<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-QSB
/X/ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
FOR QUARTER ENDED JUNE 30, 1995
/ / TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the period from __________ to __________
Commission File Number 0-4559
BEVERLY HILLS BANCORP
(Exact name of registrant as specified in its charter)
CALIFORNIA 95-2588374
(State of Incorporation) (I.R.S. Employer Identification Number)
100 WILSHIRE BOULEVARD, SUITE 1940, SANTA MONICA, CA 90401
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: 310-395-7754
Indicate by check mark whether the Registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the Registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes X No .
--- ---
Number of shares of Common Stock, $1.00 par value, outstanding as of June 30,
1995: 1,194,432.
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BEVERLY HILLS BANCORP
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
Number
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PART I. Financial Information
Item 1. Financial Statements
Condensed Consolidated Financial
Statements 3
Condensed Consolidated Balance Sheet --
June 30, 1995 4
Condensed Consolidated Statements of
Operations -- For the Three Months
Ended June 30, 1995 and 1994 5
Condensed Consolidated Statements of
Operations -- For the Six Months
Ended June 30, 1995 and 1994 6
Condensed Consolidated Statements of
Cash Flows -- For the Six Months
Ended June 30, 1995 and 1994 7
Notes to Condensed Consolidated Financial
Statements 8-10
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations 11-13
PART II. Other Information
Item 1. Legal Proceedings 14
Item 2. Exhibits and Reports on Form 8-K 14
SIGNATURE 15
</TABLE>
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<PAGE> 3
PART I. Financial Information
Item 1. Beverly Hills Bancorp -- Financial Statements
Condensed Consolidated Financial Statements
(Unaudited)
The Condensed Consolidated Financial Statements included
herein have been prepared by Beverly Hills Bancorp (the "Company"), without
audit, pursuant to the rules and regulations of the Securities and Exchange
Commission. Certain information and footnote disclosures normally included in
financial statements prepared in accordance with generally accepted accounting
principles have been condensed or omitted pursuant to such rules and
regulations, although the Company believes the disclosures which are made are
adequate to make the information presented not misleading. Further, the
Condensed Consolidated Financial Statements have been prepared in accordance
with generally accepted accounting principles for interim financial information,
the instructions to Form 10-QSB and Regulation S-B (including Item 310(b)
thereof) and reflect, in the opinion of management, all adjustments necessary to
present fairly the financial position and results of operations as of and for
the periods indicated.
It is suggested that these Condensed Consolidated Financial
Statements be read in conjunction with the Consolidated Financial Statements and
the Notes thereto for the year ended December 31, 1994, included in the Beverly
Hills Bancorp Form 10-KSB Annual Report to the Securities and Exchange
Commission.
The results of operations for the three and six months ended
June 30, 1995 are not necessarily indicative of results to be expected for the
entire year ending December 31, 1995.
See Item 2 - "Management's Discussion and Analysis of
Financial Condition and Results of Operations."
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BEVERLY HILLS BANCORP AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEET
(UNAUDITED)
JUNE 30, 1995
<TABLE>
<CAPTION>
ASSETS
<S> <C>
Cash and Cash Equivalents $1,620,000
Notes Receivable - Officer/Shareholder 250,000
Notes Receivable - Sixty Eight Thousand, Inc.
less allowance for loss of $185,000 200,000
Investment in Tigera Group, Inc., at equity 3,317,000
Investment, at cost 200,000
----------
Total Assets $5,587,000
==========
LIABILITIES AND
STOCKHOLDERS' EQUITY
Accounts Payable and Accrued Liabilities $ 94,000
----------
Total Liabilities 94,000
----------
Commitments & Contingencies
Minority Interests 506,000
----------
Stockholders' Equity:
Preferred Stock - without par value;
authorized 500,000 shares, none issued
Common Stock - $1 par value; authorized
3,500,000 shares; issued and outstanding
1,194,432 shares - stated value 1,434,000
Capital Surplus 3,450,000
Retained Earnings Accumulated Since
July 1, 1985 103,000
----------
Total Stockholders' Equity 4,987,000
----------
Total Liabilities and Stockholders' Equity $5,587,000
==========
</TABLE>
See Accompanying Notes to Condensed Consolidated Financial Statements.
