<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-KSB
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 1995
Commission file number 0-4559
BEVERLY HILLS BANCORP
(Exact name of registrant as specified in its charter)
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California 95-2588374
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(State of Incorporation) (I.R.S. Employer Identification No.)
100 Wilshire Boulevard, Suite 1940,
Santa Monica, California 90401
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(Address of principal (Zip Code)
executive offices)
</TABLE>
Registrant's telephone number, including area code: (310) 395-7754
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act:
Common Stock, $1.00 par value
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
----- -----
Indicate by check mark whether the registrant has filed all documents and
reports required to be filed by Section 12, 13 or 15(d) of the Securities
Exchange Act of 1934 subsequent to the distribution of securities under a plan
confirmed by a court. Yes X No
----- -----
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-B is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-KSB or any amendment to
this Form 10-KSB. [ ]
Issuer's revenues for its most recent fiscal year: None.
Aggregate market value of the Common Stock, $1.00 par value, held by
non-affiliates of the registrant at March 19, 1996, was $2,124,248.
Number of shares of Common Stock, $1.00 par value, outstanding as of March 19,
1996, was 1,194,432.
Page 1 of 22 pages.
Exhibit Index is on page E-1 hereof.
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PART I
ITEM 1. BUSINESS
Recent Activities:
On November 8, 1995, the Company sold to Forschner
Enterprises, Inc. ("Forschner") its holding of Tigera Group, Inc. ("Tigera")
shares owned directly and indirectly for $.90 per share, or a total sales price
of $4,266,000. Forschner also purchased certain shares of Tigera owned by
Albert M. Zlotnick (1,731,000 shares) and Michael S. Berlin (248,250 shares) at
$.90 per share. Tigera retained Albert M. Zlotnick as a consultant for a
period of two years at a rate of $180,000 per year. Additionally, Forschner
agreed, if requested, to either arrange for the sale in the open market or
purchase themselves within five months of the closing date, any shares of
Tigera owned by Directors of the Company who resigned as Directors of Tigera
and by an individual affiliated with them (1,638,276 shares in total) at $.90
per share.
The Company, as part of the Plan of Complete Liquidation and
Dissolution discussed in the Proxy Statement dated April 14, 1995, will make a
payment of $3.50 per share of common stock outstanding on April 30, 1996, to
shareholders of record as of April 16, 1996.
Prior to the sale to Forschner, the following events had
occurred:
The Board of Directors called for a Shareholders' meeting to
be held on June 1, 1995, to approve, among other things, the sale by the
Company of its direct and indirect holdings of the common stock of Tigera to
Forschner for $.86 per share for a total of $4,076,400 and to adopt a Plan of
Complete Liquidation and Dissolution ("Plan"). Prior to the meeting, 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 for a total of $4,266,000 or elect
by June 23, 1995 to tender for certain shares of the Company itself. At the
meeting 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 for a
total of $4,266,000, 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.
On July 10, 1995, the Company reached an agreement with A-Mark
Financial Corporation ("A-Mark") under which A-Mark was to acquire all the
issued and outstanding shares of the Company. The Company received a deposit
of $100,000 from A-Mark, which deposit was to be forfeited if the tender offer
with the terms set forth was not made or commenced within the time period
stated. Simultaneously, the Company's shareholders adopted the Plan.
On September 6, 1995, A-Mark stated that it would not go
through with the purchase and, thereby, forfeited its deposit.
History:
The history of the Company's activities is that it was
organized under the laws of California in 1969 as a one-bank holding company
that engaged in banking and related businesses through its subsidiaries. The
Company commenced a proceeding for reorganization under Chapter X of the
Bankruptcy Act in April 1974. The Bankruptcy Court thereafter appointed a
trustee who succeeded to legal title to the Company's assets. The Company's
banking operations were disposed of prior to the
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commencement of the reorganization proceeding. None of the Company's present
subsidiaries was included in the reorganization proceeding. A Joint Plan of
Reorganization was accepted by a requisite vote of the shareholders and
confirmed by the United States District Court for the Central District of
California on April 16, 1985. On August 30, 1985, an order was entered
discharging the Trustee and terminating the reorganization proceeding.
Since 1992, the Company has acquired a controlling interest in
three publicly held reporting corporations with no assets other than cash, and
a 22.5% interest in Tigera, a publicly held corporation. With respect to the
latter, affiliates of the Company had owned or controlled, directly or
indirectly, an additional 17.7% of Tigera's issued and outstanding shares. The
Company acquired its interest with respect to these corporations with the
intention of merging each such corporation with an entity having an ongoing
business.
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.
Executive Officers:
During 1995, the Company's executive officers were:
Albert M. Zlotnick, age 71, is Chairman of the Board,
President, Chief Executive, Financial and Accounting Officer of the Company.
