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-----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, WKCU9nCElyRNNTz5Vkkwg/PYnOJFmXR+yUwUyN42yO8q0QA3gQCeLKQRoPaUkhZ6 rDQs30mxW+yis6M1L2A0Zw== 0000012779-09-000017.txt : 20090612 0000012779-09-000017.hdr.sgml : 20090612 20090612124845 ACCESSION NUMBER: 0000012779-09-000017 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 5 CONFORMED PERIOD OF REPORT: 20090430 FILED AS OF DATE: 20090612 DATE AS OF CHANGE: 20090612 FILER: COMPANY DATA: COMPANY CONFORMED NAME: BLUE RIDGE REAL ESTATE CO CENTRAL INDEX KEY: 0000012779 STANDARD INDUSTRIAL CLASSIFICATION: REAL ESTATE [6500] 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: 09889000 BUSINESS ADDRESS: STREET 1: PO BOX 707 STREET 2: ROUTE 940 AND MOSEYWOOD RD CITY: BLAKESLEE STATE: PA ZIP: 18610 BUSINESS PHONE: 5704438433 MAIL ADDRESS: STREET 1: PO BOX 707 STREET 2: ROUTE 940 AND MOSEYWOOD RD CITY: BLAKESLEE STATE: PA ZIP: 18610 10-Q 1 blueridgeform10qqtr2final.htm QUARTERLY REPORT PERIOD ENDED 04-30-2009 Converted by EDGARwiz

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, 2009

( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)

OF THE SECURITIES EXCHANGE ACT OF 1934


Commission File No.:	Blue Ridge 0-28-44
	Big Boulder 0-28-43

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


I.R.S. Employer Identification Number:	24-0854342 (Blue Ridge)
	24-0822326 (Big Boulder)

Address of principal executive office: Route 940 and Moseywood Road, Blakeslee, Pennsylvania

Zip Code: 18610

Registrants’ telephone number, including area code: (570) 443-8433

Indicate by check mark whether the registrants (1) have filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such period that the registrants were required to file such reports) and (2) have been subject to such filing requirements for the past 90 days.

ýYES ¨NO

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate web site, if any, every Interactive Data file required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).

¨YES ¨NO

Indicate by check mark whether the registrants are large accelerated filers, accelerated filers, non-accelerated filers or smaller reporting companies. See definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Large Accelerated filer ¨

Accelerated Filer ¨

Non-Accelerated filer ¨ (Do not check if smaller reporting company)

Smaller reporting company ý

Indicate by check mark whether the registrants are shell companies (as defined in Rule 12b-2 of the Exchange Act).

¨YES ýNO

The number of shares of the registrants’ common stock outstanding as of the close of business on June 12, 2009 was 2,450,424 shares.*

*Under a Security Combination Agreement between Blue Ridge Real Estate Company ("Blue Ridge") and Big Boulder Corporation ("Big Boulder") (together, the "Companies") and under the by-laws of the Companies, shares of the Companies are combined in unit certificates, each certificate representing the same number of shares of each of the Companies. Shares of each Company may be transferred only together with an equal number of shares of the other Company. For this reason, a combined Blue Ridge/Big Boulder Form 10-Q is being filed. Except as otherwise indicated, all information applies to both Companies.

INDEX

Page No.

PART I - FINANCIAL INFORMATION

It e m 1. Financial Statements

Combined Condensed Balance Sheets – April 30, 2009 and October 31, 2008

Combined Condensed Statements of Operations - Three and Six Months ended

April 30, 2009 and 2008

Combined Condensed Statement of Changes in Shareholders’ Equity –

Six months ended April 30, 2009

Combined Condensed Statements of Cash Flows - Six Months Ended

April 30, 2009 and 2008

Notes to Financial Statements

It e m 2. Management's Discussion and Analysis of Financial Condition and Results

of Operations

It e m 4T. Controls and Procedures

PART II - OTHER INFORMATION

It e m 1. Legal Proceedings

Ite m 4. Submission of Matters to a Vote of Security Holders

It e m 6. Exhibits

PART I – FINANCIAL INFORMATION

Item 1. FINANCIAL STATEMENTS

BLUE RIDGE REAL ESTATE COMPANY and SUBSIDIARIES

BIG BOULDER CORPORATION and SUBSIDIARIES

COMBINED CONDENSED BALANCE SHEETS


	(UNAUDITED)
ASSETS	4/30/09	10/31/08
Land and land development costs (4,971 acres per land ledger)	$23,759,270	$23,952,717
Land improvements, buildings & equipment, net	27,060,967	27,448,577
Land held for investment, (11,448 acres per land ledger)	8,194,827	8,194,827
Land held for recreation (514 acres per land ledger)	8,693,860	8,693,860
Net investment in direct financing leases	8,317,180	8,324,258
Cash and cash equivalents	160,846	225,083
Cash held in escrow	98,029	232,059
Prepaid expenses and other assets	1,202,040	1,430,068
Accounts receivable and mortgages receivable	558,085	532,167
	$78,045,104	$79,033,616


LIABILITIES AND SHAREHOLDERS’ EQUITY
LIABILITIES:
Debt	$31,755,876	$31,273,294
Accounts payable	601,759	1,264,556
Accrued liabilities	456,782	628,325
Deferred income	1,080,390	866,660
Amounts due to related parties	16,042	48,959
Deferred income taxes	6,463,000	6,750,000
Accrued pension expense	1,179,643	1,179,643
Total liabilities	41,553,492	42,011,437

Commitments and contingencies

COMBINED SHAREHOLDERS’ EQUITY:
Capital stock, without par value, stated value $0.30 per combined share, Blue Ridge and Big Boulder each authorized 3,000,000 shares, each issued 2,732,442	819,731	819,731
Capital in excess of stated value	19,811,808	19,785,264
Earnings retained in the business	18,639,947	19,197,058
Accumulated other comprehensive loss	(694,467)	(694,467)
	38,577,019	39,107,586
Less cost of 282,018 shares of capital stock in treasury	2,085,407	2,085,407
Total shareholders’ equity	36,491,612	37,022,179
	$78,045,104	$79,033,616

See accompanying notes to unaudited financial statements.

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BLUE RIDGE REAL ESTATE COMPANY and SUBSIDIARIES

BIG BOULDER CORPORATION and SUBSIDIARIES

COMBINED CONDENSED STATEMENTS OF OPERATIONS


FOR THE THREE AND SIX MONTHS ENDED APRIL 30, 2009 and 2008
(UNAUDITED)	Three Months Ended		Six Months Ended
	4/30/09	4/30/08	4/30/09	4/30/08
Revenues:
Real estate management	$433,938	$1,247,840	$912,489	$2,902,273
Summer recreation operations	45,835	33,631	50,713	39,835
Land resource management	5,947	556,943	2,109,899	562,242
Rental income	616,563	617,682	1,198,252	1,201,498
	1,102,283	2,456,096	4,271,353	4,705,848
Costs and expenses:
Real estate management	584,142	1,375,773	1,173,248	3,061,208
Summer recreation operations	249,560	306,449	478,714	544,673
Land resource management	94,324	440,491	1,821,208	533,132
Rental income	298,944	338,297	581,269	657,416
General and administration	341,804	303,331	718,509	613,801
Loss on sale of assets	0	23,033	10,643	23,033
	1,568,774	2,787,374	4,783,591	5,433,263
Operating loss	(466,491)	(331,278)	(512,238)	(727,415)

Other income (expense):
Interest and other income	81,682	80,390	169,480	159,146
Interest expense (net of capitalized interest for the three and six months ended April 30, 2009 and 2008 of $118,256, $132,499, $225,178 and $312,615, respectively.)	(266,444)	(237,612)	(501,353)	(503,927)
	(184,762)	(157,222)	(331,873)	(344,781)

Loss from continuing operations before income taxes	(651,253)	(488,500)	(844,111)	(1,072,196)

Credit for income taxes	(221,400)	(166,200)	(287,000)	(364,400)

Net loss	($429,853)	($322,300)	($557,111)	($707,796)

Basic loss per weighted average combined share	($0.18)	($0.13)	($0.23)	($0.29)

Diluted loss per weighted average combined share	($0.18)	($0.13)	($0.23)	($0.29)

See accompanying notes to unaudited financial statements.

