U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-QSB
(X) QUARTERLY REPORT UNDER SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF
1934
FOR THE QUARTERLY PERIOD ENDED FEBRUARY 27, 2000
( ) TRANSITION REPORT UNDER SECTION 13 OR 15(D) OF THE EXCHANGE ACT
FOR THE TRANSITION PERIOD FROM TO
------- -------
COMMISSION FILE NO. 0-15030
WINTER SPORTS, INC.
(EXACT NAME OF SMALL BUSINESS ISSUER AS SPECIFIED IN ITS CHARTER)
MONTANA 81-0221770
(STATE OF INCORPORATION) (I.R.S. EMPLOYER I.D. NO.)
P.O. BOX 1400, WHITEFISH, MONTANA 59937
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES)
ISSUER'S TELEPHONE NUMBER, INCLUDING AREA CODE (406) 862-1900
FORMER NAME, FORMER ADDRESS & FORMER FISCAL YEAR, IF CHANGED SINCE LAST REPORT
CHECK WHETHER THE ISSUER (1) FILED ALL REPORTS REQUIRED TO BE FILED BY SECTION
13 OR 15(D) OF THE EXCHANGE ACT DURING THE PAST 12 MONTHS, AND (2) HAS BEEN
SUBJECT TO SUCH FILING REQUIREMENTS FOR THE PAST 90 DAYS. YES X NO
AS OF APRIL 3, 2000 THE NUMBER OF SHARES OUTSTANDING OF THE ISSUER'S COMMON
STOCK, NO PAR VALUE, WAS 1,008,368.
TRANSITION SMALL BUSINESS DISCLOSURE FORMAT YES NO X
WINTER SPORTS, INC.
INDEX
PART I. FINANCIAL STATEMENTS
CONDENSED CONSOLIDATED BALANCE SHEETS
AT:
FEBRUARY 27, 2000
FEBRUARY 28, 1999
MAY 31, 1999
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE PERIODS:
DECEMBER 6, 1999 - FEBRUARY 27, 2000
DECEMBER 7, 1998 - FEBRUARY 28, 1999
JUNE 1, 1999 - FEBRUARY 27, 2000
JUNE 1, 1998 - FEBRUARY 28, 1999
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE PERIODS:
JUNE 1, 1999 - FEBRUARY 27, 2000
JUNE 1, 1998 - FEBRUARY 28, 1999
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITIONS
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
ITEM 5. OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
SIGNATURES
WINTER SPORTS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
2/27/00 2/28/99 5/31/99
(UNAUDITED) (UNAUDITED) SEE NOTE 2
ASSETS
CURRENT ASSETS
CASH AND CASH EQUIVALENTS $ 350,530 $ 530,064 $ 236,132
CERTIFICATES OF DEPOSIT 72,079 0 7,125
RECEIVABLES (NET OF RESERVE
FOR BAD DEBTS OF $17,680,
$11,090 AND $17,128, RESPECTIVELY) 298,661 153,010 81,278
RECEIVABLES - RELATED PARTIES 12,187 1,711 14,882
INTEREST RECEIVABLE 3,758 0 0
INCOME TAX REFUND RECEIVABLE 164 325,555 190,753
CURRENT DEFERRED TAX ASSET 24,516 51,767 24,516
INVENTORIES 532,252 511,427 411,870
PREPAID EXPENSES 226,100 199,336 229,448
TOTAL CURRENT ASSETS 1,520,247 1,772,870 1,196,004
PROPERTY AND EQUIPMENT
PROPERTY AND EQUIPMENT, AT COST 23,729,107 22,504,766 23,693,174
ACCUMULATED DEPRECIATION AND
AMORTIZATION (12,779,984) (11,627,938) (11,992,377)
10,949,123 10,876,829 11,700,797
CONSTRUCTION IN PROGRESS 1,595,933 1,035,012 419,568