He is a private investor and financial consultant. He is the sole general
partner of Asset Ventures I, a Pennsylvania limited partnership which owns
42.9% of the Company's outstanding common stock. Mr. Zlotnick currently serves
as Chairman of the Board of Directors of the following public companies:
P.H.C., Inc., Electronic Data Controls, Inc., Robin Industries, Inc., Bala
Cynwyd Corporation, Convention Centers, Inc., Upward Technology Corporation and
Medtech Diagnostics, Inc., and as a director of Tigera Group, Inc.,
Comprehensive Holdings Corporation, S.A., and Federated Purchaser, Inc. He has
served as a director of the Company since 1985.
Irving I. Lassoff, age 67, Secretary and Treasurer of the
Company, is President of Lassoff Group, Inc., a real estate advisory company
based in Merion, Pennsylvania, which engages in services with respect to the
management, investment and sale of commercial, industrial and residential
properties, and President of Realty Resources Corp., a company which engages in
the development and construction of residential and commercial properties. Mr.
Lassoff has held both positions for more than five years and has served as a
director of the Company since June 1993.
Robert E. Kelly, age 52, served as Vice President and Chief
Financial Officer of the Company from August 1993 to October 27, 1995.
The Company has one full-time employee and that person is not
represented by a union.
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ITEM 2. PROPERTIES
The Company shares office space with another company under the
terms of a five-year operating lease, making both companies jointly and
severally liable under the terms of the lease. The lease expires in January
1997, and the Company's share of future minimum rentals is as follows:
<TABLE>
<S> <C>
1996 $46,000
1997 4,000
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$50,000
=======
</TABLE>
Total rental expense was $46,000 for 1995 and 1994.
ITEM 3. LEGAL PROCEEDINGS
In the last week of December 1995, the Company received a
summons and complaint with respect to a California corporation, Sixty-Eight
Thousand, Inc., a debtor in bankruptcy. The complaint alleged that a payment
of interest made by check dated December 30, 1993 in the sum of $32,326.03 was
an improper transfer from the bankrupt estate. The Company has put in an
answer at this time denying the merits thereof.
During March 1996, Arrisystems, Inc. (formerly Sixty-Eight
Thousand, Inc., a Nevada corporation, which was the parent of the California
corporation) paid to the Company $38,500 to cover the aforementioned claim and
has undertaken the defense of the lawsuit. In addition, the Company sold the
notes receivable of $385,000 to an unaffiliated third party for $150,000. The
Company recorded an additional allowance for loss of $50,000 at December 31,
1995.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None.
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON STOCK AND RELATED STOCKHOLDER
MATTERS
The Company's common shares are traded in the national
over-the-counter market. The following table sets forth the high and low bid
and ask quotations for the Company's common stock, as reported by the National
Quotation Bureau, Inc.
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<CAPTION>
1995
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Bid Ask
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High Low High Low
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Quarters
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First $3 $2 1/2 $4 1/2 $4
Second 3 1/2 2 5/8 5 4
Third 3 1/ 3 5 1/2 4 1/2
Fourth 3 1/2 3 1/4 5 1/2 5 1/4
</TABLE>
<TABLE>
<CAPTION>
1994
----------------------------------------
Bid Ask
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High Low High Low
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<S> <C> <C> <C> <C>
Quarters
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First $2 $1 1/2 $2 7/8 $2 1/2
Second 2 1 1/2 2 1/2 2 1/2
Third 2 1/2 1 1/2 4 1/4 2 1/2
Fourth 2 5/8 2 1/4 4 1/4 4
</TABLE>
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As of March 19, 1996, there were approximately 1,350 holders
of record of the Company's common stock. The Company has never paid a cash
dividend.
ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATION
Results of Operations
Interest, dividend and other income were $196,000 for the year
ended December 31, 1995, as compared to $136,000 for the year ended December
31, 1994. The increase is primarily due to the receipt of an interest payment
of $77,000 in 1995 from Sixty Eight Thousand, Inc. for the interest due on the
notes receivable for 1995 and 1994, 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, which shares were sold on November 8,
1995. Tigera's net losses were $106,000 for the nine months ended September
30, 1995, as compared to $427,000 for the nine months ended September 30, 1994.
General and administrative expenses were $309,000 ($34,333 per
month) for the nine months ended September 30, 1995, and $384,000 ($32,000 per
month) for the year ended December 31, 1994. The average monthly increase is
primarily attributable to increased professional fees in connection with the
sale of the Tigera shares and Plan of Complete Liquidation and Dissolution and
the holding of the Annual Meeting of Shareholders.
