amounts to approximately $1,290,000 at
March 31, 2000.
13. STOCK OPTIONS AND CAPITAL STOCK:
The Board of Directors has authorized the repurchase of the Companies'
common stock in the open market from time to time. As of March 31, 2000, 250,790
shares have been repurchased. In Fiscal 2000, 25,600 shares were repurchased.
19,056 shares were repurchased in Fiscal 1999 and 12,000 shares were repurchased
in Fiscal 1998.
In Fiscal 1998. the Chairman of the Board of the Companies was granted
options for 35,000 shares of the Companies' common stock at $6.75 per share. Ten
thousand options were granted in 1993 and 25,000 in July 1997. The options
expire July 1, 2003. The option price of $6.75 was equal to the market value on
the dates of grant.
The Companies apply Accounting Principles Board Opinion 25 and the
related interpretations in accounting for the options. Accordingly, no
compensation cost has been recognized in the financial statements relative to
these options. Had compensation cost for the Companies' options been determined
consistent with Financial Accounting Standards Board Statement No. 123, the
Companies' net income and earnings per share would have been reduced to the
proforma amounts indicated below, based on the following assumptions:
The fair value of the 1998 option grant is estimated on the date of
grant using the Black-Scholes option-pricing model with the following
weighted-average assumptions for 1998: dividend yield of 0%; expected volatility
of 37.8%; risk free interest rate of 6.4%, and expected life of 6 years.
31
<PAGE>
1998
Net Income:
As reported $394,593
Pro Forma $340,879
Basic earnings per share:
As reported $0.20
Pro Forma $0.17
Diluted earnings per share:
As reported $0.20
Pro Forma $0.17
Option activity during the periods ended March 31, 2000, 1999 and 1998 is as
follows:
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
2000 1999 1998
Exercise Exercise Exercise
Shares Price Shares Price Shares Price
Outstanding at beginning
of year: 35,000 $6.75 35,000 $6.75 10,000 $6.75
Granted - - - - 25,000 $6.75
Exercised - - - - - -
Canceled - - - - - -
Outstanding at end of year 35,000 $6.75 35,000 $6.75 35,000 $6.75
Options exercisable at
year-end 35,000 $6.75 35,000 $6.75 35,000 $6.75
Option price range $6.75 $6.75 $6.75
Weighted average fair value
of options granted during year $- $- $3.26
</TABLE>
All 35,000 options outstanding are exercisable at $6.75 per share and have a
remaining contractual life of 3.25 years.
14. RESTATEMENT:
In 1999, the Companies under a contract with the Pennsylvania
Department of Transportation ("PDOT"), began construction of a two-mile sewer
line from the Jack Frost treatment plant to a rest station on Interstate Route
80. The total estimated construction budget for the project is $841,832 plus
reimbursement of estimated income taxes of $567,628. The Companies expect to
complete construction in fiscal year 2001. The Companies received $413,644 from
PDOT in 1999 and recorded the amount, net of estimated income taxes of $72,162
as an extraordinary item. During the fourth quarter of Fiscal 2000, management
determined that the amounts received under the contract related to construction
of the sewer line should be deferred and recognized as income over the period in
which depreciation on those assets is charged. The amounts related to
reimbursement of income taxes and non-capital overhead expenses will be
recognized as income in the periods in which the related income taxes and
overhead expenses are incurred. Accordingly, results of operations for 1999 have
been restated decreasing net income by $232,280 ($.12 per share), net of income
taxes of approximately $16,000.
The Companies received $771,786 in Fiscal 2000 as taxable reimbursement
for construction costs. $254,246, net of reimbursed estimated income taxes and
overhead expenses of $517,540, has been deferred. The cumulative proceeds (net
of reimbursed estimated income taxes and overhead expenses) of $248,187 and
$502,433 as of March 31, 1999 and 2000, respectively, have been reported as
Deferred income in the accompanying Combined Balance Sheets. Other income
includes $517,540 in 2000 and $155,000 in 1999 related to reimbursement of
related income taxes and overhead expenses. Construction cost capitalized of
$502,433 as of March 31, 2000 is recorded in Land Improvements, Buildings and
Equipment.
