-----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, DYxmIOcUEzSLiKfpxNw+P70S6HcyOZ8J50qVvq8GwBdlHpoLzGCf8W75jnGaSi2U CsdgshK1WoqDJvscWtP9uw== 0000012779-02-000010.txt : 20020612 0000012779-02-000010.hdr.sgml : 20020612 20020612162443 ACCESSION NUMBER: 0000012779-02-000010 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 20020430 FILED AS OF DATE: 20020612 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: 1031 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-02844 FILM NUMBER: 02677469 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-Q 1 brbb10q4.txt 2002 FY 2ND QUARTER 10Q FILING UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q (X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended April 30, 2002 ( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from.......... to.......... Blue Ridge 0-28-44 Commission File No.: Big Boulder 0-28-43 BLUE RIDGE REAL ESTATE COMPANY BIG BOULDER CORPORATION State or other jurisdiction of incorporation or organization: Pennsylvania 24-0854342 (Blue Ridge) I.R.S. Employer Identification Number: 24-0822326 (Big Boulder) Address of principal executive office: Blakeslee,Pennsylvania Zip Code: 18610 Registrant's telephone number, including area code: (570)-443-8433 Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities and Exchange Act of 1934 during the preceding 12 months (or for such period that the registrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90 days. YES___X____ NO__________ Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the close of the period of this report: Class Outstanding at April 30, 2002 Common Stock, without par value, 1,916,180 stated value $.30 per combined share* *Under a Security Combination Agreement between Blue Ridge Real Estate Company ("Blue Ridge") and Big Boulder Corporation ("Big Boulder") (referred to as the "Corporations") and under the by-laws of the Corporations, shares of the Corporations are combined in unit certificates, each certificate representing the same number of shares of each of the Corporations. Shares of each Corporation may be transferred only together with an equal number of shares of the other Corporation. For this reason, a combined Blue Ridge/Big Boulder Form 10-Q is being filed. Except as otherwise indicated, all information applies to both Corporations. INDEX Page No. PART I - FINANCIAL INFORMATION Item 1-Financial Statements Combined Condensed Balance Sheets April 30, 2002 and October 31, 2001 1 & 2 Combined Condensed Statements of Operations - Three Months and Six Months ended April 30, 2002 and March 31, 2001 3 Combined Condensed Statements of Cash Flows - Six Months Ended April 30, 2002 and March 31, 2001 4 Notes to Financial Statements 5 Item 2-Management's Discussion and Analysis of Financial Condition and Results of Operations 6, 7 & 8 PART II - OTHER INFORMATION 8 Signatures 9 BLUE RIDGE REAL ESTATE COMPANY and SUBSIDIARIES BIG BOULDER CORPORATION AND SUBSIDIARIES COMBINED CONDENSED BALANCE SHEETS ASSETS April 30, October 31, 2002 2001 (UNAUDITED) (AUDITED) Current Assets Cash and cash equivalents (all funds are interest bearing) $1,577,892 $263,178 Accounts receivable 886,181 376,838 Inventories 200,570 231,771 Prepaid expenses, principally insurance and real estate taxes 708,686 730,382 Deferred operating costs 336,684 2,106,478 Total current assets 3,710,013 3,708,647 Properties: Land, principally unimproved (19,741 1,868,505 1,868,505 acres per land ledger) Land Improvements, buildings and equipment 54,111,007 53,985,296 55,979,512 55,853,801 Less accumulated depreciation and amortization 36,659,750 36,636,005 19,319,762 19,217,796 $23,029,775 $22,926,443 See accompanying notes to unaudited financial statements. 1 LIABILITIES AND SHAREHOLDERS' EQUITY April 30, October 31, 2002 2001 Current Liabilities: Notes payable - line of credit $0 $648,195 Current installments of long-term debt 723,342 720,435 Accounts and other payables 494,137 544,734 Accrued claims 165,682 134,770 Deferred income taxes 905,863 625,292 Accrued pension expense 816,580 732,580 Accrued liabilities 663,871 999,527 Deferred revenue 366,420 638,875 Total current liabilities 4,135,895 5,044,408 Long-term debt, less current installments 6,507,388 6,949,805 Deferred income taxes 1,044,269 842,117 Other non-current liabilities 36,707 48,219 Deferred income non-current 515,631 515,631 Commitments and Contingencies Combined shareholders' equity: Capital Stock, without par value, stated value $.30 per combined share, Blue Ridge and Big Boulder each have authorized 3,000,000 shares and each have issued 2,198,148 shares as of April 30, 2002 and as of October 31, 2001 659,444 659,444 Capital in excess of stated value 1,461,748 1,461,748 Earnings retained in the business 10,753,575 9,479,453 12,874,767 11,600,645 LESS: Cost of 281,968 and 280,968 shares of capital stock in treasury as April 30, 2002 & October 31, 2001, respectively. 