LAND AND DEVELOPMENT COSTS 3,075,949 6,050,450 4,090,262
NET PROPERTY AND EQUIPMENT 15,621,005 17,962,290 16,210,627
OTHER ASSETS 405,690 280,685 420,443
TOTAL ASSETS $17,546,942 $20,015,845 $17,827,074
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
ACCOUNTS PAYABLE $ 750,099 $ 1,012,042 $ 452,800
ACCOUNTS PAYABLE - RELATED PARTIES 212 0 7,998
EMPLOYEE COMPENSATION AND
RELATED EXPENSES 377,112 385,290 173,302
TAXES OTHER THAN INCOME & PAYROLL 279,457 89,229 149,064
INCOME TAXES PAYABLE 923,048 0 50
CURRENT PORTION OF LONG-TERM DEBT 0 61,628 24,347
DEPOSITS & OTHER UNEARNED INCOME 1,005,815 804,637 911,467
OTHER CURRENT LIABILITIES 16,882 9,121 4,953
TOTAL CURRENT LIABILITIES 3,352,625 2,361,947 1,723,981
LONG-TERM DEBT,
LESS CURRENT PORTION 3,255,000 8,299,213 6,589,369
DEFERRED INCOME TAXES 1,470,564 1,361,554 1,470,564
TOTAL LIABILITIES 8,078,189 12,022,714 9,783,914
SHAREHOLDERS' EQUITY
COMMON STOCK (5,000,000 SHARES
AUTHORIZED; NO PAR VALUE;
1,008,368, 1,008,368 AND
1,008,368 SHARES OUTSTANDING) 4,099,174 4,099,174 4,099,174
ADDITIONAL PAID-IN CAPITAL 20,519 20,519 20,519
RETAINED EARNINGS 5,349,060 3,873,438 3,923,467
TOTAL SHAREHOLDERS' EQUITY 9,468,753 7,993,131 8,043,160
TOTAL LIABILITIES AND
SHAREHOLDERS' EQUITY $17,546,942 $20,015,845 $17,827,074
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS
WINTER SPORTS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
THIRD QUARTER YEAR TO DATE
12/6/99 12/7/98 6/1/99 6/1/98
TO TO TO TO
2/27/00 2/28/99 2/27/00 2/28/99
REVENUE
LIFTS $ 3,750,748 $ 3,005,625 $ 4,150,967 $ 3,467,462
FOOD, BEVERAGE & RETAIL 457,620 869,158 856,343 1,314,616
EQUIPMENT RENTAL & REPAIR 495,423 390,381 537,578 427,911
LODGING 120,194 108,173 180,207 174,808
LEASE, MANAGEMENT AND
OTHER FEES 1,082,271 761,975 1,554,609 1,043,197
LEASE, MANAGEMENT & OTHER
FEES - RELATED PARTIES 132,780 38,974 180,502 74,186
REAL ESTATE SALES 2,087,000 1,736,797 3,874,240 1,736,797
TOTAL REVENUE 8,126,036 6,911,083 11,334,446 8,238,977
COSTS AND EXPENSES
DIRECT EXPENSES - LIFTS 602,539 716,460 1,211,696 1,231,095
DEPRECIATION - LIFTS 462,547 494,127 462,547 494,127
COST OF FOOD, BEVERAGE
AND RETAIL 214,848 341,751 362,597 515,437
COST OF REAL ESTATE SALES 803,919 1,522,587 1,622,749 1,522,587
PAYROLL & RELATED EXPENSES 948,717 1,102,332 2,034,949 2,244,381
DIRECT EXPENSES 585,998 511,501 1,305,976 1,028,596
DIRECT EXPENSES -
RELATED PARTIES 7,435 5,000 37,778 6,347
MARKETING 334,383 419,600 792,253 1,008,435
MARKETING - RELATED PARTIES 0 35 0 1,094
DEPRECIATION & AMORTIZATION 307,849 286,961 334,453 313,668
GENERAL & ADMINISTRATIVE 195,439 177,184 602,287 621,887
GENERAL & ADMINISTRATIVE -
RELATED PARTIES 14,511 6,784 18,042 22,312
TOTAL COSTS AND EXPENSES 4,478,185 5,584,322 8,785,327 9,009,966