On July 10, 1995, the Company reached an agreement with A-Mark
Financial Corporation ("A-Mark") under which A-Mark was to acquire all the
issued and outstanding shares of the Company. The Company received a deposit
of $100,000 from A-Mark, which deposit was to be forfeited if the tender offer
with the terms set forth was not made or commenced within the time period
stated. Simultaneously, the Company's shareholders adopted the Plan.
On September 6, 1995, A-Mark stated that it would not go
through with the purchase and, thereby, forfeited its deposit.
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:
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1. Increase in valuation of Investment in
Tigera to realizable value of $.90 per share $ 995,000
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>
The increase in valuation of the Tigera shares is based on the
sale of such shares. On November 8, 1995, the Company sold to Forschner its
holding of Tigera shares owned directly and indirectly for $.90 per share, or a
total sales price of $4,266,000. Forschner also purchased certain shares of
Tigera owned by Albert M. Zlotnick (1,731,000 shares) and Michael S. Berlin
(248,250 shares) at $.90 per share. Tigera retained Albert M. Zlotnick as a
consultant for a period of two years at a rate of
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<PAGE> 6
$180,000 per year. Additionally, Forschner agreed, if requested, to either
arrange for the sale in the open market or purchase themselves within five
months of the closing date, any shares of Tigera owned by Directors of the
Company who resigned as Directors of Tigera and by an individual affiliated
with them (1,638,276 shares in total) at $.90 per share.
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.
Liquidity and Capital Resources
Cash and cash equivalents increased to $5,086,000 as of December
31, 1995, compared with $1,744,000 as of December 31, 1994. The increase is
attributable to the sale of the Tigera shares, which was partially offset by
expenditures for general and administrative expenses and the restatement of the
investments in subsidiaries.
As of December 31, 1995, the Company's principal source of funds
consisted of $5,086,000 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, existing cash
balances and the sale of the Company's remaining assets.
ITEM 7. FINANCIAL STATEMENTS
The Consolidated Financial Statements of the Company (see Index
to Consolidated Financial Statements at Item 13) appear on pages F-3 through
F-10.
ITEM 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
None.
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PART III
ITEM 9. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
The following persons are all directors and, where indicated,
officers of the Registrant.
Michael S. Berlin, age 45, is an Associate Clinical Professor at
the Jules Stein Eye Institute of the University of California at Los Angeles,
where he has been a faculty member since 1980. He is a glaucoma specialist
with a private office associated with the Cedars-Sinai Medical Center. He is
a member of a number of professional organizations, including the American
Academy of Ophthalmology and the American Glaucoma Society.
Philip R. Hankin, age 57, has been for the past five years Group
Sales Manager for Sally Line Ltd., an operator of ferries between the United
Kingdom and the European continent.
Irving I. Lassoff, age 67, Secretary and Treasurer of the
Company, is President of Lassoff Group, Inc., a real estate advisory company
based in Merion, Pennsylvania, which engages in services with respect to the
management, investment and sale of commercial, industrial and residential
properties, and President of Realty Resources Corp., a company which engages in
the development and construction of residential and commercial properties. Mr.
Lassoff has held both positions for more than five years.
James A. Martin, III, age 47, is President and a director of
Sterling Investment Management, Inc., an investment management company based in
Atlanta, Georgia. He had been with Roe, Martin & Nieman Investment Management,
Inc., a division of Roe, Martin & Nieman, Inc., since 1985. Roe, Martin &
Nieman Investment Management, Inc. was purchased from its parent company by its
management, of which Mr. Martin was a part, in 1988 and renamed Sterling
Investment Management, Inc. in 1991.
Dr. Daniel A. Rivetti, age 35, is an Associate Professor of
Finance at the University of San Diego, School of Business, since 1986. He
previously taught at the University of Akron and Kent State University.
Albert M. Zlotnick, age 71, is Chairman of the Board, President
and Chief Executive, Financial and Accounting Officer of the Company. He is a
private investor and financial consultant. He is the sole general partner of
Asset Ventures I, a Pennsylvania limited partnership which owns 42.9% of the
common stock of Beverly Hills Bancorp. Mr. Zlotnick currently serves as
Chairman of the Board of Directors of the following public companies: P.H.C.,
Inc., Electronic Data Controls, Inc., Robin Industries, Inc., Bala Cynwyd
Corporation, Convention Centers, Inc., Upward Technology Corporation and
Medtech Diagnostics, Inc., and as a director of Tigera Group, Inc.,
Comprehensive Holdings Corporation, S.A., and Federated Purchasers, Inc.
David B. Zlotnick, age 42, has been a partner in the Tucson,
Arizona office of the law firm of Zlotnick and Thomas and has been engaged in
the private practice of law for over five years. David B. Zlotnick is the son
of Albert M. Zlotnick.
The Company has no audit, compensation or nominating committee.