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BLUE RIDGE REAL ESTATE COMPANY and SUBSIDIARIES

BIG BOULDER CORPORATION and SUBSIDIARIES

COMBINED CONDENSED STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY

FOR THE SIX MONTHS ENDED APRIL 30, 2009

(UNAUDITED)


					Accumulated
	Capital Stock (a)		Capital in Excess of	Earnings Retained in	Other Comprehensive	Capital Stock in
	Shares	Amount	Stated Par	the Business	Loss	Treasury (b)	Total

Balances, October 31, 2008	2,732,442	$819,731	$19,785,264	$19,197,058	($694,467)	($2,085,407)	$37,022,179

Net loss				(557,111)			(557,111)

Compensation recognized under employee stock plan			26,544				26,544

Balances, April 30, 2009	2,732,442	$819,731	$19,811,808	$18,639,947	($694,467)	($2,085,407)	$36,491,612

(a) Capital stock, at stated value of $.30 per combined share

(b) 282,018 shares held in treasury, at cost

See accompanying notes to unaudited financial statements

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BLUE RIDGE REAL ESTATE COMPANY and SUBSIDIARIES

BIG BOULDER CORPORATION and SUBSIDIARIES

COMBINED CONDENSED STATEMENTS OF CASH FLOWS


FOR THE SIX MONTHS ENDED
APRIL 30, 2009 and 2008
(UNAUDITED)
	2009	2008
Cash Flows Used In Operating Activities:
Net loss	($557,111)		($707,796)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation	701,281		697,562
Deferred income taxes	(287,000)		(364,400)
Loss on sale/disposition of assets	10,643		24,848
Compensation cost under employee stock plans	26,544		84,525
Changes in operating assets and liabilities:
Cash held in escrow	134,030		(238,665)
Accounts receivable and mortgages receivable	(25,918)		163,625
Prepaid expenses and other assets	228,028		430,287
Land and land development costs	(22,524)		(1,820,603)
Accounts payable and accrued liabilities	(867,257)		(735,842)
Deferred income	213,730		434,826
Net cash used in operating activities	(445,554)		(2,031,633)
Cash Flows Used In Investing Activities:
Proceeds from disposition of assets	0		14,250
Additions to properties	(90,536)		(289,701)
Payments received under direct financing lease arrangements, net	7,078		8,561
Net cash used in investing activities	(83,458)		(266,890)
Cash Flows Provided By Financing Activities:
Proceeds from debt	4,570,410		6,904,979
Payment of debt	(4,087,828)		(4,544,084)
Deferred financing costs	(17,807)		0
Net cash provided by financing activities	464,775		2,360,895
Net (decrease) increase in cash and cash equivalents	(64,237)		62,372
Cash and cash equivalents, beginning	225,083		189,702
Cash and cash equivalents, ending	$160,846		$252,074

Supplemental disclosures of cash flow information:
Cash paid during the period for:
Interest	$733,731		$824,252
Income taxes	$34,400		$500

Supplemental disclosures of non cash investing and financing activities:
Reclassification of assets from land and land development costs to land held for investment and land improvements, buildings and equipment	$215,971		$348,388

See accompanying notes to unaudited financial statements.

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NOTES TO UNAUDITED FINANCIAL STATEMENTS

1. Basis of Combination

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, Boulder Creek Resort Company, Moseywood Construction Company, Jack Frost National Golf Course, Inc., Blue Ridge Acquisition Company, BRRE Holdings, Inc., Coursey Commons Shopping Center, LLC, Coursey Creek, LLC, Cobble Creek, LLC and Flower Fields Motel, LLC) (“Blue Ridge”) and Big Boulder Corporation and its wholly-owned subsidiaries (Lake Mountain Company and BBC Holdings, Inc.) (“Big Boulder” and, together with Blue Ridge, the “Companies”).

The condensed balance sheet as of October 31, 2008, which has been derived from audited financial statements, and the combined condensed financial statements as of and for the six month periods ended April 30, 2009 and 2008, which are unaudited, are presented pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”). Accordingly, these combined condensed financial statements should be read in conjunction with the combined financial statements and notes thereto contained in the Companies’ 2008 Annual Report on Form 10-K. In the opinion of management, the accompanying combined condensed financial statements reflect all adjustments (which are of a normal recurring nature) necessary for a fair statement of the results for the interim periods.

Due to intermittent revenues from land resource management, the results of operations for any interim period are not necessarily indicative of the results expected for the full fiscal year.

2. Significant Accounting Policies

The preparation of financial statements and related disclosures in conformity with accounting principles generally accepted in the United States of America 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 date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. For example, unexpected changes in market conditions or a downturn in the economy could adversely affect actual results. Estimates are used in accounting for, among other things, land development costs, accounts and mortgages receivables, the unguaranteed residual value of assets under direct financing leasing arrangements, legal liability, insurance liability, depreciation, employ ee benefits, taxes, and contingencies. Estimates and assumptions are reviewed periodically and the effects of revisions are reflected in the combined condensed financial statements in the period they are determined to be necessary.

Management believes that its accounting policies regarding revenue recognition, land development costs, long lived assets, net investment in direct financing leases, deferred income and income taxes among others, affect its more significant judgments and estimates used in the preparation of its combined condensed financial statements. For a description of these critical accounting policies and estimates, see “Management’s Discussion and Analysis of Financial Condition and Results of Operations”. There are no significant changes in the Companies’ critical accounting policies or estimates since the Companies’ fiscal year ended October 31, 2008 (“Fiscal 2008”).

Cash held in escrow represents deposits held by the Companies for real estate transactions or other funds placed into escrow with a third party intermediary for the purpose of an Internal Revenue Code Section 1031 tax deferred exchange.

On November 1, 2008, the Companies adopted Financial Accounting Standards No. 157, Fair Value Measurements, (“SFAS 157”) which defines fair value, establishes a framework for measuring fair value, and expands disclosures about fair value. The provisions of SFAS 157 relating to financial assets and liabilities are effective for fiscal years beginning after November 15, 2007. Financial Accounting Standards Board (“FASB”) Staff Position (“FSP”) 157-2 delays the effective date of SFAS 157 to fiscal years beginning after November 15, 2008 for non-financial assets and liabilities, except for those items that are recognized or disclosed at fair value on a recurring basis. The Companies adopted the provisions of SFAS 157 related to financial assets and liabilities on November 1, 2008 with no effect to the consolidated financial posit ion, results of operations, or

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cash flows. The Companies are currently evaluating the impact of adopting the provisions of SFAS 157 related to non-financial assets and liabilities on their consolidated financial statements.

Effective November 1, 2008, the Companies adopted Statement of Financial Accounting Standards No. 159, The Fair Value Option for Financial Assets and Financial Liabilities, (“SFAS No. 159”). SFAS No. 159 permits entities to make an irrevocable election to value certain financial assets and financial liabilities, on an instrument by instrument basis, at fair value and include the related change in fair value in net income. The Companies did not elect the fair value option for eligible items.

