-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, DdPaPqRnRjPGryiKyTtiVWUAqsITPnRWrz6n20+m/EEmUcNOSIH3fss7mos6eehm EeiVUZ/Ymgi/8eTC+qJU9g== 0000012779-01-000004.txt : 20010223 0000012779-01-000004.hdr.sgml : 20010223 ACCESSION NUMBER: 0000012779-01-000004 CONFORMED SUBMISSION TYPE: 10-K/A PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20000331 FILED AS OF DATE: 20010214 FILER: COMPANY DATA: COMPANY CONFORMED NAME: BLUE RIDGE REAL ESTATE CO CENTRAL INDEX KEY: 0000012779 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-MISCELLANEOUS AMUSEMENT & RECREATION [7990] IRS NUMBER: 240854342 STATE OF INCORPORATION: PA FISCAL YEAR END: 0331 FILING VALUES: FORM TYPE: 10-K/A SEC ACT: SEC FILE NUMBER: 000-02844 FILM NUMBER: 1541346 BUSINESS ADDRESS: STREET 1: PO BOX 707 CITY: BLAKESLEE STATE: PA ZIP: 18610 BUSINESS PHONE: 7174438433 MAIL ADDRESS: STREET 1: PO BOX 707 CITY: BLAKESLEE STATE: PA ZIP: 18610 10-K/A 1 0001.txt UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-K/A (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 transition 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* 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/A or any amendment to this Form 10-K/A. (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 are incorporated herein in entirety. - -------------------- *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. 2 FORM 10-K/A 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 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 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 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. 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 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. 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 below. ELECTION OF DIRECTORS Four directors of each Corporation are to be elected at the Joint Meeting, as set forth by resolution of the Board of Directors. The By-Laws of each of the Corporations permit up to eight members to comprise the whole Board of Directors of each Corporation. The persons named as proxy agents in the enclosed Proxy Card have advised the Board of Directors of each Corporation that it is their intention to cumulate votes in their discretion among all or less than all of the four nominees for the Board of Directors unless a specific direction to cumulate votes in a particular manner is included on the Proxy Card. If elected, the directors of each Corporation will hold office until the next Annual Meeting of such Corporation when their successors are elected. If any vacancy shall occur because of death or other unexpected occurrence in the slates of nominees listed below for election as directors, the proxy agents have advised the Boards of Directors of the Corporations that it is their intention to vote the proxies for such substitute nominees as may be proposed by or on behalf of the Boards of Directors of each of the Corporations. Information with respect to the nominees, the periods during which they have served as directors of each Corporation, their principal occupations and their ages is set forth in the following table: FIRST BECAME NAME DIRECTOR OCCUPATION (1) AGE Milton Cooper 1983 Chairman and Director, Kimco Realty 71 Corporation; Director, Getty Realty Corp.; Mass Mutual Participation Investors- Closed End Investment Co.; Mass Mutual Investors-Closed End Investment Co. Michael J. Flynn 1990 Chairman of the Board, Blue Ridge 65 Real Estate Company and Big Boulder Corporation since 1991; Vice Chairman and Director, Kimco Realty Corporation (since January 1996); Chairman of the Board and President, Slattery Associates, Inc. (November 1987- December 1995) Allen J. Model 1975 International Consultant, Overseas 54 Strategic Consulting, Ltd. (January, 1993-Present); Private Investor (1991-1996); Director, Metro West Bank; Lighting Controls Inc.; Anchor Health Properties 9 Wolfgang Traber 1986 Chairman of the Board, Hanseatic 56 Corporation (August 1994-Present); Partner and Chief Executive Officer, HCH Hanseatic GmbH (August 1991- August 1994); Director, Petroleum Heat and Power Company, Inc. and Star Gas Corporation (1) Unless otherwise noted, the affiliations shown constitute the individual's principal business experience for at least the last 5 years. Directorships in public companies are also identified. Each of the nominees for election as director has stated that there is no arrangement or understanding of any kind between him or any other person or persons relating to his election as a director except that such nominees have agreed to serve as a director of the Corporations if elected. The directors are to be elected by a plurality of the votes cast at the Joint Meeting. The Board of Directors unanimously recommends a vote FOR each of the nominees. 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 below.