The Board of Directors held four meetings during the year ended December 31,
1995. During such period, all of the directors attended 75% or more of the
total number of meetings of the Board. Directors of the Company, other than
those who hold office and are entitled to remuneration, are entitled to receive
$750 for attending each meeting of the Board and $375 for each telephonic
meeting. In addition, Board members are reimbursed the expenses of attending
such meetings.
Compliance with Section 16(a) of the Securities Exchange Act of
1934:
Based solely upon a review of Forms 3, 4 and 5 furnished to the
Company pursuant to Rule 16a-3(e) of the Securities Exchange Act of 1934,
during the most recent calendar year, the Company has not identified any person
who failed to file on a timely basis, as disclosed in the above Forms, reports
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required by Section 16(a) of the said Act during the most recent fiscal year or
prior fiscal years, except that Mr. Hankin failed to report timely his election
as a director.
For the names, ages and business experience for the last five
years of the executive officers of the Registrant, see Item 1, "Executive
Officers".
ITEM 10. EXECUTIVE COMPENSATION
The only executive officer to receive compensation in his
capacity as such officer during the three-year period ended December 31, 1995,
was Albert M. Zlotnick, who received $84,000 per year which included
reimbursement for any expenses incurred. The Company has no option plan or
other form of compensation.
ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth, as of March 19, 1996,
information regarding the securities holdings of all persons known to own
beneficially more than 5% of the Company's outstanding Common Stock. Also set
forth in the table are the shares of Common Stock beneficially owned as of that
date by each director and all officers and directors as a group. Unless
otherwise indicated, such ownership is believe to be direct, with sole voting
and investment powers.
<TABLE>
<CAPTION>
NAME AND ADDRESS SHARES BENEFICIALLY PERCENT OF
OF BENEFICIAL OWNER OWNED CLASS (C)
------------------- -------------------- -----------
<S> <C> <C>
Sirak M. Baloyan (A) 239,579(1) 20.06%
P. O. Box 1645
San Ysidro, CA 92143
Asset Ventures I (A) 512,377 42.90%
301 City Avenue
Bala Cynwyd, PA 19004
Albert M. Zlotnick (A) (B) 561,834(2) 47.04%
301 City Avenue
Bala Cynwyd, PA 19004
Michael S. Berlin, M.D. (B) 13,267(3) 1.11%
8733 Beverly Boulevard
Los Angeles, CA 90048
Philip R. Hankin (B) 0
79 Derwent Drive, Telford
Shropshire TF2 9QR
United Kingdom
Irving I. Lassoff (B) 1,630 *
314 Old Lancaster Road
Merion, PA 19066
James A. Martin, III (B) 0
3340 Peachtree Road, SE, Suite 1940
Atlanta, GA 30326
Daniel A. Rivetti (B) 0
P. O. Box 7082
Rancho Santa Fe, CA 92067
</TABLE>
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<TABLE>
<S> <C> <C>
David B. Zlotnick (B) 10,773 *
1039 North Sixth Avenue
Tucson, AZ 85705
All directors and officers
as a group (7 persons) 587,504 49.19%
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(A) 5% or more shareholders.
(B) Current Director.
(C) Based on 1,194,432 shares of common stock outstanding.
* Less than 1%.
(1) These shares are held by Merrill Lynch, Pierce, Fenner & Smith,
Inc., for the account of U.S.I. Financial Corporation, Ltd., a
Cayman Islands corporation wholly owned and controlled by the Estate
of Mr. Baloyan.
(2) Includes 512,377 shares owned by Asset Ventures I in which Mr.
Zlotnick is the sole general partner.
(3) Includes 450 shares held as nominee for Helen Berlin, his mother,
and 450 shares held as nominee for Marla Berlin, his sister.
Albert M. Zlotnick may be deemed to be a "controlling person"
of the Company for purposes of the proxy rules and regulations of the
Securities and Exchange Commission.
ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Mr. Albert M. Zlotnick, the Chairman of the Board of the
Company borrowed monies at different times from the Company totaling $250,000.
The Company received notes with interest at 6.5% per annum which were unsecured
and were originally due on December 31, 1993. The notes' due date was extended
to December 31, 1995, and the notes were re-paid during December 1995. During
March 1996, Mr. Zlotnick paid the Company $16,250, representing the interest
due on the notes for 1995.
From time to time during 1995, the Company loaned $50,000 with
interest at 10% per annum to an entity affiliated with Mr. Zlotnick, which was
re-paid prior to December 31, 1995. During January 1996, the company again
advanced this amount.
During March 1995, Sixty Eight Thousand, Inc. paid the Company
$48,125, representing the interest due for the year ended December 31, 1994 and
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
$28,875.