2,084,882 2,074,382 10,789,885 9,526,263 $23,029,775 $22,926,443 See accompanying notes to unaudited financial statements. 2 BLUE RIDGE REAL ESTATE COMPANY AND SUBSIDIARIES BIG BOULDER CORPORATION AND SUBSIDIARIES COMBINED CONDENSED STATEMENTS OF OPERATIONS (UNAUDITED) Three Months Ended Six Months Ended April 30 March 31 April 30 March 31, 2002 2001 2002 2001 Revenues: Ski operations $5,074,055 $8,609,998 $10,015,075 $11,267,371 Real estate management 1,373,445 1,014,394 2,361,512 1,701,417 Summer recreation operations 186,278 165,764 364,635 475,812 Rental income 516,084 500,737 945,940 929,176 7,149,862 10,290,893 13,687,162 14,373,776 Costs and expenses: Ski operations 4,007,210 8,560,957 8,928,726 11,246,003 Real estate management 758,754 761,955 1,438,761 1,403,166 Summer recreation Operations 263,763 272,193 431,936 597,786 Rental operations 210,042 280,090 455,867 500,309 General & administrative Expenses 191,925 957,793 496,262 1,225,447 5,431,694 10,832,988 11,751,552 14,972,711 Income (loss)from operations 1,718,168 (542,095) 1,935,610 (598,935) Other income (expense:) Interest & other income 10,536 146,735 16,333 281,138 Interest expense (88,396) (163,922) (195,098) (372,511) (77,860) (17,187) (178,765) (91,373) Income (loss) before income taxes 1,640,308 (559,282) 1,756,845 (690,308) Provision (benefit) for income taxes 436,123 (419,119) 482,723 (473,119) Net income (loss) $1,204,185 ($140,163) $1,274,122 ($217,189) Basic and diluted income (loss) per weighted average combined share $0.63 ($0.07) $0.66 ($0.11) See accompanying notes to unaudited financial statements. 3 BLUE RIDGE REAL ESTATE COMPANY BIG BOULDER CORPORATION and SUBSIDIARIES COMBINED CONDENSED STATEMENT OF CASH FLOWS SIX MONTHS ENDED APRIL 30, 2002 & MARCH 31, 2001 (UNAUDITED) 2002 2001 Cash Flows From(Used In) Operating Activities: Net Income(Loss) $1,274,122 ($217,189) Adjustments to reconcile net income (loss) to net cash provided by operating activities: Depreciation and amortization 1,587,934 1,673,032 Deferred income taxes 482,723 (676,255) Gain on sale of assets (1,632) (5,879) Changes in assets and liabilities: Accounts receivable (509,343) (133,807) Prepaid expenses and other current assets 52,897 (447,628) Deferred operating costs 1,088,476 3,684,377 Accounts Payable & accrued liabilities (282,853) 679,783 Accrued income taxes 0 (53,186) Deferred revenue (272,455) 105,059 Net cash provided by operating activities 3,419,869 4,608,307 Cash Flows From (Used In) Investing Activities: Deferred Income 0 13,198 Proceeds from disposition of assets 17,191 5,879 Additions to properties (1,024,141) (930,108) Net cash used in investing activities (1,006,950) (911,031) Cash flows From (Used In) Financing Activities: Payment of short-term financing (1,448,195) (2,050,000) Proceeds from short-term financing 800,000 1,350,000 Payment of long-term debt (439,510) (583,832) Purchase of Treasury stock (10,500) (45,968) Net cash used in financing activities (1,098,205) (1,329,800) Net increase in cash and cash equivalents 1,314,714 2,367,476 Cash and cash equivalents, beginning of period 263,178 261,363 Cash and cash equivalents, end of period $1,577,892 $2,628,839 Supplemental disclosures of cash flow information: Cash paid during period: Interest $196,249 $371,250 Income taxes $ 14,012 $247,802 See accompanying notes to unaudited financial statements. 4 NOTES TO UNAUDITED FINANCIAL STATEMENTS 1. The combined financial statements include the accounts of Blue Ridge Real Estate Company and its wholly-owned subsidiaries (Northeast Land Company, Jack Frost Mountain Company and BRRE Holdings, Inc.) and Big Boulder Corporation and its wholly-owned subsidiaries (Lake Mountain Company and BBC Holdings, Inc.). In the opinion of Management, the accompanying unaudited combined condensed financial statements contain all adjustments (consisting of only normal recurring accruals) necessary to present fairly the financial position as of April 30, 2002, and the results of operations and the statements of cash flows for the three and six month periods ended April 30, 2002 and March 31, 2001. Certain information and footnote disclosures have been condensed or omitted pursuant to the rules and regulations of the Securities and Exchange Commission. These combined financial statements should be read in conjunction with the financial statements and notes thereto included in the Companies' Transition Report on Form 10-K for the seven months ended October 31, 2001. 