<PAGE> 1
U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
------------------------
(Mark One) FORM 10-QSB
(X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES ECHANGE ACT OF 1934
( ) TRANSITION REPORT UNDER SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the Quarter Ended Commission File Number 0-2374
March 31, 1996
CRYSTAL MOUNTAIN, INC.
(Exact name of registrant as specified in its charter)
ONE CRYSTAL MOUNTAIN BLVD.
CRYSTAL MOUNTAIN, WASHINGTON 98022
(address of principal executive offices)
Washington 91-0683256
(State of Incorporation) (IRS Employer Identification Number)
(360) 825-3865
(Telephone number)
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 Exchange Act of 1934 during
the preceding 12 months (or for such shorter 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 ( )
At March 31, 1996, 26,609 shares of $50 par value Class A common stock and 710
shares of $20 par value Class B common stock were outstanding.
<PAGE> 2
CRYSTAL MOUNTAIN, INC.
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page No.
<S> <C>
PART I Financial Information
Item 1 Financial Statements
Balance Sheet 3
Statement of Income 4
Statement of Cash Flows 5
Notes to Financial Statements 6
Item 2 Management's Discussion and Analysis of Financial Condition
and Results of Operations 7-8
PART II Other Information
Item 6 Exhibit Index 9-10
Signatures 11
</TABLE>
<PAGE> 3
PART I - FINANCIAL INFORMATION
ITEM 1 - FINANCIAL STATEMENTS
CRYSTAL MOUNTAN, INC.
BALANCE SHEET
(Unaudited)
<TABLE>
<CAPTION>
ASSETS
March 31, March 31,
1996 1995
---------- ----------
<S> <C> <C>
CURRENT ASSETS
Cash and cash equivalents $ 303,000 $ 491,000
Short-term investments 115,000 112,000
Accounts receivable 56,000 84,000
Inventories 147,000 127,000
Prepaid expenses 74,000 70,000
---------- ----------
Total current assets 695,000 884,000
LAND IMPROVEMENTS, BUILDINGS AND EQUIPMENT, net 7,800,000 7,925,000
OTHER ASSETS 103,000 93,000
---------- ----------
$8,598,000 $8,902,000
========== ==========
LIABILITIES AND STOCKHOLER'S EQUITY
CURRENT LIABILITIES
Accounts payable 350,000 255,000
Accrued Liabilities 705,000 776,000
Interest payable 86,000 2,000
Deferred income 48,000 194,000
Current portion of term debt and leases 250,000 211,000
---------- ----------
Total current liabilities 1,439,000 1,438,000
LONG-TERM DEBT AND CAPITAL LEASE OBLIGATIONS,
net of current portion 3,292,000 2,792,000
DEFERRED INCOME TAX -- 55,000
---------- ----------
Total liabilities 4,731,000 4,285,000
STOCKHOLDERS' EQUITY
Common stock---
Class A, $50 par value per share,
90,000 shares authorized, 26609 issued and outstanding 1,331,000 1,331,000
Class B, $20 par value per share,
25,000 shares authorized, 71 issued and outstanding 14,000 14,000
Additional paid-in capital 505,000 505,000
Retained earnings 2,017,000 2,767,000
---------- ----------
Total stockholders' equity 3,867,000 4,617,000
---------- ----------
$8,598,000 $8,902,000
========== ==========
</TABLE>
See accompanying notes to financial statements.
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<PAGE> 4
CRYSTAL MOUNTAN, INC.
STATEMENT OF INCOME
(Unaudited)
<TABLE>
<CAPTION>
For the Three Months Ended For the Six Months Ended
March 31, March 31,
--------------------------- ---------------------------
1996 1995 1996 1995
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
REVENUES
Mountain operations $4,045,000 $3,514,000 $5,730,000 $6,480,000
Food services 1,128,000 1,024,000 1,413,000 1,801,000
---------- ---------- ---------- ----------
5,173,000 4,538,000 7,143,000 8,281,000
---------- ---------- ---------- ----------
EXPENSES
Mountain operations 1,463,000 1,436,000 2,359,000 2,741,000
Food services 834,000 800,000 1,152,000 1,514,000
General and administrative 1,008,000 894,000 1,734,000 1,792,000
Depreciation and amortization 274,000 285,000 549,000 571,000
Interest 80,000 87,000 202,000 183,000
---------- ---------- ---------- ----------
3,659,000 3,502,000 5,996,000 6,801,000
---------- ---------- ---------- ----------
Income before income taxes 1,514,000 1,036,000 1,147,000 1,480,000
Income tax benefit 19,000 -- 19,000 --
---------- ---------- ---------- ----------
NET INCOME $1,533,000 $1,036,000 $1,166,000 $1,480,000
========== ========== ========== ==========
NET EARNINGS PER COMMON SHARE $ 56.11 $ 37.92 $ 42.68 $ 54.17
========== ========== ========== ==========
WEIGHTED AVERAGE SHARES 27,319 27,319 27,319 27,319
OUTSTANDING ========== ========== ========== ==========
</TABLE>
See accompanying notes to financial statements.
