SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
=========
Quarterly Report Under Section 13 or 15(d) of
The Securities Exchange Act Of 1934
For the Quarter ended Commission File Number
September 30, 1994 0-9811
- - ---------------------- ----------------------
BFC FINANCIAL CORPORATION
=========================
Florida 59-2022148
- - ------------------------------- ------------------------------------
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
1750 E. Sunrise Boulevard
Fort Lauderdale, Florida 33304
- - ---------------------------------------- ---------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (305) 760-5200
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 the number of shares outstanding of the issuer's classes of common
stock as of November 10, 1994.
Class Shares Outstanding
----- ------------------
Common stock, par value 2,305,682
$0.01 per share
Special Class A
Common stock, par value
$0.01 par value None outstanding
BFC Financial Corporation and Subsidiaries
Consolidated Statements of Financial Condition
September 30, 1994 and December 31, 1993
(in thousands, except share data)
(Unaudited)
ASSETS
September 30, December 31,
1994 1993
------------- -------------
Cash $ 145 78
Securities available for sale 7,815 20,644
Investment in BankAtlantic
Bancorp, Inc. 42,206 36,436
Loans receivable, net 4,931 9,179
Real estate acquired in debenture
exchanges, net 14,271 18,315
Real estate investment 3,663 -
Other assets 13,153 2,843
---------- ----------
Total assets $ 86,184 87,495
========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
---------------------------------------------------
Exchange debentures, net 17,554 35,651
Mortgages payable and other borrowing 21,957 30,367
Deferred interest on the
exchange debentures 7,860 12,049
Redeemed debenture liability 12,785 -
Other liabilities 8,207 8,602
Deferred income taxes 2,003 2,038
---------- ----------
Total liabilities 70,366 88,707
Commitments and contingencies - -
Redeemable common stock (353,478 shares in
1993)(redemption amount $299 in 1993) - 5,776
Stockholders' equity (deficit):
Preferred stock of $.01 par value;
authorized 10,000,000 shares; none issued - -
Special class A common stock of $.01 par value;
authorized 20,000,000 shares; none issued - -
Common stock of $.01 par value; authorized
20,000,000 shares; issued 2,351,021
in 1994 and 1993 17 17
Additional paid-in capital 21,025 15,264
Accumulated deficit (5,346) (21,989)
Less: treasury stock (45,339 shares for
1994 and 1993) (280) (280)
---------- ----------
Total stockholders' equity (deficit)
before BankAtlantic Bancorp net
unrealized appreciation on mortgage-
backed securities available for
sale-net of deferred income taxes 15,416 (6,988)
BankAtlantic Bancorp net unrealized
appreciation on mortgage-backed
securities available for
sale-net of deferred income taxes 402 -
---------- ----------
Total stockholders equity (deficit) 15,818 (6,988)
---------- ----------
Total liabilities and stockholders'
equity (deficit) $ 86,184 87,495
========== ==========
See notes to unaudited consolidated financial statements.