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BEVERLY HILLS BANCORP AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
<TABLE>
<CAPTION>
FOR THE THREE MONTHS ENDED
JUNE 30,
-------------------------------
1995 1994
----------- -----------
<S> <C> <C>
Income:
Interest, Dividend and Other $ 31,000 $ 26,000
Equity in Loss of Investment (12,000) (63,000)
---------- ----------
Total Income/(Loss) 19,000 (37,000)
---------- ----------
Operating Expenses:
General and Administrative 118,000 100,000
Amortization of Excess Cost of Investment 43,000 43,000
---------- ----------
Total Expenses 161,000 143,000
---------- ----------
Loss Before Minority Interests (142,000) (180,000)
Minority Interest in Subsidiaries' Losses 1,000 5,000
---------- ----------
Net Loss $ (141,000) $ (175,000)
========== ==========
Net Loss Per Share $ (.12) $ (.15)
========== ==========
Weighted Average Number of Common
Shares Outstanding 1,194,432 1,194,432
========== ==========
</TABLE>
See Accompanying Notes to Condensed Consolidated Financial Statements.
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BEVERLY HILLS BANCORP AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
<TABLE>
<CAPTION>
FOR THE SIX MONTHS ENDED
JUNE 30,
-------------------------------
1995 1994
----------- -----------
<S> <C> <C>
Income:
Interest, Dividend and Other $ 97,000 $ 74,000
Equity in Loss of Investment (22,000) (77,000)
---------- ----------
Total Income/(Loss) 75,000 (3,000)
---------- ----------
Operating Expenses:
General and Administrative 215,000 183,000
Amortization of Excess Cost of Investment 87,000 87,000
---------- ----------
Total Expenses 302,000 270,000
---------- ----------
Loss Before Minority Interests (227,000) (273,000)
Minority Interest in Subsidiaries' Losses 2,000 8,000
---------- ----------
Net Loss $ (225,000) $ (265,000)
========== ==========
Net Loss Per Share $ (.19) $ (.22)
========== ==========
Weighted Average Number of Common
Shares Outstanding 1,194,432 1,194,432
========== ==========
</TABLE>
See Accompanying Notes to Condensed Consolidated Financial Statements.
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<PAGE> 7
BEVERLY HILLS BANCORP AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
FOR THE SIX MONTHS ENDED
JUNE 30,
-------------------------------
1995 1994
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<S> <C> <C>
Cash Flows from Operating Activities:
Net Loss $ (225,000) $ (265,000)
Adjustments to Reconcile Net Loss to Net
Cash Used in Operating Activities:
Equity in Loss of Investment 22,000 77,000
Amortization of Excess Cost of Investment 87,000 87,000
Minority Interest in Subsidiaries' Losses (2,000) (8,000)
Change in Assets and Liabilities:
Decrease in Accounts Payable and
Accrued Liabilities (6,000) --
---------- ----------
Net Cash Used in Operating Activities and
Net Decrease in Cash and Cash Equivalents (124,000) (109,000)
Cash and Cash Equivalents at Beginning
of Period 1,744,000 1,958,000
---------- ----------
Cash and Cash Equivalents at End
of Period $1,620,000 $1,849,000
========== ==========
</TABLE>
See Accompanying Notes to Condensed Consolidated Financial Statements.
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BEVERLY HILLS BANCORP AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
JUNE 30, 1995
Note 1 - Condensed Consolidated Financial Statements:
The Condensed Consolidated Financial Statements included herein have
been prepared by Beverly Hills Bancorp (the "Company"), without audit, pursuant
to the rules and regulations of the Securities and Exchange Commission. Certain
information and footnote disclosures normally included in financial statements
prepared in accordance with generally accepted accounting principles have been
condensed or omitted pursuant to such rules and regulations, although the
Company believes the disclosures which are made are adequate to make the
information presented not misleading. Further, the Condensed Consolidated
Financial Statements have been prepared in accordance with generally accepted
accounting principles for interim financial information, the instructions to
Form 10-QSB and Regulation S-B (including Item 310(b) thereof) and reflect, in
the opinion of management, all adjustments necessary to present fairly the
financial position and results of operations as of and for the periods
indicated.