In the last week of December 1995, the Company received a
summons and complaint with respect to a California corporation, Sixty-Eight
Thousand, Inc., a debtor in bankruptcy. The complaint alleged that a payment
of interest made by check dated December 30, 1993 in the sum of $32,326.03 was
an improper transfer from the bankrupt estate. The Company has put in an
answer at this time denying the merits thereof.
During March 1996, Arrisystems, Inc. (formerly Sixty-Eight
Thousand, Inc., a Nevada corporation, which was the parent of the California
corporation) paid to the Company $38,500 to cover the aforementioned claim and
has undertaken the defense of the lawsuit. In addition, the Company sold the
notes receivable of $385,000 to an unaffiliated third party for $150,000. The
Company recorded an additional allowance for loss of $50,000 at December 31,
1995.
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PART IV
ITEM 13. EXHIBITS, FINANCIAL STATEMENTS AND REPORTS ON FORM 8-K
<TABLE>
<S> <C> <C>
Page
(a) Financial Statements and Exhibits: Number
--------------------------------- ------
(1) List of Financial Statements:
Report of Independent Certified Public Accountants. F-2
Statement of Net Assets in Liquidation at
December 31,1995. F-3
Statement of Changes in Net Assets in Liquidation (1995)
and Consolidated Statement of Operations (1994) for the
years ended December 31, 1995 and 1994. F-4
Consolidated Statement of Stockholders' Equity for
the year ended December 31, 1994. F-5
Statements of Cash Flows for the years ended December 31,
1995 and 1994 (Consolidated) F-6
Notes to Financial Statements. F-7 - F-10
(2) List of Exhibits: E-1
(b) Reports on Form 8-K:
-------------------
No reports were filed on Form 8-K during the fourth quarter
of the year ended December 31, 1995.
(c) Exhibits:
--------
See List of Exhibits page E-1.
(d) Signatures S-1 - S-2
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</TABLE>
F - 1
<PAGE> 11
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
To the Board of Directors and Stockholders of
Beverly Hills Bancorp
We have audited the accompanying statement of net assets in
liquidation of Beverly Hills Bancorp as of December 31, 1995, and the related
statement of changes in net assets in liquidation and cash flows for the year
then ended. In addition, we have audited the accompanying consolidated
statement of operations, stockholders' equity, and cash flows of Beverly Hills
Bancorp and Subsidiaries for the year ended December 31, 1994. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards. These standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
As discussed in Note 1 to the financial statements, the Board of
Directors of Beverly Hills Bancorp approved a plan of liquidation in 1995, and
the Company commenced liquidation shortly thereafter. As a result, the Company
changed its basis of accounting from the going concern to the liquidation
basis.
In our opinion, such financial statements present fairly, in all
material respects, (1) the net assets in liquidation of Beverly Hills Bancorp
at December 31, 1995, (2) the changes in its net assets in liquidation and cash
flows for the year then ended, and (3) the consolidated results of their
operations and their cash flows for the year ended December 31, 1994, in
conformity with generally accepted accounting principles on the bases described
in the preceding paragraph.
BDO SEIDMAN, LLP
New York, New York
February 29, 1996, except for Note 9,
which is as of March 13, 1996.
F - 2
<PAGE> 12
BEVERLY HILLS BANCORP
STATEMENT OF NET ASSETS IN LIQUIDATION
DECEMBER 31, 1995
<TABLE>
<S> <C>
ASSETS
Cash and Cash Equivalents $5,086,000
Investments in Subsidiaries 526,000
Investment in Comprehensive Holdings Corporation, S.A. 200,000
Notes Receivable - Sixty Eight Thousand, Inc. 150,000
Interest Receivable - Officer/Shareholder 16,000
----------
Total Assets 5,978,000
----------
LIABILITIES
Accounts Payable and Accrued Liabilities 54,000
Reserve for Remaining Lease Obligations 72,000
Reserve for Estimated Costs of Operation, Liquidation
and Dissolution 217,000
----------
Total Liabilities 343,000
----------
Net Assets in Liquidation $5,635,000
==========
Number of Common Shares Outstanding 1,194,432
==========
Net Assets in Liquidation Per Share $ 4.72
==========
</TABLE>
See Accompanying Notes to Financial Statements.