2000 ANNUAL COMPENSATION FOR THE TOP OFFICERS Annual Compensation (1) Long-Term Compensation Awards Securities Name and Principal Other Annual Underlying All Other Position Year Salary($) Bonus($) Compensation($)(2) Options/SARS(#) Compensation($) Gary A. Smith 2000 $125,000 $28,000 $1,506 0 0 Chief Executive 1999 125,000 32,000 570 0 0 Officer & President 1998 113,467 30,000 1,070 0 0 Melanie Murphy 2000 $ 85,000 $22,000 $1,369 0 0 Vice President of 1999 78,269 26,000 1,570 0 0 Operations 1998 73,462 24,000 1,447 0 0 10 (1) Compensation is paid to Mr. Smith and Ms. Murphy by Blue Ridge Real Estate Company, a portion of which is then allocated to Big Boulder Corporation. (2) Personal use of Company Vehicle Director Compensation. An annual retainer of $5,000 is paid to Allen J. Model and Michael J. Flynn. An annual retainer of $1,000 is paid to Milton Cooper, and Wolfgang Traber. All Directors receive $1,000 for each Board Meeting they attend. Directors do not receive compensation for committee meetings. Michael J. Flynn, Chairman of the Board, received a $35,000 consulting fee during Fiscal 2000. Mr. Flynn has an Option to Purchase 35,000 shares of Common Stock at $6.75 per share exercisable to July 1, 2003. Employee Benefit Plans. The Corporations have a defined benefit pension plan. Eligible employees of the Corporations and certain of their subsidiaries participate in the pension plan which provides to each such participant annual retirement income beginning at age 65 equal product of (x) 31% of the first $10,000 of such participant's average compensation for the five highest consecutive years in the last ten year ("final average earnings") prior to retirement during which the employee was most highly paid plus 40% of such earnings in excess of $10,000; and (y) the ratio of the participant's years of credited service (if less than 15 years) to 15 years. The table which follows shows the estimated annual benefits payable upon retirement to persons in specified remuneration and years of service classifications under the pension plan. The retirement benefits shown are based upon retirement at the age of 65. YEARS OF SERVICE AVERAGE SALARY* 5 10 15** $ 15,000 1,700 3,400 5,100 $ 30,000 3,700 7,400 11,100 $ 45,000 5,700 11,400 17,100 $ 60,000 7,700 15,400 23,100 $ 75,000 9,700 19,400 29,100 $ 90,000 11,700 23,400 35,100 $ 105,000 13,700 27,400 41,100 $ 120,000 15,700 31,400 47,100 $ 135,000 17,700 35,400 53,100 $ 150,000 19,700 39,400 59,100 $ 160,000 21,000 42,000 63,000 *Based on 5 consecutive years of highest earnings in the last 10 years. **Minimum number of years of continuous service required to receive maximum pension. Remuneration covered by the pension program includes salary, overtime and awards under an annual incentive program. Mr. Smith has 17 years of credited service and $153,000 remuneration for purposes of the pension program. Ms. Murphy has 16 years of credited service and $107,000 remuneration for purposes of the pension program. 11 ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL __________OWNERS AND MANAGEMENT_________ The information required by Item 12 of Form 10-K is set forth below. HOLDINGS OF COMMON STOCK The following table sets forth, as reported to the Corporations as of June 16, 2000, the number of shares of Common Stock of each Corporation owned or controlled by persons who beneficially own more than 5% of each Corporation's outstanding shares, the nominees for Directors, the Corporations' President, and the Corporations' Vice President and directors as a group: NUMBER OF SHARES PERCENT BENEFICIALLY OF SHARES NAME OWNED (1) OUTSTANDING Milton Cooper 877,160(2) 45.51% Michael J. Flynn 36,100(3) 1.87% Allen J. Model 287,551(4) 14.92% Wolfgang Traber -0- -0- Gary A. Smith 731 * Melanie Murphy 10 * Peter Model 266,014(5) 13.80% 310 S. Juniper Street Philadelphia, Pa. 19107 All Executive Officers and Directors Named Above as a Group (6 Persons) 1,201,552(6) 62.34% *Less than 1% (1) Beneficial ownership of shares comprises voting power (the power to vote, or direct the voting, of such shares) and/or investment power (the power to dispose, or to direct the disposition, of such shares). (2) As reflected in Amendment No.7 to Schedule 13D filed with the SEC on December 3, 1997. Includes 67,803 shares as to which Mr. Cooper disclaims beneficial ownership; such shares are owned by KC Holdings, Inc., a corporation for which Mr. Cooper is Chairman of the Board and President. Mr. Cooper owns approximately 7.7% of the outstanding stock of KC Holdings, Inc. (3) Includes currently exercisable option to purchase 35,000 shares. (4) As reflected in Amendment No.4 to Schedule 13D filed with the SEC on December 12, 1997. Includes 232,693 shares held as co-trustee, with Peter Model, of the Trust under Paragraph I, Article Sixth of the Last Will and Testament of Leo Model; 21,663 shares held in trust for himself and his children of which Mr. Model is trustee with another person and 1,267 shares held by his wife, Pamela Model, as to which Mr. & Mrs. Model share voting and dispositive power. (5) As reflected in Amendment No.4 to Schedule 13D filed with the SEC on December 12, 1997. Beneficial ownership, for which the Corporations are aware, includes 232,693 shares held as trustee as described in footnote (4) 12 above; 11,658 shares to which he exercises sole voting and investment power; and 21,663 shares held in trust for the benefit of Peter Model and his children as to which Peter Model, as a trustee, shares voting and investment power. (6) Includes option to purchase 35,000 shares identified in footnote (3) above. ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS Not applicable. PART IV ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES ________AND REPORTS ON FORM 8-K________ A. (1) Financial statements included in Registrants' Fiscal 2000 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 17 of this Form 10-K/A. 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 17 of this Form 10-K/A. 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) 13 Instruments Defining the Rights of Security ________Holders including Indentures_____ 4.1 Specimen Certificate for Shares of (1) Common Stock 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 13.1 The Registrants' Fiscal 2000 Annual Report to Shareholders to the extent referred to in the responses to the items of this Annual Report. 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-K 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 14 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 15 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:__/S/______________________ By: /S/________________________ Gary A. Smith Cynthia A. Barron President Chief Accounting Officer Dated:___6-06-00 _____________ Dated:___6-06-00 _______________ -------- -------- 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___ ___/S/_________________ __6-07-00__ Michael J. Flynn Chairman of the Board Principal Executive Officer ___/S/__________________ __6-06-00__ Gary A. Smith President Chief Operating Officer Principal Financial Officer ___/S/_________________ __6-07-00__ Milton Cooper Director ___/S/_________________ __6-07-00__ Allen J. Model Director ___/S/_________________ __6-07-00__ Wolfgang Traber Director 16 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. /S/ Parente Randolph, P.C. June 21, 2000 Wilkes-Barre, Pennsylvania 17 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. /S/ PricewaterhouseCoopers LLP June 4, 1999 Philadelphia, Pennsylvania 18 REPORT OF INDEPENDENT ACCOUNTANTS ON FINANCIAL STATEMENT SCHEDULES 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 financial 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. /S/ PricewaterhouseCoopers LLP June 4, 1999 Philadelphia, Pennsylvania 19