New Accounting Pronouncements

In December 2008, the FASB issued FASB Staff Position (“FSP”) SFAS 132(R)-1, Employer’s Disclosures about Postretirement Benefit Plan Assets. This FSP amends FASB Statement No. 132, Employer’s Disclosures about Pensions and Other Postretirement Benefits, to disclose more information about investment allocation decisions, major categories of plan assets, including concentrations of risk and fair value measurements, and the fair value techniques and inputs used to measure plan assets. The disclosures required by the FSP are required to be provided for fiscal years ending after December 15, 2009. The Companies are in the process of evaluating the effect, if any, the adoption of this FSP will have on our financial statements.

In April 2009, the FASB issued FSP SFAS No. 157-4, Determining Whether a Market Is Not Active and a Transaction Is Not Distressed (“FSP SFAS No. 157-4”). FSP SFAS No. 157-4 provides guidelines for making fair value measurements more consistent with principles presented in SFAS No. 157. FSP SFAS No. 157-4 provides additional authoritative guidance in determining whether a market is active or inactive, whether a transaction is distressed, is applicable to all assets and liabilities and will require enhanced disclosures. FSP SFAS No. 157-4 is effective for periods ending after June 15, 2009. The Companies are in the process of evaluating the effect, if any, the adoption of the FSP will have on our financial statements.

In April 2009, the FASB issued FSP SFAS No. 107-1 and Accounting Principles Board (“APB”) Opinion 28-1, Interim Disclosures About Fair Value of Financial Instruments (“FSP SFAS No. 107-1 and APB No. 28-1”). FSP SFAS No. 107-1 and APB No. 28-1 amend SFAS No. 107, Disclosures About Fair Value of Financial Instruments, to require disclosures about the fair value of financial instruments in interim as well as in annual financial statements, and APB No. 28, Interim Financial Reporting, to require those disclosures in all interim financial statements. FSP SFAS No. 107-1 and APB No. 28-1 are effective for periods ending after June 15, 2009. The Companies are in the process of evaluating the effect, if any, the adoption of these pronouncements will have on our financial statements.

In May 2009, the FASB issued Financial Accounting Standards No. 165, Subsequent Events, ("SFAS 165"). SFAS 165 establishes the period after the balance sheet date and the circumstances in which management should evaluate events or transactions for potential recognition or disclosure in financial statements. SFAS 165 is effective for periods ending after June 15, 2009.

3. Segment Reporting

The Companies currently operate in three business segments, which consist of Real Estate Management/Rental Operations, Summer Recreation Operations and Land Resource Management segments.

4. Income Taxes

The benefit for income taxes for the three and six months ended April 30, 2009 and 2008 is estimated using the estimated annual effective tax rate for the years ending October 31, 2009 and 2008. The effective income tax rate for the first six months of the fiscal year ending October 31, 2009 (“Fiscal 2009”) and Fiscal 2008 was estimated at 34%.

Effective November 1, 2007, the Companies adopted Financial Accounting Standards Board ("FASB") Interpretation No. 48, Accounting for Uncertainty in Income Taxes - an Interpretation of FASB Statement No. 109 ("FIN 48"). FIN 48 requires the Companies to clarify their accounting for uncertainty in income taxes recognized in its financial statements in accordance with FASB Statement No. 109. FIN 48 also prescribes a

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recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. The adoption of FIN 48 had no impact on the combined financial statements of the Companies.

The Companies’ continuing practice is to recognize interest and/or penalties related to income tax matters as income tax expense in its combined financial statements. As of and for the six months ended April 30,
2009, no interest and penalties have been accrued in the combined balance sheet and no expense has been incurred in the combined statement of operations.

At April 30, 2009, federal and state tax returns for years ending October 31, 2005 and later are subject to future examination by the respective tax authorities.

5. Stock Based Compensation

During the six months ended April 30, 2009, no stock options were issued or exercised.

The fair value of each option award is estimated at the date of grant using a Black-Scholes option pricing model. Expected volatilities are based upon historical volatilities of the Companies’ stock. The Companies use historical data to estimate option exercises and employee terminations with the valuation model. The expected term of options granted is derived from the output of the valuation model and represents the period of time that options granted are expected to be outstanding. The risk-free rate for periods within the contractual term of the option is based on the U.S. Treasury yield curve in effect at the time of grant.

Option activity during the six month period ended April 30, 2009 is as follows:


	Shares	Weighted Average Exercise Price	Aggregate Intrinsic Value	Weighted Average Remaining Useful Life (in years)
Outstanding at October 31, 2008	64,600	$36.93	$2,385,600	2.4
Granted	0	0	0
Exercised	0	0	0
Canceled	0	0	0
Outstanding at April 30, 2009	64,600	$36.93	$2,385,600	1.9

Options exercisable at April 30, 2009	58,030	36.69

Option price range	$34.00-$39.00

Activity related to non-vested options for the period ended April 30, 2009 is as follows:


	Shares	Weighted Average Grant Date Fair Value Price
Non-vested at October 31, 2008	11,945	$7.87
Granted	0	0
Vested	(5,375)	(9.88)
Non-vested at April 30, 2009	6,570	$6.22

No options were exercised during the six months ended April 30, 2009 or 2008. The Companies expect to recognize compensation expense related to non-vested awards totaling approximately $17,667 over the next two years based on graded average vesting.

The Companies’ policy regarding the exercise of options is that optionees utilize an independent broker to manage the transaction, whereby, the broker sells the exercised shares on the open market.

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6. Land and Land Development Costs

Land and improvements in progress held for development consists of the following:


	4/30/2009	10/31/2008
Land unimproved designated for development	$461,186	$461,186
Residential development	12,978,997	10,027,041
Infrastructure development	10,319,087	13,464,490
	$23,759,270	$23,952,717

The increase in residential development costs and the decrease in infrastructure costs is primarily due to the closing and subsequent allocation of the capital jobs relating to site development in Woodsbluff Court ($525,000) located in the Laurelwoods II residential community and the Boulder Lake Village condominium project ($2,650,000) on Big Boulder Lake.

Residential development costs were further increased by the continued construction of the 18 unit Boulder Lake Village condominium ($1,320,000) and four Woodsbluff Duplex Units ($325,000). This increase was offset by the sale of one Boulder Lake Village condominium unit ($415,000) and three Woodsbluff Duplex units ($1,150,000).

7. Land


	4/30/09	10/31/08
Land held for investment
Land – Principally unimproved	$2,018,687	$2,018,687
Land – Commercial rental properties	6,176,140	6,176,140
	$8,194,827	$8,194,827

Land held for recreation
Land – Golf course	$8,656,154	$8,656,154
Land – Ski areas	37,706	37,706
	$8,693,860	$8,693,860

8. Pension Benefits

Components of Net Periodic Benefit Cost:


	Three Months Ended		Six Months Ended
	4/30/09	4/30/08	4/30/09	4/30/08

Service Cost	$34,500	$45,000	$69,000	$90,000
Interest Cost	89,750	79,250	179,500	158,500
Expected return on plan assets	($68,750)	($95,000)	(137,500)	(190,000)


Net amortization and deferral:
Amortization of transition obligation	717	717	1,434	1,434
Amortization of prior service cost	69	69	138	138
Amortization of accumulated gain	16,500	0	33,000	0
Net amortization and deferral	17,286	786	34,572	1,572
Total net periodic pension cost	$72,786	$30,036	$145,572	$60,072

The Companies expect to contribute $399,108 to their pension plan in Fiscal 2009. As of April 30, 2009, the Companies made contributions totaling $102,700. The Companies anticipate contributing an additional $296,408 to fund its pension in Fiscal 2009.