BFC Financial Corporation and Subsidiaries
Consolidated Statements of Operations
For the nine and three month periods ended September 30, 1994 and 1993
(in thousands, except per share data)
(Unaudited)
Nine Months Ended Three Months Ended
September 30, September 30,
---------------- ----------------
1994 1993 1994 1993
------- ------- ------- -------
Revenues:
Interest on loans $ 544 585 181 190
Interest and dividends on
other investment securities 553 254 149 39
Earnings on real estate
operations, net 1,542 1,909 403 509
Gain on disposition of
real estate, net 1,073 - 1,132 -
Insurance settlement 2,500 - - -
Other income, net 308 292 37 76
------- ------- ------- -------
Total revenues 6,520 3,040 1,902 814
------- ------- ------- -------
Costs and expenses:
Interest on exchange debentures 4,902 4,308 1,293 1,479
Interest on mortgages payable 1,991 2,281 614 755
Provision for loss on real estate
acquired in debenture exchange 531 - - -
Provision for loss on loans
receivable 624 - - -
Employee compensation and benefits 843 1,121 266 450
Occupancy and equipment 42 93 16 25
General and administrative 1,078 1,660 229 404
------- ------- ------- -------
Total cost and expenses 10,011 9,463 2,418 3,113
------- ------- ------- -------
(Loss) before equity in earnings of
of BankAtlantic Bancorp,
cumulative effect of change in
accounting for income taxes and
extraordinary items (3,491) (6,423) (516)
(2,299)
Equity in earnings of BankAtlantic
Bancorp 5,948 8,343 2,056 3,092
------- ------- ------- -------
Income before cumulative effect of
change in accounting for income
taxes and extraordinary items 2,457 1,920 1,540 793
Cumulative effect of change in
accounting for income taxes - (501) - -
Extraordinary items:
Gain on settlements of 1991 and
1989 Exchanges litigation 14,186 - 6,432 -
------- ------- ------- -------
Net income $ 16,643 1,419 7,972 793
======= ======= ======= =======
Income (loss) per share:
Income (loss) before cumulative
effect of change in accounting
for income taxes and
extraordinary items $ 1.20 0.82 0.75 0.36
Cumulative effect of change in
accounting for income taxes - (0.29) - -
Gain on the settlement of the
1991 and 1989 Exchange litigation 6.90 - 3.13 -
------- ------- ------- -------
Net income per share $ 8.10 0.53 3.88 0.36
======= ======= ======= =======
Weighted average number of shares
outstanding 2,056 1,702 2,056 1,702
======= ======= ======= =======
See notes to unaudited consolidated financial statements.
BFC Financial Corporation and Subsidiaries
Consolidated Statements of Stockholders' Equity (Deficit)
For the nine months ended September 30, 1994
(in thousands)
(unaudited)
Addi-
tional Accu- Trea-
Common Paid-in mulated sury
Stock Capital Deficit Stock Other Total
------- ------- ------- ------- ----- -------
Balance at
December 31, 1993 17 15,264 (21,989) (280) - (6,988)
Transfer from
redeemable
common stock - 5,776 - - - 5,776
Other - (15) - - - (15)
BankAtlantic
Bancorp net
unrealized
appreciation - - - - 402 402
Net income - - 16,643 - - 16,643
------- ------- ------- ------- ----- -------
Balance at
September 30, 1994 17 21,025 (5,346) (280) 402 15,818
====== ======= ======== ======= ===== =======
See notes to unaudited consolidated financial statements.
BFC Financial Corporation and Subsidiaries
Consolidated Statements of Cash Flow
For The Nine Months Ended September 30, 1994 and 1993
(In thousands)
(Unaudited)
September 30,
----------------
1994 1993
-------- --------
Operating activities:
Income before cumulative effect of change
in accounting for income taxes and
extraordinary items $ 2,457 1,920
Adjustments to reconcile income before
cumulative effect of change in accounting
for income taxes and extraordinary items to
net cash provided by operating activities:
Equity in earnings of BankAtlantic Bancorp (5,948) (8,343)
Depreciation 1,223 1,233
Provision for loss on loans receivable 624 -
Provision for loss on real estate acquired
in debenture exchange 531 -
Accretion on exchange debentures
and mortgage payables 110 224
Tax effect of real estate acquired
in debenture exchange (67) (73)
Amortization of discount on
loans receivable (51) (52)
Increase in deferred interest on the
exchange debentures 4,842 4,220
Increase (decrease) in other liabilities (162) 711
Accrued interest income on escrow accounts (191) -
Decrease (increase) in other assets (216) 406
Gain on disposition of real estate, net (1,073) -
-------- --------
Net cash provided by operating activities $ 2,079 246
-------- --------
Investing activities:
Proceeds from sale of real estate
acquired in debenture exchange 2,031 -
Common stock dividends received from
BankAtlantic Bancorp 565 271
Increase in securities available
for sale (7,550) (3,800)
Decrease in securities available
for sale 6,879 4,239
Increase in the 1989 Exchange escrow to fund
settlement liability (3,000) -
Principal reduction in loans receivable 186 187
Additions to office properties
and equipment (12) (29)
Purchase of real estate investment (3,663) -
Improvements to real estate acquired in
debenture exchanges (391) (446)
-------- --------
Net cash (used) provided by investing
activities $ (4,955) 422
-------- --------
Financing activities:
Increase in borrowings $ 3,500 -
Repayments of borrowings (557) (694)
-------- --------
Net cash (used) provided by financing
activities 2,943 (694)
-------- --------
Increase (decrease) in cash and
cash equivalents 67 (26)
Cash at beginning of period 78 149
-------- --------
Cash at end of period $ 145 123
======== ========
See notes to unaudited consolidated financial statements.