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 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
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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
21 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 22
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 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.
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BLUE RIDGE REAL ESTATE COMPANY 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 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.
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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 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 financi 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 The accompanying notes are an integral part of the combined financial statements.
25 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 review its long-lived assets whenever events or changes in circumstances indicate that the carrying value of an asset may not be recoverable. In that event, the Companies calculate the expected future net cash flows to be generated by the asset. If those net future cash flows are less than the carrying value of the asset, an impairment loss is recognized in operating income. The impairment loss is the difference between the carrying value and the fair value of the asset. No such losses were recognized in the three years ended March 31, 2000. 26 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. 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. 27
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: 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
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2000 1999 ---- ---- 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 Mortgage note payable to bank, interest at 6.84% payable monthly with principle 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) 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.
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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
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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.
31
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. 10. QUARTERLY FINANCIAL INFORMATION (UNAUDITED) The results of operations for each of the quarters in the last two years are presented below. 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)
32 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. 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.
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)
33
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 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 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.
34 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. 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: 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 All 35,000 options outstanding are exercisable at $6.75 per share and have a remaining contractual life of 3.25 years.
35 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. 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 issued 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
37 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 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 37 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
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
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 a decrease 38 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(25%), leasing commissions in resort communities(62%) and fishing and hunting leases(13%). 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(59%) and depreciation costs(50%). 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(97%) and an increase in disposed assets and resulting gains(3%). 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. 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(35%), festival revenues(37%), leasing 39 commissions in resort communities(12%), fees for services provided to the Trust of the resort communities(12%), and fishing and hunting leases(4%). 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 investments 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. The motocross park and the new computer equipment were financed wholly from working cash. The lift upgrade was financed by a mortgage note payable in the amount of $800,000 as detailed in Note 4 of the combined financial statements. The Companies are also investing working capital in the construction of various communication towers, all of which have proposed and/or confirmed tenants. During Fiscal 2002 a mortgage note payable to First Union National Bank in the amount of $4,851,000 comes due. The Companies intend to refinance the note and will actively seek a loan commitment from the current lender for such a refinancing. The companies fully expect the refinancing to be accomplished during Fiscal 2001. . 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 rate of interest is one quarter of one percentage point (0.25%) less than the Prime Rate. 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. 40 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 41 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. FORM 10-K AVAILABLE The Companies will furnish to any shareholder, without charge, a copy of their Fiscal Year 2000 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 42 EX-27 2 0002.txt FDS --
5 0000012779 BLUE RIDGE REAL ESTATE CO 12-MOS MAR-31-2000 APR-01-1999 MAR-31-2000 2,553,510 0 448,838 0 213,215 3,835,847 53,894,805 33,774,181 23,956,471 2,963,832 0 0 0 1,947,358 0 23,956,471 18,886,919 18,886,919 0 17,955,281 0 0 732,201 819,640 339,000 0 0 0 0 480,640 .24 .24
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