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9. Investment in Direct Financing Leases

The Companies lease the Jack Frost and Big Boulder ski areas under direct financing leases through 2034. The leases provide for minimum rental payments plus scheduled increases based upon the consumer price index, which increases shall not exceed 4% in any given year. Minimum annual future lease payments due under those leases at April 30 is as follows:


2010	$259,286
2011	265,768
2012	272,412
2013	279,222
2014	286,203
Thereafter	15,320,601
TOTAL	$16,683,492

The Companies net investment in direct financing leases consists of the following as of April 30, 2009:


Minimum future lease payments	$8,252,613
Unguaranteed residual value of lease properties	8,430,879
Gross investment in lease	16,683,492
Unearned income	(8,366,312)
Net investment in direct financing leases	$8,317,180

Unearned income is amortized into earnings using the interest method. The scheduled payment increase over the terms of the leases have been accounted for on a straight line basis in accordance with generally accepted accounting principles. The unguaranteed residual is evaluated on an ongoing basis.

10. Per Share Data

Earnings per share (“EPS”) are based on the weighted average number of common shares outstanding during the period. Diluted EPS assumes weighted average options have been exercised to purchase shares of common stock in the three and six months ended April 30, 2009 and 2008, net of assumed repurchases using the treasury stock method. Certain unexercised stock options to purchase shares of the Companies’ common stock were excluded from the dilutive calculation for the three and six months ended April 30, 2009 and 2008 due to the exercise price of the options being greater than the market price of the Companies’ common stock.

Weighted average basic and diluted shares, taking into consideration shares issued, weighted average options used in calculating EPS and treasury shares repurchased, for each of the periods are presented as follows:


	Three Months Ended		Six Months Ended
	4/30/09	4/30/08	4/30/09	4/30/08
Weighted average combined shares of common stock outstanding used to compute basic earnings per combined share	2,450,424	2,450,424	2,450,424	2,450,424
Additional combined common shares to be issued assuming exercise of stock options, net of combined shares assumed reacquired	0	0	0	0
Combined shares used to compute dilutive effect of stock option	2,450,424	2,450,424	2,450,424	2,450,424

Basic loss per weighted average combined share from continuing operations is computed as follows:


	Three Months Ended		Six Months Ended
	4/30/09	4/30/08	4/30/09	4/30/08
Net loss	($429,853)	($322,300)	($557,111)	($707,796)
Weighted average combined shares of common stock outstanding	2,450,424	2,450,424	2,450,424	2,450,424
Basic loss per weighted average combined share	($0.18)	($0.13)	($0.23)	($0.29)

Diluted loss per weighted average combined share from continuing operations is computed as follows:


	Three Months Ended		Six Months Ended
	4/30/09	4/30/08	4/30/09	4/30/08
Net loss	($429,853)	($322,300)	($557,111)	($707,796)
Combined shares used to compute dilutive effect of stock option	2,450,424	2,450,424	2,450,424	2,450,424
Basic loss per weighted average combined share	($0.18)	($0.13)	($0.23)	($0.29)

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11. Subsequent Event

On May 22, 2009, the Companies entered into a Deed of Trust and Security Agreement and Real Estate Lien Note with Barbers Hill Bank, a branch of Anahuac National Bank, in the amount of $1,050,000, which encumbers certain real property owned by Blue Ridge Real Estate Company located in Chambers County, Texas. This property is currently leased to Jack in the Box Eastern Division, L.P. The loan has a term of five years and a fixed interest rate of 6.75% and requires monthly payments in the amount of $7,254 beginning June 22, 2009 and ending May 22, 2014, at which time the remaining principal balance and all interest accrued shall become due and payable. The proceeds of the loan will be used to fund the completion of Building J of the Boulder Lake Village condominium project and general operations.

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Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Special Note Regarding Forward-Looking Statements

Some of the statements in this Quarterly Report on Form 10-Q constitute forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, that are made based upon, among other things, current assumptions by management, expectations and beliefs concerning future developments and their potential effect on the Companies. In some cases you can identify forward-looking statements where statements are preceded by, followed by or include the words “believes,” “expects,” “anticipates,” “plans,” “future,” “potential,” “probably,” “predictions,” “continue” or the negative of such terms or similar expressions. All statements, other than statements of historical fact, regarding the Companies’ strategy, future operations, financial position, estimated revenue, projected costs, projected savings, prospects, plans, opportunities and objectives constitute “forward-looking statements,” including but not limited to statements regarding the current and future real estate market in the Pocono Mountains; the timing of the agreements of sale with The Conservation Fund, the timing and outcome of the Companies’ planned land development; compensation expense related to non-vested awards; contributions to the Companies’ pension plan; the Companies’ land development and infrastructure plans in and around Jack Frost Mountain and Big Boulder Lake and Ski Resort; and the Companies’ anticipated cash needs.

These statements involve known and unknown risks, uncertainties and other factors that may cause the Companies’ or their industry’s actual results, levels of activity, performance or achievements to be materially different from the information expressed or implied by these forward-looking statements. Because forward-looking statements involve risks and uncertainties, there are important factors that could cause actual results to differ materially from those expressed or implied by these forward-looking statements, including but not limited to:

▪

Changes in market demand and/or economic conditions within the Companies’ local region and nationally, including changes in consumer confidence, volatility of mortgage interest rates and inflation;

▪

The status of the current and future real estate market in the Pocono Mountains;

▪

An increase in borrowing costs, and the Companies’ ability to generate cash flow to pay interest and scheduled debt payments as well as the Companies’ ability to refinance such indebtedness;

▪

The Companies’ ability to continue to generate sufficient working capital to meet the Companies’ operating requirements;

▪

The Companies’ ability to obtain and maintain approvals from local, state and federal authorities on regulatory issues;

▪

The Companies’ ability to provide competitive pricing to sell homes;

▪

The Companies’ ability to achieve gross profit margins to meet operating expenses;

▪

Fluctuations in the price of building materials;

▪

The Companies’ ability to effectively manage the Companies’ business;

▪

The Companies’ ability to attract and retain qualified personnel in the Companies’ business;

▪

The Companies’ ability to negotiate leases for the future operations of our facilities;

▪

The Companies’ relations with the Companies’ controlling shareholder, including its continuing willingness to provide financing and other resources;

▪

Actions by the Companies’ competitors;

▪

Effects of changes in accounting policies, standards, guidelines or principles; and

▪

Terrorist acts, acts of war and other factors over which the Companies have little or no control.

As a result of these factors, the Companies cannot assure you that the forward-looking statements in this Quarterly Report on Form 10-Q will prove to be accurate. Furthermore, if the Companies’ forward-looking statements prove to be inaccurate, the inaccuracy may be material. In light of the significant uncertainties in these forward-looking statements, you should not regard these statements as a representation or warranty by the Companies or any other person that the Companies will achieve their objectives and plans in any specified time frame, if at all.

The Companies may not update these forward-looking statements, even though their situation may change in the future.

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The Companies qualify all the forward-looking statements contained in this Quarterly Report on Form 10-Q by the foregoing cautionary statements.

Overview

Since the early 1980s, the Companies have developed five resort communities in close proximity to their Jack Frost Mountain and Big Boulder Ski Area resorts. The Companies’ resorts are located in the Pocono Mountains of Pennsylvania, an area which offers year-round regional tourist appeal and a quiet, relaxing vacation environment.

The Companies own 16,920 acres of land in Northeastern Pennsylvania, along with 13 acres in various other states. Of these land holdings, the Companies’ have designated 4,971 acres as held for development. It is expected that all of the Companies’ planned developments will be subdivided and sold as parcels of land, while others will be developed into single and multi-family housing.

The Companies believe the real estate market in the Pocono Mountains continues to offer an attractive investment alternative for buyers seeking a second home in a resort community. The Companies believe this is partially attributable to current moderate mortgage interest rates and a challenging economy that may be facilitating more regional tourist destinations.

