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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, 1996
/ / TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the period from to
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Commission File Number 0-4559
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BEVERLY HILLS BANCORP
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(Exact name of registrant as specified in its charter)
CALIFORNIA 95-2588374
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(State of Incorporation) (I.R.S. Employer Identification Number)
100 WILSHIRE BOULEVARD, SUITE 1940, SANTA MONICA, CA 90401
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(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 .
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Number of shares of Common Stock, $1.00 par value, outstanding as of June 30,
1996: 1,194,432.
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BEVERLY HILLS BANCORP
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
PART I. Financial Information Number
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<S> <C> <C>
Item 1. Financial Statements
Condensed Financial Statements 3-4
Condensed Statement of Net Assets
in Liquidation at June 30, 1996 5
Condensed Consolidated Statements of
Operations for the three and six
months ended June 30, 1995 6
Condensed Statements of Cash Flows
for the six months ended June 30,
1996 and 1995 7
Notes to Condensed Financial Statements 8-10
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations 11-12
PART II. Other Information
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Item 1. Legal Proceedings 13
Item 6. Exhibits and Reports on Form 8-K 13
SIGNATURE 14
</TABLE>
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PART I. Financial Information
Item 1. Beverly Hills Bancorp -- Financial Statements
Condensed Financial Statements
(Unaudited)
The Condensed 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 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 net assets and results of operations as of and for the periods
indicated.
It is suggested that these Condensed Financial
Statements be read in conjunction with the Financial Statements and the Notes
thereto for the year ended December 31, 1995, included in the Beverly Hills
Bancorp Form 10-KSB Annual Report to the Securities and Exchange Commission.
The Company has adopted the liquidation basis of
accounting as of September 30, 1995. This basis of accounting is considered
appropriate when the Company has adopted a Plan of Complete Liquidation and
Dissolution (the "Plan") and liquidation appears imminent, the Company is no
longer viewed as a going concern and the net realizable value of the Company's
assets are reasonably determinable. Under this basis of accounting, assets and
liabilities are stated at their estimated net realizable value and estimated
costs of liquidating the Company are provided to the extent they are reasonably
determinable.
The Plan provides for the liquidation of all of the
Company's assets. In connection with the adoption of the liquidation basis of
accounting, the Company has accrued what management believes are reasonable
estimates of realizable value and costs to liquidate its remaining assets. The
actual realizable value and costs may differ significantly depending on a
number of factors, including the length of time it takes to dispose of and the
amount received for the remaining assets and the holding costs associated
therewith. Estimated costs to liquidate are reflected in the Statement of Net
Assets as "Reserve for Remaining Lease Obligations" and "Reserve for Estimated
Costs of Operation, Liquidation and Dissolution."
The Condensed Consolidated Statements of Operations
and of Cash Flows for the three and six months ended June 30, 1995 were
prepared on a going concern basis of accounting which contemplated the
realization of assets and the satisfaction of
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liabilities in the normal course of business. The Condensed Financial
Statements for the three and six months ended June 30, 1996 were prepared on
the liquidation basis of accounting. The effects of adopting the Plan are
explained in Note 2 - Plan of Complete Liquidation and Dissolution.
The Condensed Financial Statements for the three and
six months ended June 30, 1996 are not necessarily indicative of results to be
expected for the entire year ending December 31, 1996.
See Item 2 - "Management's Discussion and Analysis of
Financial Condition and Results of Operations."
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BEVERLY HILLS BANCORP
CONDENSED STATEMENT OF NET ASSETS IN LIQUIDATION
(UNAUDITED)
JUNE 30, 1996
<TABLE>
<S> <C>
ASSETS
Cash and Cash Equivalents $ 1,760,000
Other Assets 25,000
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Total Assets 1,785,000
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LIABILITIES
Reserve for Estimated Costs of Operation, Liquidation
and Dissolution 247,000
Reserve for Remaining Lease Obligations 48,000
Other Liabilities 35,000
------------
Total Liabilities 330,000
------------
Net Assets in Liquidation $ 1,455,000
============
Number of Common Shares Outstanding 1,194,432
============
Net Assets in Liquidation Per Share $1.22
============
</TABLE>
See Accompanying Notes to Condensed Financial Statements.