It is suggested that these Condensed Consolidated Financial Statements
be read in conjunction with the Consolidated Financial Statements and the Notes
thereto for the year ended December 31, 1994, included in the Beverly Hills
Bancorp Form 10-KSB Annual Report to the Securities and Exchange Commission.
Note 2 - Net Loss per Share:
Net loss per share is based on the weighted average number of common
shares outstanding during each period.
Note 3 - Notes Receivable - Sixty Eight Thousand, Inc.:
During March 1995, Sixty Eight Thousand, Inc. paid the Company the
interest due for the year ended December 31, 1994 and for the three months ended
March 31, 1995. These amounts, $38,500 and $9,625, respectively, have been
included in interest income for the three months ended March 31, 1995.
Additionally, the maturity date of these notes was extended to December 31, 1995
and the Company received an escrow payment for interest from April 1, 1995 to
December 31, 1995, of which $9,625 has been included in interest income for the
three months ended June 30, 1995.
Note 4 - Income Taxes:
The Company files consolidated federal income and combined California
franchise tax returns on a cash basis. As of December 31, 1994, the Company has
net operating loss
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<PAGE> 9
carryforwards of approximately $5,000,000 which are available to offset future
taxable income expiring from 1997 through 2009. Examination by taxing
authorities of open tax years could result in tax assessments and material
changes to the net operating loss carryforwards.
As a result of its reorganization, the Company is required to report
income for financial statement purposes as if no tax loss carryforward existed.
However, since the Company's tax status is not affected by the reorganization,
it is entitled to a reduction of federal income taxes, except for personal
holding taxes, arising from the utilization of its net operating losses incurred
prior to reorganization. Such reduction is credited to capital surplus, when
realized, rather than reflected in the income statement.
Federal statutes place significant restrictions on the utilization of
net operating loss deductions. Under present tax law, there is substantial risk
that net operating loss carryforwards will be reduced if certain conditions are
present in connection with an acquisition, merger or reorganization.
As of December 31, 1994, the deferred tax assets related to the net
operating loss carryforwards totaling approximately $2,000,000 have been fully
offset by valuation allowances, since the utilization of such amounts is
uncertain.
Note 5 - Subsequent Event:
The Company held its annual meeting on June 1, 1995. Among the
proposals the shareholders were asked to consider and act upon were resolutions
to consent to the sale by the Company of its direct and indirect holdings of the
common stock of Tigera Group, Inc. ("Tigera") for $.86 per share to Forschner
Enterprises, Inc. ("Forschner"), and to adopt a Plan of Complete Liquidation and
Dissolution ("Plan").
On May 31, 1995, the Company received a written offer from Qualis Care
L.P. ("Qualis") in which Qualis would either purchase the Tigera shares owned
directly or indirectly by the Company for $.90 per share or elect by June 23,
1995 to tender for certain shares of the Company itself.
On June 1, 1995, the shareholders voted to reject the offer from
Forschner and to adjourn until July 10, 1995 the vote on the Plan.
On June 29, 1995, the Company issued a press release stating that
Qualis had not exercised its option to tender and, on July 5, 1995, it issued a
further press release stating that Qualis had failed to purchase the Tigera
shares owned by the Company.
On July 7, 1995, the Company received a written offer from Forschner in
which Forschner offered to purchase the Tigera shares owned directly and
indirectly by the Company for $.90 per share, which offer was to expire on July
10, 1995, following the adjourned meeting of the Company shareholders. The offer
contained certain conditions, including the adoption by shareholders of the
Plan.
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<PAGE> 10
On July 10, 1995, the Company, its principal shareholder, Albert M.
Zlotnick, and five of the six remaining directors of the Company, entered into
an agreement with A-Mark Financial Corporation ("A-Mark") under which A-Mark
will acquire all of the issued and outstanding shares of the Company at a price
of $5.00 per share for a total of $5,972,160. The agreement is not subject to
any financing or similar conditions.
Mr. Zlotnick agreed to become a consultant to the Company for a period
of three years at $360,000 per year for the purpose of finding and analyzing
acquisitions for the Company, any of its subsidiaries, and Tigera. In addition,
Mr. Zlotnick has agreed to vote with the Company for three years the shares of
Tigera common stock that he owns.