32
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C> <C>
15. PER SHARE DATA:
Earnings per share and computed as follows:
2000 1999 1998
Net Earnings $480,640 $79,199) $394,593
Weighted average combined
shares of common stock out-
standing used to compute basic
earnings per combined
common share 1,962,491 1,980,706 1,993,014
Additional combined common shares to
be issue assuming exercise of stock
options, net of combined shares
assumed reacquired 10,295 12,346 8,029
Combined shares used to compute
dilutive effect of stock
option 1,972,786 1,993,052 2,001,043
Basic and diluted earnings per
combined common share $0.24 ($0.04) $0.20
</TABLE>
INDEPENDENT AUDITOR'S REPORT
To Shareholders of
Blue Ridge Real Estate Company
and Big Boulder Corporation:
We have audited the combined balance sheet of Blue Ridge Real Estate Company and
subsidiaries and Big Boulder Corporation and subsidiaries (the "Companies") as
of March 31, 2000 and the related combined statements of operations and earnings
retained in the business and cash flows for the year then ended. These financial
statements are the responsibility of the Companies' management. Our
responsibility is to express an opinion on these financial statements based on
our audit. The combined financial statements of the Companies as of March 31,
1999 and 1998 were audited by other auditors whose report dated June 4, 1999
expressed an unqualified opinion on those statements. As discussed in Note 14,
the Companies have restated their 1999 financial statements.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the 2000 combined financial statements referred to above present
fairly, in all material respects, the combined financial position of Blue Ridge
Real Estate Company and subsidiaries and Big Boulder Corporation and
subsidiaries as of March 31, 2000, and the results of their operations and their
cash flows for the year then ended in conformity with generally accepted
accounting principles.
Parente Randolph, P.C.
June 21, 2000
33
<PAGE>
PRICE RANGE OF COMMON SHARES AND DIVIDEND INFORMATION
Prior to May 4, 1993, Blue Ridge Real Estate Company and Big Boulder
Corporation common shares were listed and traded as unit certificates on the
Over-the-Counter market and were quoted on the NASDAQ National Market System
(Symbol: BLRGZ). Effective May 4, 1993, the Companies decided to discontinue
their listing with NASDAQ. Subsequent to May 4, 1993, the Companies are aware of
limited trades in their common stock; however, Management does not believe such
limited activity constitutes an established public trading market.
The following sets forth the high asked and low price quotations as
reported on the monthly statistical reports of the National Association of
Securities Dealers, Inc. for Fiscal Years 2000 and 1999. No dividends were paid
on common stock in either Fiscal Year.
FISCAL YEAR 2000 HIGH LOW
ASKED BID
First Quarter 10.500 9.500
Second Quarter 10.500 9.250
Third Quarter 9.875 9.250
Fourth Quarter 9.750 9.125
FISCAL YEAR 1999 HIGH LOW
ASKED BID
First Quarter 12.375 10.500
Second Quarter 12.375 10.375
Third Quarter 11.250 9.000
Fourth Quarter 10.500 9.375
The reported quotations represent prices between dealers, do not
reflect retail mark-ups, mark-downs or commissions and do not necessarily
represent actual transactions. The approximate number of holders of record of
common stock on March 31, 2000 and 1999 were 636 and 659, respectively.
BLUE RIDGE REAL ESTATE COMPANY AND SUBSIDIARIES
AND BIG BOULDER CORPORATION AND SUBSIDIARIES
COMBINED SUMMARY OF SELECTED FINANCIAL DATA
<TABLE>
<CAPTION>
<S> <C> <C> <C>
2000 1999 1998
Revenues $18,886,919 $17,787,480 $18,655,995
Net income(loss) 480,640 (79,199) 394,593
Net income(loss)per combined share $0.24 ($0.04) $0.20
Cash dividends per combined share 0 0 0
Weighted average number of
combined shares outstanding 1,962,491 1,980,706 1,993,014
Total assets 23,956,471 23,807,755 23,943,980
Long-term debt 8,818,794 8,799,905 9,290,909
Shareholders' equity 10,363,619 10,133,392 10,413,858
1997 1996
Revenues $16,038,000 $15,308,986
Net income(loss) 486,806 43,263
Net income(loss)per combined share $0.24 $0.02
Cash dividends per combined share 0 0
Weighted average number of
combined shares outstanding 2,004,014 2,004,014
Total assets 23,802,737 23,209,690
Long-term debt 9,778,431 9,694,167
Shareholders' equity 10,100,268 9,613,462
</TABLE>
34
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATION
RESULTS OF OPERATIONS
FISCAL 2000 VERSUS FISCAL 1999
For Fiscal Year ended March 31, 2000, the Companies reported net income of
$480,640 or $.24 per combined share as compared with a net loss of $(79,199) or
$.04 per combined share for Fiscal 1999.