BFC Financial Corporation and Subsidiaries
Notes to Unaudited Consolidated Financial Statements
September 30, 1994
(1) PRESENTATION OF INTERIM FINANCIAL STATEMENTS
The accompanying unaudited consolidated financial statements have been
prepared by BFC Financial Corporation (the "Company" or "BFC") in accordance
with the accounting policies described in its 1993 Annual Report and should be
read in conjunction with the notes to the consolidated financial statements
which appear in that report. The Company became a savings bank holding
company in 1987 by acquiring shares of the common stock of BankAtlantic, A
Federal Savings Bank ("BankAtlantic"). On July 13, 1994 BankAtlantic
consummated a reorganization into a holding company structure and BankAtlantic
Bancorp, Inc. ("BBC") became a unitary savings bank holding company. The
reorganization resulted in BankAtlantic becoming a wholly-owned subsidiary of
BBC with BFC becoming a shareholder of BBC on the same proportionate basis as
was the Company's ownership in BankAtlantic. The consolidated financial
statements include the accounts of BFC Financial Corporation and its wholly
owned subsidiaries. Because the Company's ownership in BBC is less than 50%,
BBC is carried on the equity method. All significant intercompany accounts
and transactions have been eliminated in consolidation.
In the opinion of management, the accompanying financial statements contain
such adjustments as are necessary to present fairly the Company's unaudited
consolidated financial condition at September 30, 1994, the unaudited
consolidated results of operations for the nine and three month periods ended
September 30, 1994 and 1993 the unaudited consolidated cash flows for the nine
months ended September 30, 1994 and 1993. Such adjustments consisted only of
normal recurring items. The unaudited consolidated financial statements and
related notes are presented as permitted by Form 10-Q and consequently, do not
include certain information and notes necessary for a complete presentation of
financial condition, results of operations and cash flows as required by
generally accepted accounting principles for financial statements. The 1993
consolidated financial statements have been reclassified to conform to the
1994 presentation.
(2) INVESTMENTS IN BANKATLANTIC BANCORP
A reconciliation of the carrying value in BBC to BBC stockholders' equity at
September 30, 1994 and December 31, 1993 is as follows:
September 30, December 31,
1994 1993
---------- ---------
BBC stockholders' equity $ 103,335 90,652
Preferred stock of BBC (7,036) (7,036)
------- -------
BBC common stockholders' equity 96,299 83,616
Ownership percentage 48.01% 48.17%
------- -------
46,233 40,278
Purchase accounting adjustments (4,027) (3,842)
------- -------
Investment in BBC $ 42,206 36,436
======= =======
BFC also owns 5,600 shares of BBC 12.25% Series A Preferred Stock, 529 shares
of BBC 10.00% Series B Preferred Stock and 7,245 shares of BBC 8.00% Preferred
Stock. The aggregate purchase price relating to the acquisition of these
shares was approximately $143,000 and is included in trading securities, net
in the accompanying statements of financial condition.
(3) EXCHANGE TRANSACTIONS
During 1991, the Company exchanged (the "1991 Exchange") approximately $15.4
million (the "Original Principal Amount") of its subordinated unsecured
debentures (the "Debentures") for all of the assets and liabilities of three
affiliated limited partnership(s), respectively. The major assets and
liabilities of these partnerships consisted principally of eight commercial
real estate properties and related non-recourse mortgage debt.