2. The Companies and the subsidiaries, under SFAS No. 131, operate in three business segments - Ski Operations, Real Estate Management/Rental Operations and Summer Recreation Operations. The results of operations for the three and six months are not necessarily indicative of the results to be expected for the full year since the Companies' two ski facilities operate principally during the months of December through March. Costs and expenses net of revenues received in advance attributable to the Ski Operations for the months of April through November are deferred and recognized as revenue and operating expenses, ratably, over the operating period. Therefore revenues and operating expenses of the Real Estate Management/Rental Operations and Summer Recreation Operations are as disclosed on the statement of operations. Depreciation of ski facility fixed assets is calculated over the 12-month period. The expense is deferred until the operating period, at which time it will be recognized ratably. 3. The provision for income taxes for the three and six months ended April 30, 2002 represents the estimated annual effective tax rate for the year ending October 31, 2002. The effective income tax rate for the first six months of Fiscal 2002 was 34%. 4. Reclassifications have been made to the March 31, 2001 Combined Condensed Financial Statement of Operations to reflect changes in presentation for the three and six months ended April 30, 2002. Namely, Summer Recreation Operations are reported as a separate segment of the Companies. 5 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Results of Operations Due to the change in the Companies' fiscal year end, the most recent being October 31, 2001, the comparative quarterly information presented is from the most current comparable quarters which are the three and six months ended March 31, 2001. It was not financially practicable to restate the prior fiscal information to match the newly stated quarters. Operations for the three and six months ended April 30, 2002 resulted in a net income of $.63 and $.66 per combined share compared to a net loss of $(.07) and ($0.11) per combined share for the three and six months ended March 31, 2001. Combined revenue of $7,149,862 and $13,687,162 for the three and six months ended April 30, 2002 represents a decrease of $3,141,031 and $686,614 as compared to the three and six months ended March 31, 2001. Ski Operations decreased $3,535,943 and $1,252,296 for the three and six months ended April 30, 2002 as compared to the three and six months ended March 31, 2001. Real Estate Management increased $359,051 and $660,095 for the three and six months ended April 30, 2002 as compared to the three and six months ended March 31, 2001. Summer Recreation Operations increased $20,514 and decreased $111,177 for the three and six months ended April 30, 2002 as compared to the three and six months ended March 31, 2001. Rental income increased $15,347 and $16,764 for the three and six months ended April 30, 2002 as compared to the three and six months ended March 31, 2001. Ski Operations decrease was due to the extremely warm months of November and December 2001 which resulted in a much later opening date. Real Estate Management increase was due to the implementation of a timbering program. Management has instituted a program to begin selective timbering on the Companies land holdings. A forester has been hired to generate a long-term plan of managed timbering which pays specific attention to protecting the environment and retaining the value of the land. Bids are publicly sought for parcels which have had the timber selectively marked and calculated to board feet. For the six months ended April 30, 2002 five timber sales agreements have been entered into generating approximately $672,000 of revenue. Management anticipates two additional contracts to be entered into during the remaining months of the fiscal year. Summer Recreation Activities decreased due to the closing of the Splatter Paintball fields and the Traxx Motocross facility in early December 2001 which were operational year round in the previous year. Interest and Other Income decreased by $136,199 and $264,805 for the three and six months ended April 30, 2002 as compared to the three and six months ended March 31, 2001. This decrease is attributable to the revenue from Penn Dot Sewer Project (52%) and the reclassification of fuel tax credits (48%) being included in other income during the three and six months ended March 31, 2001 that wasn't applicable to the three and six months ended April 30, 2002. 