<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported) NOVEMBER 17, 1994
GRUBB & ELLIS COMPANY
(Exact Name of Registrant as Specified in its Charter)
DELAWARE 1-8122 94-1424307
(State or Other Jurisdiction (Commission File (I.R.S. Employer
of Incorporation) Number) Identification No.)
ONE MONTGOMERY STREET
TELESIS TOWER
SAN FRANCISCO, CALIFORNIA 94104
(Address of Principal Executive Offices) (Zip Code)
(415) 956-1990
(Registrant's Telephone Number, Including Area Code)
N/A
(Former Name or Former Address, if Changed Since Last Report)
<PAGE>
Item 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS.
In Form 8-K dated November 17, 1994, Grubb & Ellis Company reported its
sale of certain assets related to its Southern California residential brokerage
operations to Newco Realty Corporation. The following pro forma financial
statements are included in this Form 8-K in connection with such disposition.
(b) PRO FORMA FINANCIAL INFORMATION.
1) Unaudited Pro Forma Condensed Consolidated Statements of Operations for the
year ended December 31, 1993.
2) Unaudited Pro Forma Condensed Consolidated Balance Sheets as of September
30, 1994.
3) Notes to Pro Forma Condensed Consolidated Financial Statements.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
GRUBB & ELLIS COMPANY
(Registrant)
Date: December 22, 1994 By: /s/ James E. Klescewski
----------------------------
James E. Klescewski
Vice President and Controller
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Pro Forma Condensed Consolidated Financial Statements
Effective November 17, 1994, Grubb & Ellis Company (the "Company") sold certain
assets related to its Southern California residential brokerage operations to
Newco Realty Corporation (the "Buyer"). The Company had operated nine
residential brokerage offices in Southern California. Primary consideration for
the transaction was the assumption by the Buyer of the Company's obligations, in
full, under certain real property and equipment leases related to the sold
operations. In addition, the Buyer entered into an agreement to pay the Company
a portion of the real estate commissions to be received from certain pending
real estate transactions and listings and made a cash payment representing the
proration of certain prepaid expenses.
Set forth below are unaudited pro forma condensed consolidated statements of
operations of Grubb & Ellis Company for the year ended December 31, 1993, which
give effect to the disposition of its Southern California residential brokerage
operations as if the disposition had occurred on January 1, 1993. The
unaudited pro forma condensed consolidated statements of operations for the nine
months ended September 30, 1994 are not presented because there are no pro forma
adjustments. Had the disposition of the Southern California residential
brokerage operations occurred on January 1, 1994, total revenues of $1,931,000
and total expenses of $1,931,000 included in the "Other, net" expense line would
not have been recognized. Also set forth below are unaudited pro forma
condensed consolidated balance sheets as of September 30, 1994, which give
effect to the disposition as if the disposition had occurred September 30, 1994.
The pro forma adjustments are based upon available information and certain
assumptions that management believes are reasonable. The unaudited pro forma
condensed consolidated statements of operations are not necessarily indicative
of the results of the Company's operations that would have actually occurred
had the disposition taken place on the dates assumed.
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ITEM 7. PRO FORMA FINANCIAL INFORMATION
GRUBB & ELLIS COMPANY AND SUBSIDIARIES
Pro Forma Condensed Consolidated Statements of Operations
(in thousands, except per share amounts and shares)
<TABLE>
<CAPTION>
Year Ended December 31, 1993
-------------------------------------------------
Pro Forma Pro Forma
Historical Adjustments (unaudited)
---------- ----------- -----------
<S> <C> <C> <C>
Revenue:
Commercial real estate brokerage
commissions $ 141,875 $ -- $ 141,875
Residential real estate brokerage commissions 20,266 (17,152)(a) 3,114
Real estate services fees 38,590 (30)(a) 38,560
Interest income 442 -- 442
Other 551 (1)(a) 550
--------- --------- ---------
Total revenue 201,724 (17,183) 184,541
--------- --------- ---------
Cost and expenses:
Real estate brokerage and other commissions 100,250 (12,031)(b) 88,219
Selling, general and administrative 55,958 (4,504)(b) 51,454
Salaries and wages 44,780 (1,993)(b) 42,787
Interest expense 333 (11)(b) 322
Interest expense to related parties 2,255 -- 2,255
Depreciation and amortization 2,287 (104)(b) 2,183
Special charges and unusual items 13,494 -- 13,494
--------- --------- ---------
Total costs and expenses 219,357 (18,643) 200,714
--------- --------- ---------
Loss before income taxes (17,633) 1,460 (16,173)
Provision for income taxes (575) 1(c) (574)
--------- --------- ---------
Net loss $ (18,208) $ 1,461 $ (16,747)
--------- --------- ---------
--------- --------- ---------
Undeclared dividends (accretion of liquidation
preference) on preferred stock $ (2,196) $ (2,196)
Net loss applicable to common stock $ (20,404) $ 1,461 $ (18,943)
Net loss per common share and equivalents $ (5.08) $ .37 $ (4.71)
Weighted average common shares 4,019,795 4,019,795
</TABLE>
See notes to pro forma condensed consolidated financial statements.