During 1989, the Company exchanged (the "1989 Exchange") approximately $30
million (the "Original Principal Amount") of its subordinated unsecured
debentures (the "Debentures") for all of the assets and liabilities of three
affiliated limited partnerships. The major assets and liabilities of these
partnerships consisted principally of fourteen commercial real estate
properties, and related non-recourse mortgage debt.
Settlements of the litigation against the Company that arose in connection
with the 1991 Exchange was approved by the District Court in May 1994. The
settlements required BFC Financial Corporation to establish a settlement fund
equal to 81.359% of the original face amount of the debentures distributed in
connection with the 1991 Exchange to the 1991 Exchange Class Members. The
settlement fund will be available to 1991 Exchange Class Members as follows:
(a) those members still owning the BFC Financial Corporation debentures
distributed to them in connection with the 1991 Exchange ("1991 Exchange Class
Members Still Owning Debentures") are entitled to receive 81.359% of the
original face amount of the debentures still owned by them, less the
attorneys' fees and costs; (b) those members who no longer own the BFC
Financial Corporation debentures distributed to them in connection with the
1991 Exchange ("1991 Exchange Class Members No Longer Owning Debentures") are
entitled to receive 81.359% of the original face value of the BFC Financial
Corporation debentures distributed to such persons, less the attorneys' fees
and costs and less the gross proceeds received by such persons on the sale or
disposition of their BFC Financial Corporation debentures, provided, however,
that the disposition price shall not be calculated as less than 25% of the
original face amount, regardless of the amounts actually received by such
persons on the disposition of such debentures. Based upon information
obtained from the debenture transfer agent, at least 85.5% of the outstanding
debentures are owned by 1991 Exchange Class Members Still Owning Debentures.
For purposes of establishing the settlement payable, it was assumed that all
persons in the remaining 14.5% of the outstanding debentures sold their
debentures and that all such members of that group received 25% of the
original face amount of the debentures as gross proceeds on the disposition of
the debentures. Therefore, upon the District Court's approval of the 1991
Exchange settlement, the Company on June 30 1994, recorded a redeemed
debenture liability of approximately $12 million and a related gain on the
extinguishment of debt of approximately $7.8 million. If persons in the
remaining 14.5% group are ultimately deemed to belong to the group of 1991
Exchange Class Members Still Owning Debentures because their transfer of
ownership was not in fact a bona fide sale transaction, (i.e., involved a
transfer to street name or to a family member) or if the proceeds from sale
were greater than 25% of the original face amount of the debenture, the
redeemed debenture liability will be adjusted and additional gain recognized.
The components of the 1991 Exchange settlement are as follows (in thousands):
Increase in real estate acquired in debenture
exchange, net $ 6,157
Decrease in other assets (297)
Decrease in exchange debentures, net 8,834
Decrease in deferred interest on the exchange debentures 5,003
-------
19,697
Redeemed debenture liability (11,943)
-------
Gain on the 1991 Exchange settlement $ 7,754
=======
Separately, the settlement of the litigation brought against the Company in
connection with the 1989 Exchange by the plaintiffs who either voted against
the transaction or did not vote (the "Purcell Litigation") was approved by the
District Court in September 1994. Pursuant to the settlement, BFC will
establish a settlement fund equal to 56% of the original face amount of the
debentures issued to the class members in the Purcell Litigation (the"Purcell
Class"). The settlement fund will be available to the Purcell Class as
follows: (a) those members still owning the BFC Financial Corporation
debentures distributed to them in connection with the 1989 Exchange ("Purcell
Class Still Owning Debentures") are entitled to receive 56% of the original
face amount of the debentures still owned by them, less the attorneys' fees
and costs awarded by the District Court; (b) those members who no longer own
the BFC Financial Corporation debentures distributed to them in connection
with the 1989 Exchange ("Purcell Class No Longer Owning Debentures") are
entitled to receive 56% of the original face value of the BFC Financial
Corporation debentures distributed to such persons, less the attorneys' fees
and costs awarded by the District Court and less the gross proceeds received
by such persons on the sale or disposition of their BFC Financial Corporation
debentures, provided, however, that the disposition price shall not be
calculated as less than 22.5% of the original face amount, regardless of the
amounts actually received by such persons on the disposition of such
debentures. Upon the effectiveness of the settlement, the Purcell Class will
have the right to receive one-half the sums due to them pursuant to the
settlement upon surrender of the BFC debentures. No later than thirty months
after the execution of the settlement agreement and upon effectiveness of the
settlement, the Purcell Class shall have the right to receive the remaining
amount due to them, including seven percent interest on the deferred amount.