The Companies are constructing Phase I and II of the Laurelwoods II community of single family and multi-family homes and a condominium project known as Boulder Lake Village. Plans to develop residential communities near Jack Frost Mountain and Big Boulder ski resorts are in place in anticipation of an economic recovery. This is part of the Companies’ comprehensive plan for their “core land” development in and around their two ski areas. Management is very cautious, in the unpredictable housing market, not to commence any residential developments until the market stabilizes.

For the fiscal year ended October 31, 2009, or Fiscal 2009, management intends to continue selective sales of land, some of which may be treated as section 1031 tax deferred exchanges under the Internal Revenue Code.

Management is also taking various steps to attract new home and land sale customers. For example, purchasers who want to purchase newly constructed single family homes in the Companies’ Laurelwoods II community development and can make a down payment of at least 20%, have the option of financing their mortgage through Big Boulder Corporation with interest only payments for five years. The Companies are also offering a one year membership with the Lake Mountain Club and complimentary passes to the Jack Frost National Golf Course to the purchasers of the existing Laurelwoods II single family and duplex townhomes. The Companies are also offering to pay six months’ of homeowner’s association fees on behalf of any current homeowner in the Blue Heron, Midlake Condominium, Laurelwoods Community and Snow Ridge Village developments that provide a purchaser referral which re sults in the sale of an existing Laurelwoods II single family home. The Companies have instituted discount price incentives for the 18 units to be sold in Building J of the Boulder Lake Village condominiums. For the first six units sold, a 3% discount will apply, for the next six units sold, a 2% discount will apply, and for the final six units sold, a 1% discount will apply. The Companies are also offering financing opportunities for the purchase of selected tracts of land.

The Companies also generate revenue by the selective timbering of their land. Management relies on the advice of their forester, who is engaged on a consulting basis, for the timing and selection of certain parcels for timbering whereby significant attention is given to protecting the environment and retaining the value of these parcels for future timber harvests. The Companies’ forester is in the process of updating the inventory of the Companies’ timber resources to aid in land valuations so that management will have more current valuation information before entering into future timber agreements.

The Jack Frost National Golf Course opened in the spring of 2007. The golf course is managed by Billy Casper Golf, LLC, a nationally-recognized golf course management company.

Plans are in place for a community surrounding the Jack Frost National Golf Course. This community is expected to be comprised of single family homes and multi-family units, as well as golf club amenities and the necessary infrastructure.

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The Companies also intend to advertise certain subdivisions for sale to recognized land developers in order to facilitate the market for housing and to reduce the inherent risk associated with land development.

Recent Developments

On March 11, 2009, the Companies entered into two Agreements of Sale with The Conservation Fund for the sale of eight non-contiguous parcels of raw land belonging to the Companies. The first Agreement of Sale, or the Phase 1 Agreement, relates to the sale of 1,175 acres located in Monroe and Lackawanna Counties, Pennsylvania, for a total purchase price of $2,100,000, $5,000 of which is payable to the Companies within five business days of the date of the Phase 1 Agreement and the remainder of which is payable to the Companies at the closing. The second Agreement of Sale, or the Phase 2 Agreement, relates to the sale of 2,797 acres located in Lackawanna, Luzerne and Monroe Counties, Pennsylvania, for a total purchase price of $8,150,000, $5,000 of which is payable to the Companies within five business days of the date of the Phase 2 Agreement and the remainder of which is payable to the Companies at the closing. The closing of the Phase 1 Agreement is scheduled to take place on June 24, 2009. The closing of the Phase 2 Agreement is expected to take place during the month of August 2009 contingent upon the Buyers’ satisfactory completion of a due diligence review. The Companies intend to use the proceeds of these land sales to pay down debt.

Management made the decision to close the Jack Frost-Big Boulder Real Estate sales office located in unit 32 of the Blue Heron Community in Lake Harmony, Pennsylvania. On April 24, 2009, the Companies signed an Agreement with Pocono Resorts Realty. The Agreement provided for, among other things, the transfer of current home sale listings, the use of Company-owned signboards and the use of real estate sales offices currently located in the Jack Frost Mountain and Big Boulder Ski Area lodges. Also as part of the Agreement and upon approval by municipal and state agencies, Pocono Resorts Realty will be allowed to use a model home in either the Laurelwoods II or Boulder Lake Village developments as a sales office to sell the Companies’ newly constructed homes at Big Boulder.

Due to the recent decline in the housing market nationwide, the Companies continue to monitor the progress of residential home sales within the northeast region. No new residential development projects will be started until the market stabilizes.

The Companies continue to research income producing investment properties for potential acquisition.

Critical Accounting Policies and Significant Judgments and Estimates

The Companies have identified the most critical accounting policies upon which the Companies’ financial status depends. The critical policies and estimates were determined by considering accounting policies that involve the most complex or subjective decisions or assessments. The most critical accounting policies identified relate to net deferred tax assets and liabilities, net investment in direct financing leases, the valuation of land development costs and long-lived assets, and revenue recognition.

Revenues are derived from a wide variety of sources, including sales of real estate, management of investment properties, home construction, property management services, golf activities, timbering and leasing activities. Revenues are recognized as services are performed, except as noted below.

Timbering revenues from stumpage contracts are recognized at the time a stumpage contract is signed in accordance with Staff Accounting Bulletin No. 104 – Revenue Recognition, (“SAB 104”). At the time a stumpage contract is signed, the risk of ownership is passed to the buyer at a fixed, determinable cost. Reasonable assurance of collectibility is determined by the date of signing and, at that time, the obligations of the Companies’ are satisfied. Therefore, full accrual recognition at the time of contract execution is appropriate under SAB 104 guidance.

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”) using the full accrual method. The full accrual method is appropriate at closing when the sales contract has been signed, the buyer has arranged permanent financing and the risks and rewards associated with ownership have been transferred to the buyer. In the few instances that the Companies finance the sale, more than a 20% down payment is required from the buyers. The remaining financed purchase price is not subject to subordination. Down payments of less than 20% are accounted for as deposits as required by SFAS 66.

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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.

The Companies recognize revenue on custom home construction in accordance with SFAS 66. Under the provisions of SFAS 66, revenues and costs are recognized using the percentage of completion method of accounting when construction is beyond the preliminary stage, the buyer is committed and may only require a refund in the event of non-delivery, if the sales proceeds are collectible and if the aggregate sales proceeds and the total cost of the project can be reasonably estimated. Total estimated revenues and construction costs are reviewed periodically, and any change is applied prospectively.

Management’s estimate of deferred tax assets and liabilities is primarily based on the difference between the tax basis and financial reporting basis of depreciable assets and the net investment in direct financing leases, like-kind exchanges of assets, net operating losses, stock options and accruals. Valuation allowances are established when necessary to reduce tax assets to the amount expected to be realized.

The Companies have capitalized as the net investment in direct financing leases that portion of the leased premises pertaining to Jack Frost Mountain and Big Boulder Ski Areas, which met the criteria for accounting for a portion of the lease transactions as direct financing leases. The accounting was based on estimates and assumptions about the fair values and estimated useful lives of the leased properties, as well as the collectibility of lease payments and recoverability of the unguaranteed residual value of the leased properties. The Companies periodically review the net investment in direct financing leases for events or changes in circumstances that may impact collectibility, and recoverability of the unguaranteed residual value of leased properties.

The Companies capitalize as land and land development costs, the original acquisition cost, direct construction and development costs, property taxes, interest incurred on costs related to land under development and other related costs (engineering, surveying, landscaping, etc.) until the property reaches its intended use. The cost of sales for individual parcels of real estate or condominium units within a project is determined using the relative sales value method. Revenue is recognized upon signing of the closing documents. At closing, a binding contract is in effect, the buyer has arranged for permanent financing and the Companies are assured of payment in full. Also at the time of closing, the risks and rewards associated with ownership have been transferred to the buyer. Selling expenses are recorded when incurred.