OPERATING INCOME (LOSS) 3,647,851 1,326,761 2,549,119 (770,989)
OTHER INCOME (EXPENSE)
INTEREST INCOME 0 10,138 0 19,460
INTEREST EXPENSE (101,643) (155,281) (341,523) (429,041)
GAIN (LOSS) OF DISPOSAL
OF ASSETS 0 0 4,645 24,899
OTHER INCOME (EXPENSE) 233 42,358 136,291 342,776
TOTAL OTHER INCOME (EXPENSE) (101,410) (102,785) (200,587) (41,906)
INCOME (LOSS)
BEFORE INCOME TAX 3,546,441 1,223,976 2,348,532 (812,895)
PROVISION FOR (RECOVERY
OF) INCOME TAX 1,304,318 489,178 922,884 (325,556)
NET INCOME (LOSS) $ 2,242,123 $ 734,798 $ 1,425,648 $ (487,339)
NET INCOME (LOSS)
PER COMMON SHARE $ 2.22 $ 0.73 $ 1.41 $ (0.48)
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
WINTER SPORTS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOW
6/1/99 6/1/98
TO TO
2/27/00 2/29/99
NET CASH PROVIDED BY (USED IN)
OPERATING ACTIVITIES $ 3,545,009 $(1,142,575)
CASH FLOWS FROM INVESTING ACTIVITIES:
PURCHASE OF CERTIFICATES OF DEPOSIT (72,079) 0
REDEMPTION OF CERTIFICATES OF DEPOSIT 7,125 249,000
PROCEEDS FROM SALES OF ASSETS 4,645 34,899
PROPERTY AND EQUIPMENT ACQUISITIONS (35,933) (787,161)
NET CASH (USED IN) INVESTING ACTIVITIES (96,242) (503,262)
CASH FLOWS FROM FINANCING ACTIVITIES
PROCEEDS FROM DRAWS ON LONG-TERM REVOLVER 4,457,399 5,407,344
PROCEEDS FROM DRAWS ON CONSTRUCTION LOAN 0 3,738,935
PRINCIPAL PAYMENTS ON LONG-TERM REVOLVER (6,809,241) (5,478,881)
PRINCIPAL PAYMENTS ON CONSTRUCTION LOAN (982,527) (1,641,502)
NET CASH PROVIDED BY (USED IN)
FINANCING ACTIVITIES (3,334,369) 2,025,896
NET INCREASE IN CASH AND CASH EQUIVALENTS 114,398 380,059
CASH AND CASH EQUIVALENTS AT
BEGINNING OF PERIOD 236,132 150,005
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 350,530 $ 530,064
SUPPLEMENTAL DISCLOSURES OF CASH PAID YEAR-TO-DATE FOR:
INTEREST (NET OF CAPITALIZED INTEREST) $ 236,824 $ 412,235
INCOME TAXES (NET OF REFUNDS) $ 0 $ (275,565)
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
WINTER SPORTS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1 - BASIS OF PRESENTATION
THE FINANCIAL STATEMENTS INCLUDED HEREIN ARE CONDENSED ACCORDING TO 10-QSB
REPORTING REQUIREMENTS. THEY DO NOT CONTAIN ALL INFORMATION REQUIRED BY
GENERALLY ACCEPTED ACCOUNTING PRINCIPLES TO BE INCLUDED IN A SET OF AUDITED
FINANCIAL STATEMENTS. ACCORDINGLY, THE FINANCIAL STATEMENTS SHOULD BE READ IN
CONJUNCTION WITH THE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS CONTAINED HEREIN
IN THE COMPANY'S ANNUAL REPORT FOR THE YEAR ENDED MAY 31, 1999.
IN THE OPINION OF MANAGEMENT, THE ACCOMPANYING CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS CONTAIN ALL ADJUSTMENTS (CONSISTING OF NORMAL RECURRING ACCRUALS)
NECESSARY FOR THE FAIR PRESENTATION OF THE INTERIM PERIODS PRESENTED.