Based upon information obtained from the debenture transfer agent, at least
76.8% of the outstanding debentures are owned by Purcell Class Members Still
Owning Debentures. For purposes of establishing the settlement payable, it
was assumed that all persons in the remaining 23.2% of the outstanding
debentures sold their debentures and that all such members of that group
received 22.5% of the original face amount of the debentures as gross proceeds
on the disposition of the debentures. Therefore, upon the District Court's
approval of the Purcell Litigation settlement, the Company recorded a redeemed
debenture liability of approximately $7 million and a related gain on the
extinguishment of debt of approximately $6.4 million. If persons in the
remaining 23.2% group are ultimately deemed to belong to the group of Purcell
Class Still Owning Debentures because their transfer of ownership was not in
fact a bona fide sale transaction, (i.e., involved a transfer to street name
or to a family member) or if the proceeds from sale were greater than 22.5% of
the original face amount of the debenture, the redeemed debenture liability
will be adjusted and additional gain recognized.
In June 1994, ABC Broadcasting Companies, Inc. and William H. Willson
(collectively "ABC") attempted to intervene in the Purcell Litigation. By
attempting to intervene, ABC sought, for the purposes of defending their
conduct in a defamation lawsuit brought against them by BFC and Alan B. Levan,
to prevent the settlement of the Purcell Litigation and to obtain the
protection of the judgment by the District Court following the jury's verdict.
On June 30, 1994, the District Court entered an order denying ABC's motion to
intervene. On September 12, 1994, the District Court entered a final judgment
which approved and ratified the settlement agreement and set aside, vacated,
dissolved and nullified the December 18, 1992 jury verdict and the District
Court's December 18, 1992 judgment (the "Final Judgment"). On October 5,
1994, ABC filed an appeal of the Final Judgment and an appeal of the order
entered by the District Court denying ABC the right to intervene in the
Purcell Litigation. All parties to the Purcell Litigation believe that the
appeals filed by ABC are without merit. Nevertheless, until these appeals
have been dismissed or are finally resolved and the Final Judgment becomes
final for appellate purposes, the payment of amounts due to the Purcell Class
pursuant to the settlement will be delayed.
The components of the Purcell Class settlement are as follows (in thousands):
Increase in real estate acquired in debenture
exchange, net $ 362
Decrease in other assets (139)
Decrease in exchange debentures, net 9,356
Decrease in deferred interest on exchange debentures 4,028
-------
13,607
Redeemed debenture liability (7,175)
-------
Gain on the 1989 Exchange litigation $ 6,432
=======
The litigation brought by the plaintiffs who voted yes in connection with the
1989 Exchange (the "Meador Litigation") has also now been settled subject to
receipt of court approval. A hearing for the purpose of obtaining court
approval has been scheduled in December 1994. The settlement agreement in
the Meador Litigation contains the same financial terms as those set forth in
the description of the settlement of the Purcell Litigation. There will be no
financial statement recognition to the Meador Litigation settlement until it
has been approved by the District Court.
At September 30, 1994 the redeemed debenture liability for the 1991 Exchange
litigation and the Purcell Litigation was approximately $5.6 million and $7.2
million, respectively.
In connection with the settlements and proposed settlement of the above
litigation, the Company collected $2.5 million from its insurance carrier
under its liability coverage. Such insurance proceeds were utilized to
reimburse the Company for expenses previously incurred and expensed with
respect to the above litigation.
(4) REAL ESTATE INVESTMENT
On June 1, 1994, BFC acquired from an independent third party 23.7 acres of
unimproved land located in Fort Lauderdale, Florida for the purchase price of
$3.6 million cash.