At the adjourned shareholders' meeting, the shareholders voted:
1. To reject the July 7, 1995 offer from Forschner.
2. To adopt the Plan of Complete Liquidation and Dissolution if, for
any reason whatsoever, the agreement between the Company and A-Mark is not
consummated.
A-Mark is a privately held Santa Monica-based company which, through
its wholly owned subsidiaries, is primarily engaged in the businesses of
wholesaling, brokering, marketing, auctioning and financing precious metals,
rare coins, stamps, manuscripts and other collectibles.
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<PAGE> 11
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations
June 30, 1995
General
The Securities and Exchange Commission, by letter dated June
29, 1993, raised the question of whether the Company "...may fall within the
definition of an investment company under Section 3(a)(1) and 3(a)(3) of the
Investment Company Act of 1940." After subsequent communication between the
staff of the Securities and Exchange Commission and the Company, special counsel
for the Company, in a letter dated December 6, 1993, informed the Securities and
Exchange Commission that if a "letter of intent" had not been entered into
within 90 days from the date thereof, the Company "...will take the necessary
steps promptly to effect a liquidation."
Though the Company was actively seeking a merger candidate, at
a meeting of the Board of Directors of the Company held on February 11, 1994, a
Committee of three directors was appointed to prepare a report to be submitted
to the Board at a meeting to be held on March 24, 1994, "...detailing the manner
and method to be used to liquidate the Company, with specific recommendations
with respect to each asset of the Company so as to maximize shareholder value."
On March 24, 1994 and April 28, 1994, the Company's Board of Directors reviewed
a report of the Committee and authorized the Committee to continue to pursue its
detailed recommendations with respect to this matter.
On January 20, 1995, the Board of Directors called for a
Shareholders' meeting to approve, among other things, the sale by the Company of
its direct and indirect holdings of the common stock of Tigera Group, Inc.
("Tigera") to Forschner Enterprises, Inc. ("Forschner") for $4,076,400 and to
adopt a Plan of Complete Liquidation and Dissolution ("Plan"). The meeting was
held on June 1, 1995.
On May 31, 1995, the Company received a written offer from
Qualis Care L.P. ("Qualis") in which Qualis would either purchase the Tigera
shares owned directly or indirectly by the Company for $.90 per share or elect
by June 23, 1995 to tender for certain shares of the Company itself.
On June 1, 1995, the shareholders voted to reject the offer
from Forschner and to adjourn until July 10, 1995 the vote on the Plan.
On June 29, 1995, the Company issued a press release stating
that Qualis had not exercised its option to tender and, on July 5, 1995, it
issued a further press release stating that Qualis had failed to purchase the
Tigera shares owned by the Company.
On July 7, 1995, the Company received a written offer from
Forschner in which Forschner offered to purchase the Tigera shares owned
directly and indirectly by the Company for $.90 per share, which offer was to
expire on July 10, 1995, following the
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<PAGE> 12
adjourned meeting of the Company shareholders. The offer contained certain
conditions, including the adoption by shareholders of the Plan.
On July 10, 1995, the Company, its principal shareholder,
Albert M. Zlotnick, and five of the six remaining directors, entered into an
agreement with A-Mark Financial Corporation ("A-Mark") under which A-Mark will
acquire all of the issued and outstanding shares of the Company at a price of
$5.00 per share for a total of $5,972,160. The agreement is not subject to any
financing or similar conditions.
Mr. Zlotnick agreed to become a consultant to the Company for
a period of three years at $360,000 per year for the purpose of finding and
analyzing acquisitions for the Company, any of its subsidiaries, and Tigera. In
addition, Mr. Zlotnick has agreed to vote with the Company for three years the
shares of Tigera common stock that he owns.
At the adjourned shareholders' meeting, the shareholders
voted:
1. To reject the July 7, 1995 offer from Forschner.
2. To adopt the Plan of Complete Liquidation and Dissolution
if, for any reason whatsoever, the agreement between the Company and A-Mark is
not consummated.