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BEVERLY HILLS BANCORP AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 1995
<TABLE>
<CAPTION>
Three Months Six Months
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<S> <C> <C>
Income:
Interest, Dividend and Other $ 31,000 $ 97,000
Equity in Loss of Investment (12,000) (22,000)
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Total Income 19,000 75,000
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Operating Expenses:
General and Administrative 118,000 215,000
Amortization of Excess Cost of Investment 43,000 87,000
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Total Expenses 161,000 302,000
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Loss Before Minority Interests (142,000) (227,000)
Minority Interest in Subsidiaries' Losses 1,000 2,000
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Net Loss $ (141,000) $ (225,000)
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Net Loss Per Share $(.12) $(.19)
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Weighted Average Number of Common
Shares Outstanding 1,194,432 1,194,432
============ ============
</TABLE>
See Accompanying Notes to Condensed Financial Statements.
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BEVERLY HILLS BANCORP
CONDENSED STATEMENTS OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
FOR THE SIX MONTHS ENDED
JUNE 30,
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1996 1995
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(Liquidation Basis) (Going Concern Basis)
(Consolidated)
<S> <C> <C>
Cash Flows from Operating Activities:
Net Loss $ --- $ (225,000)
Adjustments to Reconcile Net Loss to Net
Cash Used in Operating Activities:
Equity in Loss of Investment --- 22,000
Amortization of Excess Cost of Investment --- 87,000
Minority Interest in Subsidiaries' Losses --- (2,000)
Change in Assets and Liabilities:
Decrease in Investments 726,000 ---
Decrease in Notes and Interest Receivable 166,000 ---
Increase in Other Assets (25,000) ---
Decrease in Accounts Payable and
Accrued Liabilities (54,000) (6,000)
Decrease in Reserve for Remaining
Lease Obligations (24,000) ---
Increase in Reserve for Estimated Costs of
Operation, Liquidation and Dissolution 30,000 ---
Increase in Other Liabilities 35,000 ---
Payment under Plan of Complete
Liquidation and Dissolution (4,180,000) ---
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Net Cash Used in Operating Activities and
Net Decrease in Cash and Cash Equivalents (3,326,000) (124,000)
Cash and Cash Equivalents at Beginning
of Period 5,086,000 1,744,000
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Cash and Cash Equivalents at End
of Period $ 1,760,000 $ 1,620,000
=============== ============
</TABLE>
See Accompanying Notes to Condensed Financial Statements.
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BEVERLY HILLS BANCORP
NOTES TO CONDENSED FINANCIAL STATEMENTS
(UNAUDITED)
JUNE 30, 1996
Note 1 - Basis of Presentation:
The Condensed 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 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 net assets and
results of operations as of and for the periods indicated.
It is suggested that these Condensed Financial Statements be read
in conjunction with the Financial Statements and the Notes thereto for the year
ended December 31, 1995, included in the Beverly Hills Bancorp Form 10-KSB
Annual Report to the Securities and Exchange Commission.
The Company has adopted the liquidation basis of accounting as of
September 30, 1995. This basis of accounting is considered appropriate when
the Company has adopted a Plan of Complete Liquidation and Dissolution (the
"Plan") and liquidation appears imminent, the Company is no longer viewed as a
going concern and the net realizable value of the Company's assets are
reasonably determinable. Under this basis of accounting, assets and
liabilities are stated at their estimated net realizable value and estimated
costs of liquidating the Company are provided to the extent they are reasonably
determinable.
The Plan provides for the liquidation of all of the Company's
assets. In connection with the adoption of the liquidation basis of
accounting, the Company has accrued what management believes are reasonable
estimates of realizable value and costs to liquidate its remaining assets. The
actual realizable value and costs may differ significantly depending on a
number of factors, including the length of time it takes to dispose of and the
amount received for the remaining assets and the holding costs associated
therewith. Estimated costs to liquidate are reflected in the Statement of Net
Assets as "Reserve for Remaining Lease Obligations" and "Reserve for Estimated
Costs of Operation, Liquidation and Dissolution."
The Condensed Consolidated Statements of Operations and of Cash
Flows for the three and six months ended June 30, 1995 were prepared on a going
concern basis of accounting which contemplated the realization of assets and
the satisfaction of liabilities in the
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normal course of business. The Condensed Financial Statements for the three
and six months ended June 30, 1996 were prepared on the liquidation basis of
accounting. The effects of adopting the Plan are explained in Note 2 - Plan of
Complete Liquidation and Dissolution.