6 Operating costs decreased by $4,635,426 and $2,491,974 for the three and six months ended April 30, 2002 as compared to the three and six months ended March 31, 2001. This decrease was due to the late opening of the ski areas relating to the extremely warm weather in November and December 2001, in addition to vigorous cost management because of the unseasonably warm winter. General and Administrative expenses for the three and six months ended April 30, 2002 decreased $765,868 and $729,185 as compared to the three and six months ended March 31, 2001. This is the result of a reallocation of wages and benefits (14%), the accrual of a severance package (65%) at March 31, 2001 and year end accrual adjustments (21%) at March 31, 2001. Interest expense for the three and six months ended April 30, 2002 decreased $75,526 and $177,413 as compared to the three and six months ended March 31, 2001. This decrease is attributable to a reduction in the prime interest rate (50%), pay down on notes payable (20%), and lower draws on the line of credit (10%). Options Granted Effective December 10, 2001 four corporate officers were granted stock options in varying amounts with a total of 11,000 shares. The option price of $10.50 was equal to the market value on the date of the grant. Because the exercise price of the stock options equaled the fair market value of the Companies' underlying stock on the date of the grant, no compensation expense has been recognized in the combined condensed statement of operations. Per Share Data Loss per share are computed as follows; 6 Mos ended 6 Mos ended April 30, March 31, 2002 2001 Net Income (Loss) $1,274,122 ($217,189) Weighted average combined shares of common stock outstanding used to compute basic earnings per combined common share 1,916,680 1,923,179 Additional combined common shares to be issued assuming exercise of stock options, net of combined shares assumed reacquired 13,722 9,902 Combined shares used to complete dilutive effect of stock option 1,930,402 1,933,081 Basic and diluted income (loss) per combined common share $0.66 $(.11) Financial Condition, Liquidity and Capital Resources The deficit in working capital as of April 30, 2002, decreased by $909,879 as compared to October 31, 2001. The change is primarily due to the cyclical nature of the Companies' business. The change in the balance of deferred operating costs from October 31, 2001 to April 30, 2002 was due primarily to revenue and expenses that are applicable to the ski facilities, which are deferred and recognized ratably during the months of December through March. 7 Moving Forward Capital expenditures for the six months ended April 30, 2002 were for the renovation and expansion of the Jack Frost Mountain Rental Shop, the expansion of the terrain park at Big Boulder and various equipment purchases at both ski areas all of which were financed through working capital. The Companies, in Fiscal 2002 will construct a new dual double chair lift at Jack Frost Mountain, purchase new snowmaking compressors and new snow grooming equipment for Big Boulder Ski Area. Management expects to obtai n debt and or lease financing on the three previously mentioned capital additions. During Fiscal 2002 the Companies instituted a new division for the purpose of actively pursuing real estate sales and purchases. The land department has started to identify a subdivision masterplan and will begin to seek potential buyers. Management intends to generate a constistent stream of additional revenue through selective sales and purchases of land. The initiation of two business activities during Fiscal 2002 - land sales and the timbering program, has prompted Management to consider the possib ility of creating a new business segment. Management is also considering the organization of another subsidiary corporation - Boulder Creek Resort Company. The new company would be used as a marketing tool to consolidate and "brand" the Companies' holdings as one resort destination and also enable the advancement of the land sales division. An offer to purchase the Dreshertown Plaza Shopping Center has been presented to the Companies. Management is presently reviewing the proposal. No firm price has been determined PART II - OTHER INFORMATION The Companies have no matters to report with respect to Items 1, 2, 3, 4, 5, and 6(A) and (B). 8 FORM 10-Q SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized: BLUE RIDGE REAL ESTATE COMPANY BIG BOULDER CORPORATION (Registrant) (Signature) Eldon D. Dietterick Executive Vice President/Treasurer (Signature) Cynthia A. Barron Chief Accounting Officer Date: June 4, 2002 9 -----END PRIVACY-ENHANCED MESSAGE-----