(5) EARNINGS PER COMMON SHARE
Earnings per common share for the nine and three month periods ended September
30, 1993 was computed using the more dilutive of (a) the weighted average
number of shares outstanding, or (b) the weighted average number of shares
outstanding assuming that the shares of redeemable common stock are reacquired
for debt, from the later of their date of issuance (May 10, 1989) or the
beginning of the computation period, at the greater of the amount originally
recorded, or the then book value. Computation (b) was utilized, assuming a
rate of 12% on indebtedness for the nine and three months periods ended
September 30, 1993.
In connection with the acquisition of shares of BankAtlantic in 1989, a
shareholders agreement was entered into between the Company, the Abdo family
(including John E. Abdo, Vice Chairman of the Board) and Mr. Alan B. Levan,
the President of the Company. During the first quarter of 1994, the parties
mutually agreed to terminate the agreement with respect to the requirement to
buy and or sell shares. Therefore, during the first quarter of 1994, the
amount classified as redeemable common stock was reclassified to the
stockholders' equity (deficit) section of the Statement of Financial Condition
and earnings per share for the nine and three month periods ended September
30, 1994 was computed based upon the weighted average number of shares
outstanding.
For all periods, the shares issued in connection with a 1984 acquisition are
considered outstanding after elimination of 250,000 shares, representing the
Company's 50% ownership of the shares issued in the acquisition.
(6) CONSOLIDATED STATEMENTS OF CASH FLOWS
Other non-cash financing and investing activities for the nine months ended
September 30, 1994 and 1993 are as follows (in thousands):
September 30,
-----------------
1994 1993
-------- --------
The establishment of an escrow account to
fund a litigation settlement transferred
from securities available for sale
to other assets $ 13,500 -
The reclassification of redeemable
common stock to additional paid-in
capital due to the cancellation
of a shareholder agreement 5,776 -
The net gains associated with the settlement
of the 1991 Exchange litigation and the
Purcell Litigation 14,186 -
The increase in stockholders' equity resulting
from the Company's porportionate share of BBC's
net unrealized appreciation on
mortgage-backed securities available for sale,
less related deferred income taxes 402 -
Deferred gain on debt restructuring 356 -
The elimination of mortgages payable
associated with the disposition of real
estate acquired in debenture exchanges 3,494 954
The decrease in the redeemed debenture
liability transferred from the escrow
accounts to fund the 1991 Exchange
litigation settlements 6,333 -
Income taxes paid 20 -
Interest paid on borrowings 1,852 2,223
Subordinated debentures due from BankAtlantic
which were utilized by BFC to
exercise related warrants to purchase
common stock of BankAtlantic - 1,971
===== =====
(7) OTHER ASSETS
Included in other assets at September 30, 1994 is $10.4 million that has been
placed in escrow accounts to fund settlements of litigation against the
Company arising from the 1991 Exchange and the Purcell Litigation. Included
in other assets at September 30, 1994 and interest and dividends on other
investment securities for the nine months ended September 30, 1994 is interest
earned on these escrow accounts of approximately $191,000.
(8) DEBT AND EQUITY SECURITIES
FAS 115 was implemented by BBC prospectively on January 1, 1994 and a
reclassification of securities was not required upon implementation. At
September 30, 1994, the effect of implementing FAS 115 was to increase the
amount stated for mortgage-backed securities available for sale by $1.4
million, record related deferred income taxes of $526,000, and to reflect the
net of these amounts, $838,000, as a separate component of stockholders'
equity. The Company's financial statements reflect the Company's
proportionate share of the unrealized appreciation on mortgage-backed
securities available for sale, net of deferred income taxes, as an adjustment
to its investment in BBC and as a component of its stockholders' equity.