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<PAGE> 5
CRYSTAL MOUNTAN, INC.
STATEMENT OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
For the Three Months Ended For the Six Months Ended
March 31, March 31,
------------------------------ ------------------------------
1996 1995 1996 1995
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
CASH FLOWS FROM OPERATING
ACTIVITIES
Net income $ 1,533,000 $ 1,036,000 $ 1,166,000 $ 1,480,000
Adjustments to reconcile net income
to net cash provided by operating
activities
Depreciation and amortization 274,000 285,000 549,000 571,000
Change in:
Accounts receivable 46,000 (72,000) (19,000) (18,000)
Inventories 74,000 56,000 13,000 (27,000)
Prepaid expenses 106,000 94,000 52,000 42,000
Other assets (4,000) (1,000) 40,000 101,000
Accounts payable (542,000) (373,000) (33,000) 129,000
Accrued liabilities (10,000) (60,000) (54,000) 282,000
Interest payable 86,000 -- (8,000) --
Deferred income (24,000) 18,000 (59,000) 124,000
----------- ----------- ----------- -----------
1,539,000 983,000 1,647,000 2,684,000
----------- ----------- ----------- -----------
CASH FLOWS FROM INVESTING
ACTIVITIES
Capital expenditures, net (66,000) (90,000) (257,000) (385,000)
----------- ----------- ----------- -----------
CASH FLOWS FROM FINANCING
ACTIVITIES
Net payments on line of credit -- -- -- (400,000)
Principal borrowings (payments) on
long-term debt and leases (2,101,000) (1,202,000) (1,241,000) (1,556,000)
----------- ----------- ----------- -----------
(2,101,000) (1,202,000) (1,241,000) (1,956,000)
----------- ----------- ----------- -----------
NET INCREASE (DECREASE) IN CASH
AND CASH EQUIVALENTS (628,000) (309,000) 149,000 343,000
CASH AND CASH EQUIVALENTS
Beginning of period 931,000 800,000 154,000 148,000
----------- ----------- ----------- -----------
End of period $ 303,000 $ 491,000 $ 303,000 $ 491,000
=========== =========== =========== ===========
SUPPLEMENTAL DISCLOSURE OF
CASH FLOW INFORMATION
Cash paid during the period for interest $ (6,000) $ 87,000 $ 116,000 $ 183,000
=========== =========== =========== ===========
</TABLE>
See accompanying notes to financial statements.
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<PAGE> 6
CRYSTAL MOUNTAIN, INC.
NOTES TO FINANCIAL STATEMENTS
THREE MONTHS ENDED MARCH 31 1996 AND 1995
(Unaudited)
NOTE 1 - SUMMARY OF FINANCIAL STATEMENT PRESENTATION
In the opinion of management, the financial statements include all
adjustments necessary to present fairly the changes in financial position and
results of operations for the interim periods reported.
Revenues are subject to material seasonal variations with approximately
90% of the Company's revenue recognized during the winter months of each fiscal
year. Interim operating results may not be taken as fairly representative of the
estimated results for a full fiscal year.
The financial statements should be read with reference to "management's
Discussion and Analysis of Financial Condition and Results of Operations"
contained herein and the "Notes to financial Statements" set forth in the
Company's 10-K filing for the year ended September 30, 1995.
NOTE 2 - PROVISION FOR INCOME TAX
There is no income tax provision for the interim periods reported
because the Company has significant net operating loss carryforwards which are
fully reserved.
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<PAGE> 7
PART I - FINANCIAL INFORMATION
ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF PLAN OF OPERATIONS
SIX MONTHS ENDED MARCH 31, 1996 COMPARED TO
SIX MONTHS ENDED MARCH 31, 1996
Statements in this report covering future performance, developments,
expectations or events, constitute forward looking statements which are subject
to a number of risks and uncertainties which might cause actual results to
differ materially from stated expectations.
Crystal Mountain is a company whose fortunes rise and fall with the vagaries of
weather. Each year is unique as to how weather conditions direct our financial
results. Once again the 1995 - 1996, winter season has proved just how weather
dependent we are. We did not open until December 15, 1995, compared to our
earliest opening ever on November 6, 1994, last season. Although skiing
conditions were good in spite of low snow the entire region, including Crystal
Mountain was not able to attract skiers and snowboarders to ski and board due to
the low snow from the time we opened until January 15. During mid January until
the first week of February over 5 feet of snow fell and our skier visits met or
exceeded our projections for that time of the season.