CERTAIN AMOUNTS IN THE FEBRUARY 28, 1999 FINANCIAL STATEMENTS HAVE BEEN
RECLASSIFIED TO CONFORM TO THE FEBRUARY 27, 2000 PRESENTATION.
NOTE 2 - MAY 31, 1999
THE BALANCE SHEET AT MAY 31, 1999 HAS BEEN CONDENSED FROM THE AUDITED FINANCIAL
STATEMENTS OF THAT DATE.
NOTE 3 - NET INCOME (LOSS) PER COMMON SHARE
THE WEIGHTED AVERAGE NUMBERS OF COMMON SHARES OUTSTANDING WERE 1,008,368 FOR THE
QUARTERS ENDED FEBRUARY 27, 2000 AND FEBRUARY 28, 1999.
NOTE 4 - SEASONAL NATURE OF OPERATIONS
THE COMPANY'S OPERATIONS ARE HIGHLY SEASONAL IN NATURE. REVENUES, EARNINGS AND
CASH FLOW ARE GENERATED PRINCIPALLY FROM THE WINTER OPERATION OF LIFTS AND
RELATED FACILITIES. IT IS THE COMPANY'S PRACTICE TO RECOGNIZE SUBSTANTIALLY ALL
OF THE YEAR'S DEPRECIATION EXPENSE IN THE THIRD AND FOURTH QUARTERS IN ORDER TO
BETTER MATCH EXPENSES INCURRED IN GENERATING REVENUE DURING THE COMPANY'S MAIN
PERIODS OF BUSINESS. THE COMPANY ALSO GENERATES REVENUES FROM THE SALE OF REAL
ESTATE THAT IS ONGOING THROUGHOUT THE FISCAL YEAR. THEREFORE, THE RESULTS OF
OPERATIONS FOR THE INTERIM AND YEAR-TO-DATE PERIODS ENDED FEBRUARY 27, 2000 AND
FEBRUARY 28, 1999 ARE NOT NECESSARILY INDICATIVE OF THE RESULTS TO BE EXPECTED
FOR THE FULL YEAR.
NOTE 5 - LEGAL PROCEEDINGS AND CONTINGENCIES
THE COMPANY IS A DEFENDANT IN LAWSUITS FILED BY THREE INDIVIDUALS WHO ARE
SEEKING DAMAGES OF AN UNSPECIFIED AMOUNT, FOR ALLEGED PERSONAL INJURIES
RESULTING FROM ACCIDENTS OCCURRING ON THE COMPANY'S PROPERTY. THE COMPANY
INTENDS TO VIGOROUSLY DEFEND THESE CLAIMS. THE COMPANY'S INSURANCE CARRIER
PROVIDES DEFENSE AND COVERAGE FOR THESE CLAIMS AND THE COMPANY'S PARTICIPATION
HAS BEEN LIMITED TO ITS POLICY DEDUCTIBLE. SUCH AMOUNTS ARE CHARGED TO GENERAL
AND ADMINISTRATIVE EXPENSE UPON SETTLEMENT.
NOTE 6 - NOTES PAYABLE
THE COMPANY CURRENTLY HAS A LOAN AGREEMENT WITH BANK OF AMERICA NATIONAL TRUST
AND SAVINGS ASSOCIATION, DOING BUSINESS AS SEAFIRST BANK (SEAFIRST). THE
AGREEMENT PROVIDES FOR A $9,750,000 REVOLVING REDUCING LINE OF CREDIT, WHICH
MATURES ON JUNE 1, 2008. THE AGREEMENT CONTAINS COVENANTS THAT REQUIRE MINIMUM
NET WORTH, A FIXED CHARGE COVERAGE RATIO AND RESTRICTS INVESTMENT, DISPOSITION
OF ASSETS, CAPITAL EXPENDITURES, OUTSIDE BORROWING AND PAYMENT OF DIVIDENDS.