Long-lived assets, namely properties, are recorded at cost. Depreciation and amortization is provided principally using the straight-line method over the estimated useful life of the asset. Upon sale or retirement of the asset, 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.

The Companies review their 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. The impairment loss is recognized in the period incurred.

Deferred income consists of dues, rents and deposits on land or home sales. Rents that are not yet earned are related to the Companies’ commercial properties that have been paid in advance, and dues are related to memberships in their hunting and fishing clubs and golf course memberships paid in advance. The Companies recognize revenue related to the hunting and fishing clubs and golf course memberships over the one-year period that the dues cover. The Companies recognize revenue related to the fishing club over a five month period from May through September, and the golf course over a seven month period, April through October. Deposits are required on land and home sales.

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The Companies sponsor a defined benefit pension plan as detailed in footnote 8. The accounting for pension benefits is determined by specialized accounting and actuarial methods using numerous estimates, including discount
rates, expected long-term investment returns on plan assets, employee turnover, mortality and retirement ages, and future salary increases. Changes in these key assumptions can have a significant effect on the pension plan’s impact on the Companies’ financial statements. The Companies engage the services of an independent actuary and investment consultant to assist them in determining these assumptions and in calculating pension income. The plan is currently underfunded and, accordingly, the Companies have made contributions to the fund of $467,392 and $444,494 in the fiscal years ending October 31, 2008, or Fiscal 2008, and October 31, 2007, or Fiscal 2007, respectively. The Companies expect to contribute $399,108 to the pension plan in Fiscal 2009. The Companies also have in place a 401(k) pension plan available to all full time employees, which is funded entirely by employee contributions.

The Companies account for their employee stock options in accordance with SFAS No. 123R, “Share-Based Payment”. SFAS No. 123R requires the Companies to recognize as compensation expense an amount equal to the grant date fair value of the stock options issued over the required service period. Compensation cost was measured using the modified prospective approach provided under SFAS No. 123R.

The Companies have no off-balance sheet arrangements as defined in Item 303(a)(4)(ii) of Regulation S-K.

Results of Operations for the Three and Six Months Ended April 30, 2009 and 2008

Operations for the three and six months ended April 30, 2009 resulted in, respectively, a net loss of ($429,853) and ($557,111), or ($0.18) and ($0.23) per combined share, compared to net loss of ($322,300) and ($707,796), or ($0.13) and ($0.29) per combined share, for the three and six month periods ended April 30, 2008.

Revenues

Combined revenue of $1,102,283 and $4,271,353 for the three and six months ended April 30, 2009 represents a decrease of $1,353,813 and $434,495, respectively, compared to the three and six months ended April 30, 2008. Real Estate Management Operations / Rental Operations revenue decreased $815,021 and $1,993,030, or 44% and 49%, respectively, for the three and six months ended April 30, 2009, compared to the three and six months ended April 30, 2008. Summer operations revenue increased $12,204 and $10,878, or 36% and 27%, respectively, for the three and six months ended April 30, 2009, compared to the three and six months ended April 30, 2008. Land resource management revenue decreased $550,996, or 99% and increased $1,547,657, or 275%, respectively, for the three and six months ended April 30, 2009 compared to the three and six months ended April 30, 2008.

Real Estate Management/Rental Operations

Real Estate Management Operations / Rental Operations had revenue of $2,110,741 for the six months ended April 30, 2009, compared to $4,103,771 for the six months ended April 30, 2008, which resulted in a decrease of $1,993,030, or 49%, which was primarily attributed to a decrease in Moseywood Construction Company’s new home construction sales. Revenue for the new home construction for the six months ended April 30, 2009 was $385,395 compared to $2,420,432 for the six months ended April 30, 2008 for a decrease of $2,035,037, or 84%. This is the result of having fewer homes under construction in Fiscal 2009 as compared to the six months ended April 30, 2008. As of April 30, 2009, there were 2 homes under various stages of construction compared to 13 homes for the period ended April 30, 2008. On July 3, 2008 Management decided to complete all new homes under contract and not to acce pt any new home construction contracts due to the ongoing slowdown in the overall economy. This was offset by an increase in Trust service fees, which are fees charged to our resort communities for water, sewer and road maintenance. For the six months ended

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April 30, 2009 the Trust service fees were $312,832 as compared to $256,150 for the six months ended April 30, 2008 which resulted in an increase of $56,682 or 22%.

Summer Recreation Operations

Summer operations revenue for the six months ended April 30, 2009 was $50,713 as compared to $39,835 for the six months ended April 30, 2008 resulting in an increase of $10,878 or 27%. This was the result of an increase in green fees at the Jack Frost National Golf Course.

Land Resource Management

For the six months ended April 30, 2009, Land Resource Management had revenue of $2,109,899 compared to $562,242 for the six months ended April 30, 2008, which resulted in an increase of $1,547,657. This increase is attributable to sale of three duplex units in the Laurelwoods II community and one condominium in the Boulder Lake Village community for the six months ended April 30, 2009, as compared to one home sale in Laurelwoods II community for the six months ended April 30, 2008, for an increase of $1,480,656. For the six months ended April 30, 2009, land sale revenue was $13,460 as compared to $207,942 for the six months ended April 30, 2008, for a decrease of $194,482, or 94%. Land sales occur sporadically and do not follow any set schedule. Timbering revenue for the six months ended April 30, 2009 was $261,483 on one timbering contract as compared to $0 for the six mo nths ended April 30, 2008.

Operating Costs

Real Estate Management/Rental Operations

Operating costs associated with Real Estate Management Operations / Rental Operations for the six months ended April 30, 2009 were $1,754,517 compared to $3,718,624 for the six months ended April 30, 2008, which represents a decrease of $1,964,107, or 53%. The decrease was mainly attributable to fewer new homes under construction in 2009 as the result of a slowdown of current economic conditions and Management’s decision not to accept any new home construction contracts. For the six months ended April 30, 2009, construction costs were $416,863 compared to $2,061,810 for the six months ended April 30, 2008 for a decrease of $1,644,947, or 80%. New home construction operating expenses for the six months ended April 30, 2009 was $171,403 as compared to $513,558 for the six months ended April 30, 2008 resulting in a decrease of $342,155, or 67%. For the six months ended April 30 , 2009, commission expense on new home sales decreased by $82,436, advertising expense decreased $78,488, salaries & wage expense decreased $37,610, corporate service fee decreased $45,630 and insurance expense decreased $20,147 as compared to the six months ended April 30, 2008, primarily due to the decrease in the number of new homes under construction.

Summer Recreation Operations

Operating expenses associated with Summer Operations for the six months ended April 30, 2009 were $478,714 as compared to $544,673 for the six months ended April 30, 2008, which represents a decrease of $65,959, or 12%. This decrease was attributable to decreases in operating costs for the Jack Frost National Golf Course related to salaries and wages ($37,290) and supplies & services ($22,164).

Land Resource Management

Operating costs associated with Land Resource Management for the six months ended April 30, 2009 were $1,821,208 compared with $533,132 for the six months ended April 30, 2008, which represents an increase of $1,288,076. This is primarily attributable to an increase in construction and operating costs related to real estate development, which was $1,753,859 for the six months ended April 30, 2009 as compared to $495,202 for the six months ended April 30, 2008, an increase of $1,258,657. This is the result of three home sales in the Laurelwoods II community and one condominium sale in the Boulder Lake Village community for the six months ended April 30, 2009 as compared to one single family home in the Laurelwoods II community for the six months ended April 30, 2008. Land sales’ operating expense increased $11,832 for the six months ended April 30, 2009 as compared to the six month s ended April 30, 2008 and was primarily the result of $10,573 for research and development costs associated with natural gas exploration. Timbering operating expenses increased $21,914 for the six months ended April 30, 2009 as compared to the six months ended April 30, 2008 which was primarily for timber consultants.