Combined revenue of $18,886,919 represents an increase of $1,099,439 or 6%
when compared to Fiscal 1999.
Ski Operations increased $441,625 or 4%, and Real Estate Management
Operations increased $657,814 or 9% when compared to Fiscal 1999.
The Ski Operations had approximately 256,000 skiers visit our slopes
compared to 257,000 skier visits last season. The decrease of 1,000 skier
visits represents a decrease of less than 1%. Revenue per skier was $30 compared
to $27 last season for an increase of $3.00 or 10%. Tubing operations had
approximately 90,000 tuber visits compared to 86,000 tuber visits last season.
The increase of 4,000 tuber visits represents a 5% increase. Revenue per tuber
was $13.84 compared to $13.95 last season for an decrease of $.11 or 1%. The ski
areas operated for a combined total of 181 days compared to 179 days last
season. The food and beverage operation at the ski areas contributed revenue of
$8.13 per skier visit. The retail shop operation at the ski areas contributed
revenue of $1.97 per skier visit compared to $2.16 the previous season.
The Real Estate Management Operations increase is attributed to fewer
vacancies in investment properties, festival revenues, leasing commissions in
resort communities, fees for services provided to the Trust of the resort
communities, and fishing and hunting leases. The increases were offset by a
decrease in commissions for resale of homes in our resort communities.
Disposition of properties occur sporadically and do not follow any pattern
during the fiscal year. No major land sales occurred in Fiscal 2000 or Fiscal
1999.
Operating costs associated with Ski Operations decreased by $157,896
when compared to Fiscal 1999. This decrease is attributed to reduced
advertising, vehicle maintenance and depreciation costs.
Operating costs associated with Real Estate Management Operations
increased by $636,702 when compared to Fiscal 1999. This increase is attributed
to increased expenses related to summer activities and the investment
properties. General and Administration expenses increased by $20,482 when
compared to Fiscal 1999. The increase is attributable to an increase in supplies
and services.
Interest and Other Income increased by $373,458 when compared to Fiscal
1999 This increase is attributable to reimbursement of estimated income taxes
and overhead expenses related to the construction of the sewer line and an
increase in disposed assets and resulting gains.
Interest expense increased by $33,288 when compared to Fiscal 1999.This
increase is attributable to an additional mortgage note payable for the East
Mountain Lift at Jack Frost Mountain and an increase in the prime interest rate.
The effective Tax Rate for Fiscal 2000 and 1999 was 41% and 34%
respectively.
35
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATION
RESULTS OF OPERATIONS
FISCAL 1999 VERSUS FISCAL 1998
For Fiscal Year ended March 31, 1999, the Companies reported net loss
of ($79,199) or ($.04) per combined share as compared with a net income of
$394,593 or $.20 per combined share for Fiscal 1998.
Combined revenue of $17,787,480 represents a decrease of $868,515 or 5%
when compared to Fiscal 1998.
Ski Operations decreased $1,174,875 or 10%, and Real Estate Management
Operations increased $306,360 or 5% when compared to Fiscal 1998.
The Ski Operations had approximately 257,000 skiers visit our slopes
compared to 293,000 skier visits last season. The decrease of 36,000 skier
visits represents a 12% decrease. Revenue per skier was $27 compared to $28 last
season for a decrease of $1.00 or 2%. Tubing operations had approximately 86,000
tuber visits compared to 92,000 tuber visits last season. The decrease of 6,000
tuber visits represents a 7% decrease. Revenue per tuber was $13.95 compared to
$13.27 last season for an increase of $.68 or 5%. The ski areas operated for a
combined total of 179 days compared to 208 days last season. The food and
beverage operation at the ski areas contributed revenue of $7.66 per skier
visit. The retail shop operation at the ski areas contributed revenue of $2.16
per skier visit compared to $1.83 the previous season.
The Real Estate Management Operations increase is attributed to fewer
vacancies in investment properties, festival revenues, leasing commissions in
resort communities, fees for services provided to the Trust of the resort
communities, and fishing and hunting leases. The increases were offset by a
decrease in commissions for resale of homes in our resort communities.
Disposition of properties occur sporadically and do not follow any pattern
during the fiscal year. No major land sales occurred in Fiscal 1999 or Fiscal
1998.
Operating costs associated with Ski Operations decreased by $102,121
when compared to Fiscal 1998. This decrease is attributed to decreased personnel
costs due to a reduction in the number of operating days.