F - 3
<PAGE> 13
BEVERLY HILLS BANCORP
STATEMENT OF CHANGES IN NET ASSETS IN LIQUIDATION (1995)
AND CONSOLIDATED STATEMENT OF OPERATIONS (1994)
FOR THE YEARS ENDED DECEMBER 31, 1995 AND 1994
<TABLE>
<CAPTION>
1995 1994
----------- -------------
Liquidation (Going Concern
Basis Basis)
<S> <C> <C>
Income:
Interest, Dividend and Other $ 196,000 $ 136,000
Equity in Loss of Investment (29,000) (98,000)
Forfeited Deposit 100,000 ---
---------- ----------
Total Income 267,000 38,000
---------- ----------
Operating Expenses:
General and Administrative 306,000 384,000
Amortization of Excess Cost of Investment 131,000 174,000
Allowance for Loss on Notes Receivable 50,000 ---
---------- ----------
Total Expenses 487,000 558,000
---------- ----------
Loss Before Minority Interests and Estimated
Effects of Liquidation (220,000) (520,000)
Minority Interests in Subsidiaries' Losses --- 11,000
---------- ----------
Loss Before Estimated Effects of Liquidation (220,000) (509,000)
Estimated Effects of Liquidation 643,000 ---
---------- ----------
Net Income/(Loss) $ 423,000 $ (509,000)
========== ==========
Net Income/(Loss) Per Share $.35 $(.43)
========== ==========
Weighted Average Number of Common
Shares Outstanding 1,194,432 1,194,432
========== ==========
</TABLE>
See Accompanying Notes to Financial Statements.
F - 4
<PAGE> 14
BEVERLY HILLS BANCORP
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
FOR THE YEAR ENDED DECEMBER 31, 1994
<TABLE>
<CAPTION>
Common Stock
------------------------- Total
Number of Stated Capital Retained Stockholders'
Shares Value Surplus Earnings Equity
---------- --------- ----------- --------- ----------
(Going
Concern
Basis)
<S> <C> <C> <C> <C> <C>
December 31, 1993 1,194,432 $1,434,000 $3,450,000 $ 837,000 $5,721,000
Net Loss for the Year ---- ---- ---- (509,000) (509,000)
--------- ---------- ---------- --------- ----------
December, 31, 1994 1,194,432 $1,434,000 $3,450,000 $ 328,000 $5,212,000
========= ========== ========== ========= ==========
</TABLE>
During the year ended December 31, 1995, the Company changed to the
liquidation basis of accounting, as explained in Note 1. Therefore, the
presentation format used for 1994 is no longer applicable. The effects of the
changes to the liquidation basis of accounting are reflected in the Statement
of Changes in Net Assets in Liquidation for 1995.
See Accompanying Notes to Financial Statements.
F - 5
<PAGE> 15
BEVERLY HILLS BANCORP
STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 1995 AND 1994
<TABLE>
<CAPTION> 1995 1994
------------ -------------
(Liquidation (Going Concern
Basis) Basis)
(Consolidated)
<S> <C> <C>
Cash Flows from Operating Activities:
Net Income/(Loss) $ 423,000 $ (509,000)
Adjustments to Reconcile Net Income/(Loss) to
Net Cash Used in Operating Activities:
Equity in Loss of Investment 29,000 98,000
Amortization of Excess Cost of Investment 131,000 174,000
Minority Interests in Subsidiaries' Losses --- (11,000)
Allowance for Loss on Notes Receivable 50,000 ---
Gain on Sale of Holdings of Tigera Group, Inc. (995,000) ---
Estimated Costs of Liquidation 352,000 ---
Decrease in Liquidation Reserves (63,000) ---
Change in Assets and Liabilities:
Change in Presentation to Liquidation Basis (1,071,000) ---
Increase in Interest Receivable 16,000 ---
(Decrease)/Increase in Accounts Payable and
Accrued Liabilities (46,000) 34,000
----------- ----------
Net Cash Used in Operating Activities (1,174,000) (214,000)
----------- ----------
Cash Flows from Investing Activities:
Proceeds from Sale of Holdings of Tigera Group, Inc. 4,266,000 ---
Repayment of Notes Receivable - Officer/Shareholder 250,000 ---
----------- ----------
Net Cash Provided by Investment Activities 4,516,000 ---
----------- ----------
Net Increase/(Decrease) in Cash and Cash Equivalents 3,342,000 (214,000)
Cash and Cash Equivalents at Beginning of Period 1,744,000 1,958,000
----------- ----------
Cash and Cash Equivalents at End of Period $ 5,086,000 $1,744,000
=========== ==========
</TABLE>
See Accompanying Notes to Financial Statements.
F - 6
<PAGE> 16
BEVERLY HILLS BANCORP
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1995
Note 1 - Summary of Significant Accounting Policies:
Liquidation Basis of Accounting:
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.
The Board of Directors called for a Shareholder's meeting to
be held on June 1, 1995, to, among other things, adopt a Plan of Complete
Liquidation and Dissolution ("Plan"). At the meeting on June 1, 1995, the
shareholders voted to adjourn the vote on the Plan. On July 10, 1995, the
Company's shareholders adopted the Plan.
The Company has adopted the liquidation basis of accounting as
of September 30, 1995. Therefore, the Company's investments in subsidiaries
are stated at their estimated realizable value and the subsidiaries' assets and
liabilities are no longer consolidated with the Company's financial statements.