(9) OTHER MATTERS
The Company attempted to negotiate an extension of a $1 million balloon
payment on a note payable that matured in June 1993. However, the lender
exercised the acceleration provision in the note and in September 1994, sold
the underlying security that consisted of five wrap mortgage receivables from
affiliated limited partnerships. The sale price was $720,000. The Company
may be liable for the difference between the sale price and the original note
amount plus interest and attorneys' fees, approximately $367,000. Since the
sale price was more than the carrying value of the underlying security, there
is a gain on debt restructuring. The components of the gain are as follows
(in thousands):
Decrease in mortgage receivables, net $ (3,213)
Increase in other assets 72
Decrease in underlying mortgages payable 2,757
Reduction of note payable 720
Decrease in other liabilities 20
-------
$ 356
=======
Since the Company is still negotiating with the lender, the gain is being
deferred for financial statement purposes.
BFC Financial Corporation and Subsidiaries
Management's Discussion and Analysis of Results
of Operations and Financial Condition
General
- - -------
BFC Financial Corporation (the "Company" or "BFC") became a savings bank
holding company during 1987 by acquiring a controlling interest in
BankAtlantic, A Federal Savings Bank ("BankAtlantic"). At December 31, 1993,
the Company owned approximately 48% of the outstanding common stock of
BankAtlantic. On July 13, 1994, BankAtlantic consummated a reorganization
into a holding company structure and BankAtlantic Bancorp, Inc. ("BBC") became
a unitary savings bank holding company. The reorganization resulted in BFC
becoming a shareholder of BBC on the same proportionate basis as it was in
BankAtlantic before the reorganization. At September 30, 1994, the Company
owned approximately 48% of the outstanding common stock of BBC.
Results of Operations
- - ---------------------
For the quarter ended September 30, 1994 the Company reported net income of
approximately $8.0 million or $3.88 per share as compared to a net income of
approximately $793,000 or $.36 per share for the comparable period in 1993.
Operations for the quarter ended September 30, 1994 included an extraordinary
item of approximately $6.4 million or $3.13 per share, attributable to the
gain on the settlement of litigation relating to the exchange in 1989.
For the nine month period ended September 30, 1994 the Company reported net
income of approximately $16.6 million or $8.10 per share as compared to net
income of $1.4 million or $.53 per share for the comparable period in 1993.
Operations for 1994 included an extraordinary item of approximately $14.2
million or $6.90 per share, attributable to the gain on the settlement of
litigation relating to the 1989 and 1991 Exchange transactions (See note 3 of
notes to unaudited financial statements.) of approximately $14.2 million.
Operations for 1993 included a charge for the cumulative effect of a change in
accounting for income taxes from APB Opinion 11 to FAS 109, in the amount of
$501,000 or $.29 per share.
The increase in revenues of approximately $3.5 million for the nine month
period September 30, 1994 as compared with the same period in 1993 was
primarily due to the gain on disposition of real estate, net of approximately
$1.1 million and insurance proceeds received during the quarter ended June 30,
1994 in the amount of $2.5 million associated with the expenses incurred by
the Company in connection with the 1989 and 1991 Exchange transactions. Such
expenses were incurred and expensed by the Company in prior years.
Interest on loans decreased for the nine month period ended September 30, 1994
as compared to the same period in 1993 primarily due to the loss of a mortgage
receivable due from an affiliate in 1993 .
Interest and dividends on other investment securities increased for the nine
and three month periods ended September 30, 1994 as compared to the same
periods in 1993 primarily due to interest earned on approximately $10.4
million held in an escrow account established in connection with the
settlement of litigation.
Earnings on real estate operations, net decreased for the nine month and three
month periods ended September 30, 1994 as compared to the same periods in 1993
primarily due to the loss of a tenant that occupied approximately 81% of the
leasable area at the IBM Executive Office Building in Kingsport, Tennessee.
In May 1994, this property was foreclosed by the lender. In addition during
the quarter ended September 30, 1994 a property acquired in the 1989 Exchange
was foreclosed by the lender and two properties acquired in the 1991 exchange
were sold to an unaffiliated third party.
The gain on disposition of real estate, net of approximately $1.1 million for
the nine and three month periods ended September 30, 1994 was attributable to
the gain of approximately $981,000 on the sale of two properties acquired in
the 1991 exchange and the net gain of approximately $92,000 on the foreclosure
of two properties acquired in the 1989 exchange.