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General and Administration

General and Administration costs for the six months ended April 30, 2009 were $718,509 compared to $613,801 for the six months ended April 30, 2008, which represents an increase of $104,708, or 17%. This is primarily the result of increased salaries and related benefits ($39,930, or 11%) and the discontinuance of corporate service fees ($80,994, or 100%). These increases were the result of a reallocation to better reflect actual job related duties. These increases were offset by a reduction in consulting fees of $10,810, or 44%.

Other Income (Expense)

Interest and other income was $169,480 for the six months ended April 30, 2009 compared to $159,146 for the six months ended April 30, 2008, which represents an increase of $10,334, or 6%. This increase is primarily related to increased miscellaneous revenue from a leased shopping center. Interest expense for the six months ended April 30, 2009 was $501,353 compared to $503,927 for the six months ended April 30, 2008, which represents a decrease of $2,574, or 1%. This was primarily the result of the pay down of certain mortgage debt and declining interest rates.

Tax Rate

The effective tax rate for the three months ended April 30, 2009 and 2008 was 34%. The rate for 2009 is specific to federal taxes. There is no benefit for state income tax in 2009 because the Companies fully reserved the future benefit.

Liquidity and Capital Resources

As reflected in the Combined Condensed Statements of Cash Flows, net cash used in operating activities was $445,554 for the six months ended April 30, 2009 versus net cash used in operating activities of $2,031,633 for the six months ended April 30, 2008. The decrease in net cash used in operating activities for the six months ended April 30, 2009 is primarily attributable to the downturn in the real estate market. Market conditions have caused us to take a conservative approach to construction, putting certain projects on hold.

For the six months ended April 30, 2009, the construction of Building J in the Boulder Lake Village condominium community at Big Boulder was our major expenditure.

On December 11, 2006, the Companies entered into a Mortgage and Security Agreement and a $3,000,000 promissory note with State Farm F.S.B. The note is secured by a mortgage, which encumbers certain real property purchased on August 18, 2006, known as the Walgreens Store located in Dover Township, Ocean County, New Jersey. The agreement was scheduled to mature on January 1, 2009. On December 29, 2008, the Companies received a one year extension of the agreement and an adjustment of interest from LIBOR plus .9% to LIBOR plus 4.50%. Interest only payments are due and payable monthly until January 1, 2010, at which time the principal is due. The interest rate, calculated at LIBOR plus four and one-half of one percent (4.5%), equaled 5.01% at April 30, 2009.

On December 15, 2006, the Companies entered into a Mortgage and Security Agreement and a $4,000,000 promissory note with State Farm F.S.B. The note is secured by a mortgage, which encumbers certain real property purchased on October 31, 2006, known as the Walgreens Store located in White Bear Lake, Washington County, Minnesota. The agreement was scheduled to mature on January 1, 2009. On December 29, 2008, the Companies received a one year extension of the agreement and an adjustment of interest from LIBOR plus .9% to LIBOR plus 4.5%. Interest only payments are due and payable monthly until January 1, 2010, at which time the principal is due. The interest rate, calculated at LIBOR plus four and one-half of one percent (4.5%), equaled 5.01% at April 30, 2009.

The Companies have a line of credit with Manufacturers and Traders Trust Company to fund real estate development. The aggregate amount of this line of credit was $25,000,000 prior to February 27, 2009. On February 27, 2009 the Companies entered into a loan modification agreement which decreased the aggregate amount of the line of credit from $25,000,000 to 20,000,000. The loan modification agreement also amended the interest rate from LIBOR plus 2.5% to LIBOR plus 3.5% with an interest rate floor of 5.5% and provides that the Companies must establish an interest reserve account of $690,000 as security for the payment of interest. Interest is due and payable on a monthly basis and at April 30, 2009, the interest rate equaled 5.5%. The outstanding principal and any unpaid accrued interest is due and payable on April 19, 2010. The total line of credit is divided in to three sublimits. The Companies are using $7,900,000 of the $20,000,000 line of credit

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to fund the construction of residential development projects. The Companies have utilized a portion of the proceeds from the sale of three Woodsbluff Court duplex units and one Boulder Lake Village condominium unit to pay $909,323 on this sublimit during the first quarter of Fiscal 2009. At April 30, 2009, $5,691,457 was outstanding on this sub-limit. The Companies utilized $6,000,000 of the $20,000,000 to fund site-development. The loan modification amended the site-development sublimit from $11,000,000 to $6,000,000. The Companies have utilized a portion of the proceeds from the sale of three Woodsbluff Court duplex units and one Boulder Lake Village condominium unit to pay $280,000 on this sublimit during the first quarter of Fiscal 2009. At April 30, 2009, $4,392,933 was outstanding on this sub-limit. The remaining $6,100,000 of the $20,0 00,000 line of credit is used to fund the expansion of the water and sewer systems at both Big Boulder and Jack Frost Mountain Ski Areas. This expansion is necessary to accommodate the new construction. At April 30, 2009, $3,461,510 was outstanding on the $6,100,000 sub-limit. The term on this sub-limit is two years with interest only payments due until the maturity date after which time the Companies plan to seek a term mortgage note. The total principal amount outstanding under the aggregate line of credit may not exceed the lesser of (a) $20,000,000, or (b) 80% of the cost or appraised value of the units.

The Companies also have a $3,100,000 line of credit with Manufacturers and Traders Trust Company for general operations. During the six months ended April 30, 2009, we borrowed against the $3,100,000 line of credit in varying amounts with a maximum amount of $3,096,713. At April 30, 2009, $2,958,149 was outstanding on the $3,100,000 line and the rate of interest is 5.5%. Previously, the Companies had a $5,000,000 open end mortgage with Manufacturers and Traders Trust intended for real estate transactions; however, effective February 27, 2009, the $5,000,000 line has been cancelled due to non-usage.

Purchase obligations total $3,009,113 and consist of material contracts with multiple contractors all relating to real estate development. Payments and adjustments made through April 30, 2009 total $2,555,783.

We currently anticipate that the funds needed for future operations and to implement our land development strategy will be satisfied through operating cash, borrowed funds, public offerings or private placements of debt or equity and reinvested profits from completed and sold units or lots. We expect that with respect to land development, future construction will be conducted in phases, with the profits from each phase used to fund additional future construction. Construction is being implemented in phases as to reduce market risk associated with changing economic conditions.

Item 4T. CONTROLS AND PROCEDURES

(a) Evaluation of Disclosure Controls and Procedures.

Management, with the participation of the Companies’ chief executive officer and chief financial officer, evaluated the effectiveness of the Companies’ disclosure controls and procedures as of the end of the period covered by this report. Based on that evaluation, the Companies’ chief executive officer and chief financial officer concluded that the Companies’ disclosure controls and procedures as of the end of the period covered by this report have been designed and are functioning effectively to provide reasonable assurance that the information required to be disclosed by us in reports filed under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and is accumulated and communicated to the Companies’ management, including the Companies’ prin cipal executive and principal financial officers, or person performing similar functions, as appropriate to allow timely decisions regarding required disclosure. The Companies believe that a controls system, no matter how well designed and operated, cannot provide absolute assurance that the objectives of the controls system are met, and no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within a company have been detected.

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(b) Change in Internal Control over Financial Reporting.