EACH JUNE 1, THE AMOUNT AVAILABLE UNDER THE LINE REDUCES BY $750,000. AT
FEBRUARY 27, 2000 $5,745,000 WAS UNUSED AND AVAILABLE UNDER THE $9,000,000
INSTRUMENT. AT FEBRUARY 28, 1999 $3,647,657 WAS UNUSED OF THE $9,750,000 THEN
AVAILABLE UNDER THE INSTRUMENT. THE LOAN BEARS INTEREST AT OR BELOW SEAFIRST'S
PRIME RATE.
THE COMPANY ALSO HAD A LOAN AGREEMENT WITH WHITEFISH CREDIT UNION FOR THE
FINANCING OF THE CONSTRUCTION OF THE KINTLA LODGE, A MIXED-USE CONDOMINIUM
PROJECT. THE AGREEMENT PROVIDED FOR A $3,900,000 CONSTRUCTION LOAN DUE AND
PAYABLE ON SEPTEMBER 1, 1999. ON AUGUST 31, 1999 THE COMPANY CONVERTED THE
REMAINING BALANCE OF THE CONSTRUCTION LOAN INTO A FIFTEEN-YEAR TERM LOAN WITH A
THREE-YEAR BALLOON. AT FEBRUARY 27, 2000 THE BALANCE OF THE TERM LOAN WAS ZERO.
NOTE 7 - BUSINESS SEGMENT INFORMATION
THE COMPANY OPERATES PRINCIPALLY IN TWO INDUSTRIES: THE OPERATION OF A SKI AREA
AND THE SALE OF REAL ESTATE. FANCIAL INFORMATION BY INDUSTRY SEGMENT FOR THE
THIRD QUARTER AND YEAR-TO-DATE FOR 2000 AND 1999 IS SUMMARIZED AS FOLLOWS:
SKI AREA REAL ESTATE CONSOLIDATED
THIRD QUARTER
QUARTER ENDED 2/27/00
TOTAL REVENUE $ 4,958,136 $ 3,167,899 $ 8,126,035
OPERATING PROFIT $ 1,327,663 $ 2,320,187 $ 3,647,850
DEPRECIATION & AMORTIZATION $ 780,567 $ 7,160 $ 787,727
IDENTIFIABLE ASSETS $ 13,803,276 $ 3,743,666 $ 17,546,942
CAPITAL EXPENDITURES $ 35,933 $ 0 $ 35,933
QUARTER ENDED 2/28/99
TOTAL REVENUE $ 5,065,414 $ 1,845,669 $ 6,911,083
OPERATING PROFIT $ 1,047,472 $ 279,289 $ 1,326,761
DEPRECIATION & AMORTIZATION $ 773,928 $ 7,160 $ 781,088
IDENTIFIABLE ASSETS $ 14,644,206 $ 5,371,639 $ 20,015,845
CAPITAL EXPENDITURES $ 352,640 $ 0 $ 352,640
6/1/99 TO 2/27/00
TOTAL REVENUE $ 7,291,289 $ 4,043,157 $ 11,334,446
OPERATING PROFIT $ 383,527 $ 2,165,592 $ 2,549,119
DEPRECIATION & AMORTIZATION $ 780,567 $ 16,433 $ 797,000
IDENTIFIABLE ASSETS $ 13,803,276 $ 3,743,666 $ 17,546,942
CAPITAL EXPENDITURES $ 35,933 $ 0 $ 35,933
6/1/98 TO 2/28/99
TOTAL REVENUE $ 6,391,936 $ 1,847,041 $ 8,238,977
OPERATING PROFIT (LOSS) $ (806,174) $ 35,185 $ (770,989)
DEPRECIATION & AMORTIZATION $ 775,681 $ 16,057 $ 791,738
IDENTIFIABLE ASSETS $ 14,644,206 $ 5,371,639 $ 20,015,845
CAPITAL EXPENDITURES $ 787,161 $ 0 $ 787,161