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GRUBB & ELLIS COMPANY AND SUBSIDIARIES
Pro Forma Condensed Consolidated Balance Sheets
(in thousands)
(unaudited)
ASSETS
<TABLE>
<CAPTION>
Pro Forma
September 30, Pro Forma September 30,
1994 Adjustments 1994
------------ ----------- ------------
<S> <C> <C> <C>
Current Assets
Cash and cash
equivalents $ 10,745 $ 79(d) $ 10,824
Real estate brokerage
commissions receivable 2,401 250(d) 2,651
Real estate services
fees and other commissions
receivable 3,375 3,375
Other receivables 2,824 2,824
Prepaid and other current assets 2,764 (307)(d) 2,457
-------- -------- --------
Total current assets 22,109 22 22,131
Noncurrent Assets
Real estate brokerage
commissions receivable 457 457
Real estate investments held for
sale and real estate owned 915 915
Equipment and leasehold
improvements, net 5,160 (227)(d) 4,933
Other assets 2,631 2,631
-------- -------- --------
Total assets $ 31,272 $ (205) $ 31,067
-------- -------- --------
-------- -------- --------
</TABLE>
See notes to pro forma condensed consolidated financial statements.
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GRUBB & ELLIS COMPANY AND SUBSIDIARIES
Pro Forma Condensed Consolidated Balance Sheets, continued
(in thousands, except per share amounts and shares)
(unaudited)
<TABLE>
<CAPTION>
Pro Forma
September 30, Pro Forma September 30,
1994 Adjustments 1994
------------ ----------- ------------
<S> <C> <C> <C>
LIABILITIES
Current Liabilities
Notes payable and current portion
of long-term debt $ 506 $ 506
Current portion of notes payable and long-term
debt to related parties 6,000 6,000
Accounts payable 1,079 1,079
Compensation and employee benefits payable 8,321 8,321
Deferred commissions payable 540 540
Accrued severance obligations 1,237 1,237
Accrued office closure costs 2,553 (1,305)(e) 1,248
Accrued claims and settlements 3,715 3,715
Other accrued expenses 6,665 (79)(e) 6,586
-------- -------- --------
Total current liabilities 30,616 (1,384) 29,232
Long-Term Liabilities
Notes payable and long-term debt,
net of current portion 702 702
Notes payable and long-term debt
to related party, net of current portion 24,678 24,678
Accrued claims and settlements 13,068 13,068
Accrued severance obligations 287 287
Accrued office closure costs 2,496 2,496
Other 265 -- 265
-------- -------- --------
Total liabilities 72,112 (1,384) 70,728
-------- -------- --------
Commitments and contingencies -- -- --
-------- -------- --------
REDEEMABLE PREFERRED STOCK
12% Senior convertible preferred stock, $100.00 per
share redemption value: 137,160 shares outstanding 15,875 15,875
5% Junior convertible preferred stock, $100.00 per
share redemption value: 150,000 shares outstanding 16,147 -- 16,147
-------- -------- --------
Total redeemable preferred stock 32,022 -- 32,022
-------- -------- --------
STOCKHOLDERS' EQUITY (DEFICIT)
Preferred stock, $.01 par value:
1,000,000 shares authorized; 287,160 shares issued as
redeemable preferred stock
Common stock, $.01 par value: 25,000,000 shares
authorized; 4,434,232 shares issued and outstanding 45 45
Additional paid-in capital 47,028 47,028
Retained earnings (deficit) (119,935) 1,179(f) (118,756)
-------- -------- --------
Total stockholders' deficit (72,862) 1,179 (71,683)
-------- -------- --------
Total liabilities and stockholders' deficit $ 31,272 $ (205) $ 31,067
-------- -------- --------
-------- -------- --------
</TABLE>
See notes to pro forma condensed consolidated financial statements.
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Grubb & Ellis Company and Subsidiaries
Notes to Pro Forma Condensed Consolidated Financial Statements
(a) Revenues -
The pro forma adjustment represents actual operating revenues for the
Southern California residential brokerage operations for 1993.
(b) Costs and Expenses -
Reflects actual operating expenses for 1993 including a minor amount of
associated corporate general and administrative expenses.
(c) Provision for Income Taxes -
Due to available operating loss carryforwards, the provision for income
taxes reflects only applicable state franchise taxes.
(d) Assets -
The Buyer reimbursed the Company approximately $79,000 for certain prepaid
expenses related primarily to brochures and advertising as of September 30,
1994. Prepaid and other current assets were also reduced by $228,000
relating primarily to the reclassification of items previously reserved for
at December 31, 1993.
Net real estate brokerage commissions receivable in the amount of $250,000
relate to commissions to be received from the Buyer for certain pending
real estate transactions and listings.
Net equipment and leasehold improvements in the amount of $227,000 were
transferred to the Buyer.
(e) Liabilities -
Accrued office and closure costs were reduced by $1,305,000 reflecting the
adjustment of reserve estimates established December 31, 1993 for the
closure and or sale of the Southern California residential offices. Such
adjustment reflects an amount that would have been recorded had the sale
been transacted on September 30, 1994. The remaining reserve relates to
the remaining net lease liability exposure of these residential offices and
other non-residential offices targeted for closure. Should the Buyer
perform under the remaining lease liability that it assumed and which
extends to November 1997, remaining reserves related to the residential
offices of approximately $850,000 will be reduced in future periods.
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Grubb & Ellis Company and Subsidiaries
Notes to Pro Forma Condensed Consolidated Financial Statements, (CONTINUED)
(e) Liabilities - (CONTINUED)
Other accrued expenses were adjusted by $79,000 representing the
elimination of deferred free rent on office space and certain other
liabilities as a result of the sale.
(f) Retained Earnings (Deficit) -
The reduction to retained deficit in the amount of $1,179,000 is the net
result of the gain on the disposition of the Southern California
residential brokerage operations and the adjustment of related assets and
liabilities as of September 30, 1994, not November 17, 1994, the date of
sale.
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