A-Mark is a privately held Santa Monica-based company which,
through its wholly owned subsidiaries, is primarily engaged in the businesses of
wholesaling, brokering, marketing, auctioning and financing precious metals,
rare coins, stamps, manuscripts and other collectibles.
Results of Operations
Interest, dividend and other income were $31,000 and $97,000,
respectively, for the three and six months ended June 30, 1995, as compared to
$26,000 and $74,000, respectively for the three and six months ended June 30,
1994. The increase is primarily due to the receipt of an interest payment of
$57,750 in 1995 from Sixty Eight Thousand, Inc. for the interest due on the
notes receivable for 1994 and the first and second quarters of 1995, as compared
to the receipt of an interest payment of approximately $32,000 in 1994 for the
interest due on the notes receivable for 1993.
The equity in loss of investment and amortization of excess
cost of investment relate to the Company's purchase in December 1992 of 22.5% of
the outstanding shares of Tigera. The principal activity of Tigera consists of
seeking and evaluating candidates for acquisition. Tigera's net losses were
$53,000 and $99,000, respectively, for the three and six months ended June 30,
1995, as compared to $279,000 and $340,000, respectively, for the three and six
months ended June 30, 1994.
General and administrative expenses increased to $118,000 and
$215,000, respectively, for the three and six months ended June 30, 1995, from
$100,000 and $183,000, respectively, for the three and six months ended June 30,
1994. The increase is
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<PAGE> 13
primarily attributable to increased professional fees in connection with the
proposed sale of the Tigera shares and Plan of Complete Liquidation and
Dissolution and the holding of the Annual Meeting of Shareholders.
The Company files consolidated federal income and combined
California franchise tax returns on a cash basis. As of December 31, 1994, the
Company has net operating loss carryforwards of approximately $5,000,000 which
are available to offset future taxable income expiring from 1997 through 2009.
Examination by taxing authorities of open tax years could result in tax
assessments and material changes to the net operating loss carryforwards.
As a result of its reorganization, the Company is required to
report income for financial statement purposes as if no tax loss carryforward
existed. However, since the Company's tax status is not affected by the
reorganization, it is entitled to a reduction of federal income taxes, except
for personal holding taxes, arising from the utilization of its net operating
losses incurred prior to reorganization. Such reduction is credited to capital
surplus, when realized, rather than reflected in the income statement.
Federal statutes place significant restrictions on the
utilization of net operating loss deductions. Under present tax law, there is
substantial risk that net operating loss carryforwards will be reduced if
certain conditions are present in connection with an acquisition, merger or
reorganization.
Liquidity and Capital Resources
Cash and cash equivalents decreased to $1,620,000 as of June
30, 1995, compared with $1,744,000 as of December 31, 1994. The decrease is
attributable to expenditures for general and administrative expenses.
As of June 30, 1995, the Company's principal source of funds
consisted of $1,620,000 in cash and cash equivalents. Near-term capital
requirements for operating expenses and payment of liabilities are expected to
be financed through cash flow from interest income and existing cash balances.
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PART II. Other Information
Item 1. Legal Proceedings
None.
Item 2. Exhibits and Reports on Form 8-K
(a) Exhibits - None.
(b) Reports on Form 8-K: Forms 8-K relating to Item 5,
Other Events, were filed on June 6, 1995 and July 14,
1995, and both are incorporated herein by reference.
No other applicable items.
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SIGNATURE
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.
BEVERLY HILLS BANCORP
(Registrant)
By: /s/ Robert E. Kelly
------------------------------
Robert E. Kelly
Vice President,
Chief Financial Officer and
Principal Accounting Officer
Dated: August 4, 1995
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EXHIBIT INDEX
Exhibit No. Description Page No.
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EX-27 Financial Data Schedule
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> JUN-30-1995
<CASH> 1,620,000
<SECURITIES> 0
<RECEIVABLES> 450,000
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 5,587,000
<CURRENT-LIABILITIES> 94,000
<BONDS> 0
<COMMON> 1,434,000
0
0
<OTHER-SE> 4,059,000
<TOTAL-LIABILITY-AND-EQUITY> 5,587,000
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 302,000
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> (225,000)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (225,000)
<EPS-PRIMARY> 0
<EPS-DILUTED> (.19)
</TABLE>