WINTER SPORTS, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND
RESULTS OF OPERATIONS
FOR THE FOR THE
PERIOD PERIOD
6/1/99 6/1/98
TO TO
2/27/00 2/28/99
GROSS REVENUE $ 11,334,446 $ 8,238,977
NET INCOME (LOSS) $ 1,425,648 $ (487,339)
INCOME (LOSS) PER COMMON SHARE $ 1.41 $ (0.48)
TOTAL ASSETS $ 17,546,942 $ 20,015,845
LONG-TERM DEBT LESS CURRENT PORTION $ 3,255,000 $ 8,299,213
RESULTS OF OPERATIONS, THIRD QUARTER AND YEAR-TO-DATE
REVENUES
TOTAL REVENUES FOR THE THIRD QUARTER WERE $8,126,036, AN INCREASE OF $1,214,953
OR 18% FROM THE SAME QUARTER OF THE PRIOR YEAR. THE INCREASE IS DUE PRIMARILY
TO AN INCREASE IN LIFT REVENUE FROM $3,005,625 IN THE THIRD QUARTER OF LAST YEAR
TO $3,750,748 DURING THE THIRD QUARTER THIS YEAR, AN INCREASE OF OVER 24%.
ACCOMPANYING THE INCREASE IN LIFT REVENUE, THE COMPANY ALSO EXPERIENCED AN
INCREASE IN EQUIPMENT RENTAL AND REPAIR INCOME OF 27% OVER THE SAME TIME LAST
YEAR. THE DECREASE OF $411,538 IN FOOD AND BEVERAGE IS DUE TO THE COMPANY
LEASING OUT ITS FOOD OPERATIONS TO ANOTHER CORPORATION SPECIALIZING IN THIS TYPE
OF FOOD SERVICE. THE DECREASE IN THIS ITEM CORRESPONDS TO THE INCREASE IN
LEASE, MANAGEMENT AND OTHER FEES OF $320,299 OVER THE THIRD QUARTER OF LAST
YEAR.
REAL ESTATE SALES CONTINUE TO BE STRONG FOR THE COMPANY. REVENUES INCREASED BY
20% TO $2,087,000 DURING THE THIRD QUARTER OF THIS YEAR COMPARED TO $1,736,797
AT THIS TIME LAST YEAR. THE COMPANY EXPECTS REAL ESTATE SALES TO CONTINUE STRONG
THROUGH THE FOURTH QUARTER OF THIS FISCAL YEAR.
OPERATING COSTS AND EXPENSES
TOTAL OPERATING COSTS AND EXPENSES DECREASED BY $1,106,139 (20%) FROM THE SAME
QUARTER OF THE PREVIOUS YEAR. THE DECREASE WAS PRIMARILY DUE TO THE ELIMINATION
OF OPERATING COSTS OF THE FOOD AND BEVERAGE OPERATIONS, AS THE COMPANY HAS
ENTERED INTO AN AGREEMENT WITH A THIRD PARTY TO LEASE ITS FOOD AND BEVERAGE
OPERATIONS. THE COMPANY CONTINUES TO LOWER ITS OVERALL COST OF DOING BUSINESS,
WHICH ACCOUNTS FOR THE DECREASE IN OTHER OPERATING COSTS.
YEAR TO DATE OPERATING COSTS AND EXPENSES HAVE DECREASED 3% OR $224,639. PAYROLL
& RELATED EXPENSES AS WELL AS MARKETING EXPENSES DECREASED FROM THE PRIOR YEAR
BY $209,432 AND $217,276, RESPECTIVELY. DIRECT EXPENSES INCREASED BY 30% OR
$308,811 FROM THE PREVIOUS YEAR.