On February 5, our entire region experienced severe rainfall, 10.73 inches in
six days, causing major floods throughout western Washington. (If that amount of
rain was snow we would have received over 100 inches of snow in 6 days.) The
only highway to our resort was washed out and closed for 4 days. The rains
continued for 2 weeks keeping skier visits very light during this period and
significantly undermined skier interest for the rest of the ski season. During
this 2 week period our projected skier visits, based upon an 11 year history,
were 31,000 visits while our actual visits were 12,109 visits, with a negative
variance of 18,891 visits in 2 weeks! This severe drop in business levels caused
an estimated $560,000 decline in net income for these 2 weeks. On February 21,
the weather turned cold and we again received very good snow fall that raised
our skier visits back to and beyond our projected visits for a short period of
time.
During the Spring skiing period, March 18, 1996, to closing, April 14, 1996, the
weather turned warmer and wetter than normal. Skier Visits for the Spring period
were below projections by 22% and 34% less than actual visits for the same
Spring period last year.
Daily paid skier visits for the entire skiing season, December 15, 1995, to
April 14, 1996, totaled 196,939 compared to 252,959 for last season, November 6,
1994, to April 9, 1995, a decrease of 56,020 or 22%.
The Company's ability to reduce variable costs is limited once the mountain is
open for the season. It is difficult to reduce operating costs as revenues
decline, without cutting the quality of services that skiers expect and are
required if the Company is to remain competitive during the ski season.
Comparisons between the six months ended March 31, 1996, to the six months ended
March 31, 1995, result in large variances because the resort operated 39 days
less in 1995 - 1996 than 1994 - 1995, as well as the decline in skier visits.
Mountain operating expenses were down 14% primarily due to the shorter season.
Food services expenses were down 24% as a combination of the shorter year and
lower variable costs associated with lower revenues.
-7-
<PAGE> 8
Depreciation expense decreased 4% for the six month period. Interest expense is
up 10%. Opening late and less business resulted in a higher level of debt that
generated more interest expense.
Total revenues decreased $1,138,000 (14%) from 1995, and total expenses
decreased $802,000 (13%) resulting in net income for 1996, of $1,166,000 (-21%)
versus net income of $1,480,000 in 1995.
Effective March 20, 1996 the Board of Directors of Crystal Mountain, Inc.,
approved the change of the Company's fiscal year from a September 30, year end,
the fiscal year end used in its most recent filing with the Securities and
Exchange Commission, to the new fiscal year end of April 30. The report form
10-KSB for the fiscal year ended April 30, 1996, will be the form on which the
report covering the transition period will be filed by the Company. This change
was made to smooth out the work flow for the staff throughout the year that
allows the Company to reduce its overhead costs. The new fiscal quarters will be
July 31, October 30, and January 31.
The transition period will be for the seven months ended April 30, 1996. At
April 30, the Company's taxable income is estimated to be $860,000. The company
has net operating loss carry forwards for tax purposes of approximately
$2,437,000, and therefore, no tax liability is reported. The Company estimated a
net loss for the 12 month period from October 1, 1995, to September 30, 1996,
which was the Company's old fiscal year cycle.
The Company's total bank debt was $3,292,000 at March 31, 1996, up from
$2,792,000 at March 31, 1995, an increase of $500,000, comprised of $150,000 of
lift upgrades installed in Summer 1995, and lower operating profits for the
period. Our late opening combined with warm and wet weather that resulted in
less skier visits did not allow us to pay down our debt as much as the prior
year. This is the third year now that the company has faced loss years. The
current bank line and investments are estimated to allow for summer operations,
summer maintenance programs, and the preseason preparations for the 1996 - 1997
ski season if we open for skiing by December 1, 1996. The Board of Directors and
management are currently working together with the bank and stockholders to
create a plan for late snow contingencies, in case they occur, next winter.
-8-
<PAGE> 9
CRYSTAL MOUNTAIN, INC.
Pursuant to the requirements of Section 13 or 15 (d) 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 on the 10th day of May,
1996.
CRYSTAL MOUNTAIN, INC.
Date: May 10, 1996
------------
By: \s\ Tom Leonard, President
--------------------------
Date: May 10, 1996
------------
By: \s\ George Schmidt, Director of Finance & Systems
-------------------------------------------------
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<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> APR-30-1996
<PERIOD-START> OCT-01-1995
<PERIOD-END> MAR-31-1996
<CASH> 303,000
<SECURITIES> 115,000
<RECEIVABLES> 56,000
<ALLOWANCES> 0
<INVENTORY> 147,000
<CURRENT-ASSETS> 695,000
<PP&E> 18,317,821
<DEPRECIATION> 10,518,126
<TOTAL-ASSETS> 8,598,000
<CURRENT-LIABILITIES> 1,439,000
<BONDS> 3,292,000
0
0
<COMMON> 1,345,000
<OTHER-SE> 2,522,000
<TOTAL-LIABILITY-AND-EQUITY> 8,598,000
<SALES> 7,143,000
<TOTAL-REVENUES> 7,143,000
<CGS> 0
<TOTAL-COSTS> 5,794,000
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 202,000
<INCOME-PRETAX> 1,147,000
<INCOME-TAX> (19,000)
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,166,000
<EPS-PRIMARY> 42.68
<EPS-DILUTED> 0
</TABLE>