Operating costs associated with Real Estate Management Operations
increased by $289,270 when compared to Fiscal 1998. This increase is attributed
to increased expenses related to summer activities and the investment
properties. General and Administration expenses decreased by $3,996 when
compared to Fiscal 1998. The decrease is attributable to a decrease in supplies
and services.
Interest and Other Income increased by $115,348 when compared to Fiscal
1998. This increase is attributable to a reclass of reimbursed estimated income
taxes and overhead expenses related to the construction of the sewer line.
Interest expense decreased by $120,081 when compared to Fiscal 1998.
This decrease is attributable to a reduction of debt.
The effective Tax Rate for Fiscal 1999 and 1998 was 34.4% and 46.5%
respectively.
LIQUIDITY AND CAPITAL RESOURCES
The Combined Statement of Cash Flows reflects net cash provided by
operating activities of $2,300,757, $2,098,942, and $2,752,028 in Fiscal 2000,
1999 and 1998 respectively.
The major capital investment made in Fiscal 2000 were the construction
of the TRAXX Motocross Park, upgrade of the East Mountain Lift at Jack Frost
Mountain and the purchase of new ticketing computer equipment.
During Fiscal 2000, the Companies borrowed against their $2,000,000
line of credit for a period of five months in varying amounts with a maximum of
$1,900,000.
During Fiscal 1999, the Companies borrowed against their $2,000,000
line of credit for a period of five months in varying amounts with a maximum of
$1,850,000.
The Companies have a combined working capital of $872,015 at March 31,
2000 versus $1,330,325 at March 31, 1999.
36
<PAGE>
MOVING FORWARD
A motocross park is being developed on 50 acres of Company land at Jack
Frost Mountain. This facility will include four riding areas from a child's
riding section for 5 to 9 year olds to an expert track. An Enduro Trail and All
Terrain Vehicle (ATV) rental area are in place. This complex is expected to be a
significant revenue generator during the non ski months.
The Companies are also investing in communication towers at strategic
locations on its lands.
BOARD OF DIRECTORS
Milton Cooper
Chairman, Kimco Realty Corporation;
Director, Getty Petroleum Corp.;
Director, Kimco Realty Corporation
Michael J. Flynn
Chairman of the Board of the Companies;
Vice Chairman and Director, Kimco Realty Corporation
Allen J. Model
Private Investor, Model Entities
Wolfgang Traber
Chairman of the Board, Hanseatic Corporation & Co. N.Y.
The above Directors serve both Companies.
OFFICERS
Gary A. Smith
President
Melanie A. Murphy
Vice President of Operations
Eldon D. Dietterick
Secretary/Treasurer
Christine A. Liebold
Assistant Secretary
Cynthia A. Barron
Controller
The above Officers serve both Companies.
TRANSFER AGENT
Summit Bank, Hackensack, New Jersey
INDEPENDENT ACCOUNTANTS
Parente Randolph, PC, Wilkes Barre, Pennsylvania
NOTICE OF ANNUAL MEETINGS
The Annual Meetings of Shareholders of Blue Ridge Real Estate Company and Big
Boulder Corporation will be announced with mailing of Proxy Material in July.
37
<PAGE>
FORM 10-K AVAILABLE
The Companies will furnish to any shareholder, without charge, a copy of their
Fiscal Year 1999 Annual Report as filed with the Securities and Exchange
Commission on Form 10-K. Written request should be directed to the attention of
the Secretary, Blue Ridge Real Estate Company, P. O. Box 707, Blakeslee, PA
18610-0707
CORPORATE PROPERTIES
RESORTS IN THE POCONO MOUNTAINS
Big Boulder Ski Area
Jack Frost Mountain
Fern Ridge Campground
INVESTMENT PROPERTIES
Dreshertown Plaza Shopping Center
Dresher, Montgomery County, Pennsylvania
Wal-Mart Store, Laurens, South Carolina
The Mountains Edge, Lake Harmony, Pennsylvania
LAND HOLDINGS
Blue Ridge
18,841 acres of land, held for investment
Big Boulder
929 acres of land, held for investment
Northeast Land Company
103 acres of land
RECREATIONAL AREAS
"The Stretch" on the Tunkhannock
Porter Run Hunting Preserve
TRAXX, Motocross, ATV and BMX Park
Splatter (Paintball game)
Wheels, In-Line Skate and Board Park
Hub, Mountain Bike Facility