OTHER INCOME AND EXPENSE
INTEREST EXPENSE FOR THE QUARTER ENDED FEBRUARY 27, 2000 WAS $101,643; A
DECREASE OF $53,638 OR 35% LOWER THAN THE THIRD QUARTER OF LAST YEAR. INTEREST
EXPENSE DROPPED BY $87,518 OR 20% OVER THE FIRST THREE QUARTERS OF THE CURRENT
FISCAL YEAR. THESE DECREASES ARE DUE TO LOWER LEVELS OF BORROWING ON THE
COMPANY'S LINE OF CREDIT AND THE ELIMINATION OF THE TERM LOAN, A RESULT OF A
POSITIVE CASH FLOW AND CONTINUED STRONG REAL ESTATE SALES.
OTHER INCOME
OTHER INCOME, YEAR-TO-DATE FOR BOTH FISCAL YEARS 2000 AND 1999 REFLECT REVENUES
EARNED FROM SALES OF TIMBER ON THE COMPANY'S BASE AREA LANDS. THE REVENUE
RECEIVED IS OF A ONE-TIME NATURE, AS THE COMPANY DOES NOT EXPECT TO HARVEST ANY
MORE TIMBER IN THE NEAR FUTURE.
NET INCOME
THE THIRD QUARTER NET INCOME OF $2,242,123 WAS $1,507,325 OR 205% MORE THAN THE
SAME QUARTER LAST YEAR. THE YEAR TO DATE NET INCOME OF $1,425,648 WAS
$1,912,987 MORE THAN DURING THE SAME TIME PERIOD LAST YEAR. THIS WAS PRIMARILY
DUE TO STRONG REAL ESTATE SALES COUPLED WITH AN INCREASE IN SKIER VISITATION AND
THE ASSOCIATED REVENUES.
THE COMPANY'S MAIN PERIODS OF BUSINESS OCCUR IN ITS FISCAL THIRD QUARTER, FROM
MID-NOVEMBER THROUGH MID-APRIL. DUE TO THE SEASONAL NATURE OF THE COMPANY'S
BUSINESS, RESULTS IN ANY ONE QUARTER ARE NOT NECESSARILY INDICATIVE OF THE
RESULTS FOR THE ENTIRE YEAR.
LIQUIDITY AND CAPITAL RESOURCES
WORKING CAPITAL AT THE END OF THE THIRD QUARTER OF 2000 WAS $(1,832,378). THIS
REPRESENTS A DECREASE OF $243,300 FROM THE END OF THE SAME QUARTER LAST YEAR.
THE DECREASE IS PRIMARILY DUE TO INCREASES IN INCOME TAXES PAYABLE COUPLED WITH
HIGHER DEFERRED REVENUE COMPARED TO THE END OF THE SAME QUARTER LAST YEAR.
TOTAL LIABILITIES OF $8,078,189 REPRESENT 85% OF SHAREHOLDERS' EQUITY AT
FEBRUARY 27, 2000 COMPARED TO $12,022,717 OR 150% OF SHAREHOLDERS' EQUITY AT
FEBRUARY 28, 1999.
MANAGEMENT CONTINUALLY EVALUATES THE COMPANY'S CASH AND FINANCING REQUIREMENTS.
OVER THE YEARS, THE COMPANY HAS OBTAINED FAVORABLE FINANCING FROM FINANCIAL
INSTITUTIONS WHEN NECESSARY TO FUND OFF-SEASON CASH REQUIREMENTS AND CAPITAL
ACQUISITIONS. THE COMPANY HAS A REDUCING REVOLVING CREDIT AGREEMENT THAT
PROVIDES FLEXIBLE FINANCIAL RESOURCES ALLOWING THE COMPANY TO MEET SHORT-TERM
NEEDS AND FUND CAPITAL EXPENDITURES. THE $9.75 MILLION AGREEMENT REDUCES
AVAILABLE CAPACITY BY $750,000 EACH JUNE 1. AT FEBRUARY 27, 2000, THERE WAS
$3,255,000 OUTSTANDING ON THE AVAILABLE LINE OF CREDIT OF $9,000,000. FINANCING
OF FUTURE DEVELOPMENT AND BUSINESS OPPORTUNITIES IS ANTICIPATED TO INCLUDE CASH
GENERATED FROM OPERATIONS, ISSUANCE OF ADDITIONAL DEBT AND MAY ALSO INCLUDE
ADDITIONAL EQUITY FINANCING.