Use of Estimates:
The preparation of financial statements in conformity with
generally accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates. There
were no changes in the estimates for the three and six months ended June 30,
1996.
Reclassification:
Certain prior years' amounts have been reclassified to conform to
the current year presentation.
Note 2 - Plan of Complete Liquidation and Dissolution:
Estimated Effects of Liquidation:
The net adjustment at September 30, 1995 required to convert from
the going concern (historical cost) basis to the liquidation basis of
accounting was an increase in the carrying value of net assets of $643,000
which was included in the Statement of Net Assets and of Changes in Net Assets.
This increase is a result of recording estimated realizable values and costs,
which costs may be subject to change as facts and circumstances change, as
follows:
<TABLE>
<S> <C> <C>
1. Increase in valuation of Investment in
Tigera Group, Inc. ("Tigera") to realizable
value of $.90 per share $ 995,000 (A)
2. Reserve for Remaining Lease Obligation (80,000)
3. Reserve for Estimated Costs of Operations,
Liquidation and Dissolution (272,000)
------------
Estimated Effects of Liquidation $ 643,000
============
</TABLE>
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(A) The increase in valuation of the Tigera shares is based on
the sale of such shares on November 8, 1995.
The Company, as part of the Plan of Complete Liquidation and
Dissolution discussed in the Proxy Statement dated April 14, 1995, made a
payment of $3.50 per share of common stock outstanding on April 30, 1996, to
shareholders of record as of April 16, 1996.
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Note 3 - Net Loss per Share:
Net loss per share is based on the weighted average number of
common shares outstanding.
Note 4 - Income Taxes:
The Company files consolidated federal income and combined
California franchise tax returns on a cash basis. As of December 31, 1995,
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.
As of December 31, 1995, 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.
Due to the Plan of Complete Liquidation and Dissolution, it is
anticipated that the Company will not fully utilize these net operating loss
carryforwards.
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Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations
June 30, 1996
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, and
consisted primarily of an interest payment of $57,750 from Sixty Eight
Thousand, Inc. for the interest due on notes receivable for 1994 and the first
and second quarter of 1995.
The equity in loss of investment and amortization of
excess cost of investment for the three and six months ended June 30, 1995,
relate to the Company's prior ownership of 22.5% of the outstanding shares of
Tigera which had net losses of $53,000 and $99,000, respectively, for the three
and six months ended June 30, 1995.
General and administrative expenses were $118,000 and
$215,000, respectively, for the three and six months ended June 30, 1995. They
consisted of day-to-day operational costs and professional fees in connection
with the sale of the Tigera shares and Plan of Complete Liquidation and
Dissolution.
The Company files consolidated federal income and combined
California franchise tax returns on a cash basis. As of December 31, 1995, 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.
As of December 31, 1995, 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.
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Due to the Plan of Complete Liquidation and Dissolution,
it is anticipated that the Company will not fully utilize these net operating
loss carryforwards.
Liquidity and Capital Resources
Cash and cash equivalents decreased to $1,760,000 as
of June 30, 1996, compared with $5,086,000 as of December 31, 1995. The
decrease is attributable to payments for various liabilities and the payment
under the Plan of Complete Liquidation and Dissolution which were partially
offset by the receipt of interest income, the collection of notes and interest
receivable and receipts regarding the sale of the Company's investments.
As of June 30, 1996, the Company's principal source
of funds consisted of $1,760,000 in cash and cash equivalents. Near-term
capital requirements for the payment of liabilities and liquidating dividends
are expected to be financed through cash flow from interest income and existing
cash balances.
The Company, as part of the Plan of Complete Liquidation
and Dissolution discussed in the Proxy Statement dated April 14, 1995, made a
payment of $3.50 per share of common stock outstanding on April 30, 1996, to
shareholders of record as of April 16, 1996.
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PART II. Other Information
Item 1. Legal Proceedings
None.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits: None.
(b) Report on Form 8-K: None.
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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/ Albert M. Zlotnick
---------------------------------------
Albert M. Zlotnick
Chairman of the Board, President
and Chief Executive, Financial
Dated: August 9, 1996 and Accounting Officer
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EXHIBIT INDEX
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Exhibit 27 Financial Data Schedule
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> JUN-30-1996
<CASH> 1,760,000
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 1,785,000
<CURRENT-LIABILITIES> 330,000
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 1,455,000
<TOTAL-LIABILITY-AND-EQUITY> 1,785,000
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 0
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