No change in the Companies' internal control over financial reporting occurred during the Companies’ most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

PART II - OTHER INFORMATION

Item 1. LEGAL PROCEEDINGS

The Companies are presently party to certain lawsuits arising in the ordinary course of their business. The Companies believe that none of their current legal proceedings will be material to their business, financial condition or results of operations.

Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

The Annual Meeting of Shareholders was held on April 7, 2009. The following proposal was adopted by the margins indicated:

(1) Election of Directors. The results of the vote tabulated at the meeting for the following five director nominees were as follows:


	Blue Ridge Real Estate Company		Big Boulder Corporation
	Number of Shares		Number of Shares
	Votes For	Votes Withheld	Votes For	Votes Withheld

Bruce F. Beaty	2,190,986	3,414	2,190,988	3,412
Milton Cooper	2,099,245	95,155	2,099,247	95,153
Michael J. Flynn	2,099,212	95,155	2,099,214	95,153
Patrick M. Flynn	2,099,268	95,099	2,099,270	95,097
Wolfgang Traber	2,190,987	3,414	2,190,989	3,412

No other persons were nominated, or received votes, for election as directors at the 2008 Annual Meeting of Shareholders. There were no abstentious or broker non-votes with respect to this proposal, except as noted above.

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Item 6. EXHIBITS


Exhibit Number	Description
10.1	Agreement of Sale, Phase 1, dated March 11, 2009 between Blue Ridge Real Estate Company and The Conservation Fund for the purchase of 1,175 acres located in Monroe and Lackawanna Counties, Pennsylvania. (filed on March 13, 2009 as exhibit 10.1 to Form 10-Q and incorporated by reference herein.)
10 .2	Agreement of Sale, Phase 2, dated March 11, 2009 between Blue Ridge Real Estate Company and The Conservation Fund for the purchase of 2,797 acres located in Lackawanna, Luzerne and Monroe Counties, Pennsylvania. (filed on March 13, 2009 as exhibit 10.2 to Form 10-Q and incorporated by reference herein.)
10.3	Fourth Loan Modification Agreement, dated February 27, 2009, between Big Boulder Corporation, Blue Ridge Real Estate Company, BBC Holdings, Inc., BRRE Holdings, Inc., Northeast Land Co., Lake Mountain Company, Jack Frost Mountain Company, Boulder Creek Resort Company, Moseywood Construction Company and Jack Frost National Golf Course, Inc. and Manufacturers and Traders Trust Company. (filed on March 3, 2009 as exhibit 10.1 to Form 8-K and incorporated by reference herein.)
3 1 .1*	Principal Executive Officer’s Rule 13a-14(a)/15d-14(a) Certification
3 1.2*	Principal Financial Officer’s Rule 13a-14(a)/15d-14(a) Certification
32.1*	Principal Executive Officer’s Section 1350 Certification
3 2.2*	Principal Financial Officer’s Section 1350 Certification

* Filed herewith

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SIGNATURES

Pursuant to the requirements 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

BIG BOULDER CORPORATION

(Registrants)

Dated: June 12, 2009

/s/ Eldon D. Dietterick

Eldon D. Dietterick

Executive Vice President/Treasurer

Dated: June 12, 2009

/s/ Cynthia A. Van Horn

Cynthia A. Van Horn

Chief Accounting Officer

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EXHIBIT INDEX


Exhibit Number	Description
10.1	Agreement of Sale, Phase 1, dated March 11, 2009 between Blue Ridge Real Estate Company and The Conservation Fund for the purchase of 1,175 acres located in Monroe and Lackawanna Counties, Pennsylvania. (filed on March 13, 2009 as exhibit 10.1 to Form 10-Q and incorporated herein by reference.)
10.2	Agreement of Sale, Phase 2, dated March 11, 2009 between Blue Ridge Real Estate Company and The Conservation Fund for the purchase of 2,797 acres located in Lackawanna, Luzerne and Monroe Counties, Pennsylvania. (filed on March 13, 2009 as exhibit 10.2 to Form 10-Q and incorporated herein by reference.)
10.3	Fourth Loan Modification Agreement, dated February 27, 2009, between Big Boulder Corporation, Blue Ridge Real Estate Company, BBC Holdings, Inc., BRRE Holdings, Inc., Northeast Land Co., Lake Mountain Company, Jack Frost Mountain Company, Boulder Creek Resort Company, Moseywood Construction Company and Jack Frost National Golf Course, Inc. and Manufacturers and Traders Trust Company. (filed on March 3, 2009 as exhibit 10.1 to Form 8-K and incorporated by reference herein.)
3 1.1*	Principal Executive Officer’s Rule 13a-14(a)/15d-14(a) Certification
31 .2*	Principal Financial Officer’s Rule 13a-14(a)/15d-14(a) Certification
32.1*	Principal Executive Officer’s Section 1350 Certification
3 2.2*	Principal Financial Officer’s Section 1350 Certification

* Filed herewith

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EX-31 2 exhibit311.htm CEO CERTIFICATION EXHIBIT 31.1

EXHIBIT 31.1

RULE 13a-14(a)/15d-14(a) CERTIFICATION

I, Patrick M. Flynn, certify that:

1. I have reviewed this Quarterly report on Form 10-Q for the period ended April 30, 2009 of Blue Ridge Real Estate Company and Big Boulder Corporation (together, the “Registrants”);

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the Registrants as of, and for, the periods presented in this report;

4. The Registrants’ other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f))for the Registrants and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the Registrants, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the Registrants’ disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the Registrants’ internal control over financial reporting that occurred during the Registrants’ most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the Registrants’ internal control over financial reporting; and

5. The Registrants’ other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the Registrants’ auditors and the audit committee of the Registrants’ boards of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the Registrants’ ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the Registrants’ internal control over financial reporting.

By: /s/ Patrick M. Flynn

Patrick M. Flynn

Chief Executive Officer and President

Date: June 12, 2009

EX-31 3 exhibit312.htm CFO CERTIFICATION EXHIBIT 31.2

EXHIBIT 31.2

RULE 13a-14(a)/15d-14(a) CERTIFICATION

I, Eldon D. Dietterick, certify that:

1. I have reviewed this Quarterly report on Form 10-Q for the period ended April 30, 2009 of Blue Ridge Real Estate Company and Big Boulder Corporation (together, the “Registrants”);

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the Registrants’ internal control over financial reporting.

By: /s/ Eldon D. Dietterick

Eldon D. Dietterick

Executive Vice President and Treasurer

(Principal Financial Officer)

Date: June 12, 2009

EX-32 4 exhibit321.htm SECTION 906 CERTIFICATION - PRESIDENT & CEO EXHIBIT 32.1

EXHIBIT 32.1

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350

I, Patrick M. Flynn, Chief Executive Officer and President of Blue Ridge Real Estate Company and Big Boulder Corporation (together, the “Registrants”), certify, pursuant to 18 U.S.C. §1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, to the best of my knowledge, that:

(1)

The Registrants’ Quarterly report on Form 10-Q for the period ended April 30, 2009, as filed with the Securities and Exchange Commission on the date hereof (the ”Report”), fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and

(2)

The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Registrants.

/s/ Patrick M. Flynn

Patrick M. Flynn

Chief Executive Officer and President

June 12, 2009

EX-32 5 exhibit322.htm SECTION 906 CERTIFICATION - EVP, TREASURER & CFO EXHIBIT 32.2

EXHIBIT 32.2

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350

I, Eldon D. Dietterick, Executive Vice President and Treasurer of Blue Ridge Real Estate Company and Big Boulder Corporation (together, the “Registrants”), certify, pursuant to 18 U.S.C. §1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, to the best of my knowledge, that:

(1)

(2)

The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Registrants.

/s/ Eldon D. Dietterick

Eldon D. Dietterick

Executive Vice President

and Treasurer

(Principal Financial Officer)

June 12, 2009

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