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 Consolidated Statements of Operations and of Cash Flows
for 1994 were prepared on a going concern basis of accounting which
contemplated the realization of assets and the satisfaction of liabilities in
the normal course of business. The Financial Statements for 1995 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.
F - 7
<PAGE> 17
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.
Reclassification:
Certain prior years' amounts have been reclassified to conform
to the current year presentation.
Cash and Cash Equivalents:
Cash and cash equivalents include all bank time deposits,
commercial paper and certificates of deposit with an initial maturity of three
months or less, money fund accounts and United States Treasury Bills. The
carrying value of financial instruments, including cash and cash equivalents,
approximated fair value as of December 31, 1995, because of the short maturity
of these financial instruments.
Net Income/(Loss) per Share:
Net income/(loss) per share is based on the weighted average
number of common shares outstanding during each period.
Income Taxes:
Effective January 1, 1993, the Company adopted Statement of
Financial Accounting Standards No. 109, "Accounting for Income Taxes." This
statement provides that deferred income taxes are recognized for the tax
consequences of temporary differences between the financial reporting basis and
the tax basis of the Company's assets and liabilities. The effect of this
adoption was not material.
Note 2 - Plan of Complete Liquidation and Dissolution:
On July 10, 1995, the Company reached an agreement with A-Mark
Financial Corporation ("A-Mark") under which A-Mark was to acquire all the
issued and outstanding shares of the Company. The Company received a deposit
of $100,000 from A-Mark, which deposit was to be forfeited if the tender offer
with the terms set forth was not made or commenced within the time period
stated. Simultaneously, the Company's shareholders approved the Plan discussed
in the Proxy Statement dated April 24, 1995.
On September 6, 1995, A-Mark stated that it would not go
through with the purchase and, thereby, forfeited its deposit.
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)
</TABLE>
F - 8
<PAGE> 18
<TABLE>
<S> <C> <C>
3. Reserve for Estimated Costs of Operations,
Liquidation and Dissolution (272,000)
-----------
Estimated Effects of Liquidation $ 643,000
===========
</TABLE>
- --------------------
(A) The increase in valuation of the Tigera shares
is based on the sale of such shares, as
discussed in Note 7 - Sale of Holdings of
Tigera Group, Inc.
The Company, as part of the Plan of Complete Liquidation and
Dissolution discussed herein, will make a payment of $3.50 per share of common
stock outstanding on April 30, 1996, to shareholders of record as of April 16,
1996.
Note 3 - Investments in Subsidiaries:
As stated, the Company has adopted the liquidation basis of
accounting. Therefore, the Company's investments in subsidiaries are stated at
their estimated realizable value and the subsidiaries' assets and liabilities
are no longer consolidated with the Company's financial statements.
Note 4 - Notes Receivable - Sixty Eight Thousand, Inc.:
During March 1995, Sixty Eight Thousand, Inc. paid the Company
$48,125, representing the interest due for the year ended December 31, 1994 and
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
$28,875.
In the last week of December 1995, the Company received a
summons and complaint with respect to a California corporation, Sixty-Eight
Thousand, Inc., a debtor in bankruptcy. The complaint alleged that a payment
of interest made by check dated December 30, 1993 in the sum of $32,326.03 was
an improper transfer from the bankrupt estate. The Company has put in an
answer at this time denying the merits thereof. See Note 9 - Subsequent Event.
Note 5 - Investment in Comprehensive Holdings Corporation S.A.:
The Company has an investment in Comprehensive Holdings
Corporation, S.A. ("Comprehensive"), a privately held Luxembourg holding
company. The investment represents a share interest of approximately 7% in
Comprehensive. Comprehensive, in turn, holds investments in Swiss, Belgian and
Israeli concerns.
Pro rata audited book value of Comprehensive at March 31,
1995, the date of its most recent annual report, exceeds the cost of this
investment. The Corporation is privately held and its shares are not publicly
traded. There is no known market for its shares. Transfer of ownership of the
shares is subject to prior approval of its Board of Directors.
Comprehensive has consistently paid dividends to its
shareholders, since the date of this investment, at rates ranging from 6% to
17% of share value. The dividend was approximately $20,000 in 1995 and 1994.
Note 6 - 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
F - 9
<PAGE> 19
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.
Note 7 - Sale of Holdings of Tigera Group, Inc.:
On November 8, 1995, the Company sold to Forschner
Enterprises, Inc. ("Forschner") its holding of Tigera shares owned directly and
indirectly for $.90 per share, or a total sales price of $4,266,000. Forschner
also purchased certain shares of Tigera owned by Albert M. Zlotnick (1,731,000
shares) and Michael S. Berlin (248,250 shares) at $.90 per share. Tigera
retained Albert M. Zlotnick as a consultant for a period of two years at a rate
of $180,000 per year. Additionally, Forschner agreed, if requested, to either
arrange for the sale in the open market or purchase themselves within five
months of the closing date, any shares of Tigera owned by Directors of the
Company who resigned as Directors of Tigera and by an individual affiliated
with them (1,638,276 shares in total) at $.90 per share.