YEAR 2000
THE YEAR 2000 ("Y2K") PROBLEM RELATES TO COMPUTER SYSTEMS AND EMBEDDED CHIPS
WITH PROGRAMMING CODES IN WHICH CALENDAR YEAR DATA IS ABBREVIATED TO ONLY TWO
DIGITS. AS A RESULT OF THIS DESIGN, SOME SYSTEMS COULD FAIL TO OPERATE OR FAIL
TO PRODUCE CORRECT RESULTS IN THE YEAR 2000 IF "00" IS INTERPRETED TO MEAN THE
YEAR 1900, RATHER THAN THE YEAR 2000. AS A RESULT, COMPANIES ARE AT RISK FOR
POSSIBLE MISCALCULATIONS OR FAILURES IN EITHER THEIR OWN SYSTEMS OR THE SYSTEMS
OF THIRD PARTIES, WHICH COULD CAUSE DISRUPTION IN BUSINESS OPERATIONS.
AS OF APRIL 4, 2000, THE COMPANY HAD TESTED ITS SYSTEMS AND EXPERIENCED NO
REDUCTION IN SERVICES ITSELF OR BY ITS CUSTOMERS AS A RESULT OF ANY Y2K RELATED
PROBLEMS.
FORWARD-LOOKING STATEMENTS
THIS REPORT CONTAINS FORWARD-LOOKING STATEMENTS REGARDING MATTERS THAT ARE
SUBJECT TO RISKS AND UNCERTAINTIES. FOR SUCH STATEMENTS, THE COMPANY CLAIMS THE
PROTECTION OF THE SAFE HARBOR FOR FORWARD-LOOKING STATEMENTS CONTAINED IN
SECTION 21E OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED. THE COMPANY'S
RESULTS COULD DIFFER MATERIALLY FROM THOSE DISCUSSED IN EACH FORWARD-LOOKING
STATEMENT DUE TO VARIOUS FACTORS THAT ARE OUTSIDE THE COMPANY'S CONTROL.
WINTER SPORTS, INC.
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
REFERENCE IS MADE TO NOTE 5 OF THE CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS OF THIS FORM 10-QSB, WHICH IS INCORPORATED HEREIN BY REFERENCE.
ITEM 5. OTHER INFORMATION
NONE
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
NO REPORTS ON FORM 8-K WERE FILED DURING THE QUARTER ENDED FEBRUARY 27,
2000.
WINTER SPORTS, INC.
FORM 10-QSB
SIGNATURES
IN ACCORDANCE WITH THE REQUIREMENTS OF THE EXCHANGE ACT, THE REGISTRANT CAUSED
THIS REPORT TO BE SIGNED ON ITS BEHALF BY THE UNDERSIGNED, THEREUNTO DULY
AUTHORIZED.
WINTER SPORTS, INC.
(REGISTRANT)
DATE: APRIL 10, 2000 /S/ MICHAEL COLLINS
MICHAEL COLLINS
PRESIDENT AND CHIEF EXECUTIVE OFFICER
(PRINCIPAL EXECUTIVE OFFICER)
DATE: APRIL 10, 2000 /S/ JAMI M. PHILLIPS
JAMI M. PHILLIPS
DIRECTOR OF FINANCE AND TREASURER
(PRINCIPAL FINANCIAL OFFICER)
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from 10-QSB dated
February 27, 2000 and is qualified in its entirety by reference to such 10-QSB.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> MAY-31-2000
<PERIOD-END> FEB-27-2000
<CASH> 422,609
<SECURITIES> 0
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<DEPRECIATION> 12,779,984
<TOTAL-ASSETS> 17,546,942
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0
0
<COMMON> 4,099,174
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<INTEREST-EXPENSE> (112,785)
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<INCOME-TAX> 1,304,318
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<EPS-BASIC> 2.21
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</TABLE>