Note 8 - Related Party Transaction:
Mr. Albert M. Zlotnick, the Chairman of the Board of the
Company borrowed monies at different times from the Company totaling $250,000.
The Company received notes with interest at 6.5% per annum which were unsecured
and were originally due on December 31, 1993. The notes' due date was extended
to December 31, 1995, and the notes were re-paid during December 1995. During
March 1996, Mr. Zlotnick paid the Company $16,250, representing the interest
due on the notes for 1995.
From time to time during 1995, the Company loaned $50,000 with
interest at 10% per annum to an entity affiliated with Mr. Zlotnick, which was
re-paid prior to December 31, 1995. During January 1996, the company again
advanced this amount.
Note 9 - Subsequent Event:
During March 1996, Arrisystems, Inc. (formerly Sixty-Eight
Thousand, Inc., a Nevada corporation, which was the parent of the California
corporation) paid to the Company $38,500 to cover the aforementioned claim and
has undertaken the defense of the lawsuit. In addition, the Company sold the
notes receivable of $385,000 to an unaffiliated third party for $150,000. The
Company recorded an additional allowance for loss of $50,000 at December 31,
1995.
F - 10
<PAGE> 20
INDEX OF EXHIBITS
<TABLE>
<CAPTION>
Sequentially
Exhibit Numbered
Number Description Page
- ------ ----------- --------------
<S> <C>
3.1 Restated Articles of Incorporation and By-Laws are
incorporated herein by reference from the Company's
Annual Report on Form 10-K for the year ended December
31, 1985.
3.2 Form 8-K relating to Item 2, acquisition or disposition of
assets, was filed on February 7, 1995, and is incorporated
herein by reference.
3.3 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.
12.1 Form 12b-25, filed on March 30, 1994, relating to the
Company's Annual Report on Form 10-K for the year
ended December 31, 1993, is incorporated herein by
reference.
16.1 Forms 8-K, 8-K/A, 8-K/A(2) and 8-K/A(3) relating to Item
4, changes in accountants, were filed on January 4, 1994,
January 20, 1994, February 16, 1994, and March 28,
1994, respectively, and are incorporated herein by
reference.
21.1 The Tigera Group, Inc. Annual Report on Form 10-K for
the year ended December 31, 1992, is incorporated
herein by reference.
21.2 The Tigera Group, Inc. Annual Report on Form 10-K for
the year ended December 31, 1993, is incorporated
herein by reference.
21.3 The Tigera Group, Inc. Annual Report on Form 10-KSB for
the year ended December 31, 1994, is incorporated
herein by reference.
</TABLE>
E - 1
<PAGE> 21
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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.
Date: March 26, 1996 BEVERLY HILLS BANCORP
(Registrant)
By: /s/ Albert M. Zlotnick
------------------------------------
Albert M. Zlotnick
Chairman of the Board, President,
Chief Executive, Financial and
Accounting Officer
S - 1
<PAGE> 22
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the dates indicated.
REGISTRANT: BEVERLY HILLS BANCORP
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>
Director
- ------------------------------------
(Michael S. Berlin)
/s/ Philip R. Hankin Director March 26, 1996
- ------------------------------------
(Philip R. Hankin)
/s/ Irving I. Lassoff Director, Secretary and March 26, 1996
- ------------------------------------ Treasurer
(Irving I. Lassoff)
/s/ James A, Martin, III Director March 26, 1996
- ------------------------------------
(James A. Martin, III)
/s/ Daniel A. Rivetti Director March 26, 1996
- ------------------------------------
(Daniel A. Rivetti)
/s/ Albert M. Zlotnick Director, Chairman of the Board, March 26, 1996
- ------------------------------------ President, Chief Executive,
(Albert M. Zlotnick) Financial and Accounting Officer
/s/ David B. Zlotnick Director March 26, 1996
- ------------------------------------
(David B. Zlotnick)
</TABLE>
S - 2
<PAGE> 23
EXHIBIT INDEX
-------------
Exhibit 27 Financial Data Schedule
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> DEC-31-1995
<CASH> 5,086,000
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 5,978,000
<CURRENT-LIABILITIES> 343,000
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 5,635,000
<TOTAL-LIABILITY-AND-EQUITY> 5,978,000
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 487,000
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (220,000)
<INCOME-TAX> 0
<INCOME-CONTINUING> 423,000
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 423,000
<EPS-PRIMARY> 0.35
<EPS-DILUTED> 0.35
</TABLE>