The increase in costs and expenses of approximately $548,000 for the nine
month period ended September 30, 1994, as compared to the same period in 1993
was attributable to increases in interest on exchange debentures, the
establishment of a valuation allowance of approximately $531,000 on the 12.73
acres of unimproved land located in Birmingham, Alabama and the provision for
loss on loans receivable of approximately $624,000. These increases were
offset in part by decreases in interest on mortgages payable, employee
compensation and benefits, and general and administrative expenses. The
decrease in costs and expenses of approximately $695,000 for the three month
period ended September 30, 1994 as compared to the comparable period in 1993
was attributable to decreases in interest on exchange debentures, interest on
mortgages payable, employee compensation and benefits, and general and
administrative expenses.
Interest on exchange debentures for the nine month period ended September 30,
1994 increased approximately $594,000 as compared to the same period in 1993
due to the accrual of interest on the previously deferred interest relating to
the debentures issued in 1989 and 1991 Exchange transactions and an increase
in the interest rate to 13% and 12% per annum on the debentures issued in the
1991 and 1989 Exchanges, respectively. This increase was offset by a
reduction in interest on exchange debentures for the three month period ended
September 30, 1994 as compared to the same period in 1993 as a result of the
1991 and 1989 Exchange settlements. (See note 2.)
Interest other on mortgages decreased approximately $290,000 and $141,000 for
the nine and three month periods ended September 30, 1994, respectively, as
compared to the same periods in 1993 primarily due the foreclosures of two
properties acquired in the 1989 Exchange, the sale of two properties acquired
in the 1991 Exchange and the full amortization of interest discount relating
to a mortgage that matured in 1993.
Employee compensation and benefits decreased approximately $278,000 and
$184,000 for the nine and three month periods ended September 30, 1994,
respectively, as compared to the comparable 1993 periods primarily due to a
reduction in personnel in December 1993.
Occupancy and equipment decreased approximately $51,000 and $9,000 for the
nine and three month periods ended September 30, 1994, respectively, as
compared to the comparable 1993 periods primarily due to the Company's
reduction in office space after its move to its new location in Fort
Lauderdale.
General and administrative expenses decreased approximately $582,000 and
$175,000 for the nine month periods ended September 30, 1994, respectively, as
compared to the same periods in 1993 primarily due to the reversal in 1994 of
previously accrued expenses that will not be incurred as a result of the
settlement of litigation and the write-down in 1993 of advances to an
affiliate. This decrease in general and administrative expenses was offset by
an increase of approximately $99,000 in the provision for the Hess litigation,
an increase in trustee fees and real estate taxes on land acquired in June
1994.
BBC's net income applicable to common shareholders for the nine and three
month periods ended September 30, 1994 was $12.8 million and $4.4 million,
respectively, compared to net income of $11.4 million and $3.9 million for the
nine and three month periods ended September 30, 1993, respectively. The
Company's equity in BBC's net income for the nine and three month periods
ended September 30, 1994 was $5.9 million and $2.1 million, respectively,
compared to its equity in BBC's net income of $8.3 million and $3.1 million
for the nine and three month periods ended September 30, 1993, respectively.
For the nine and three month periods ended September 30, 1994, the Company
owned approximately 48% of the outstanding common stock of BBC whereas for the
nine and three month periods ended September 30, 1993, the Company owned
77.83% of the outstanding common stock of BBC. The decline in the equity in
earnings of BBC that would have been reflected by the Company's decreased
ownership was partially offset by increased earnings by BBC.
Financial Condition
- - -------------------
BFC's total assets at September 30, 1994 and at December 31, 1993 were $86.2
million and $87.5 million, respectively, a decrease of approximately $1.3
million. The majority of the difference at September 30, 1994 as compared to
December 31, 1993 was primarily due to decreases in (i) securities available
for sale of approximately $12.8 million, (ii) loans receivable, net of
approximately $4.2 million and (iii) real estate acquired in debenture
exchanges, net of approximately $4.0 million. These decreases were offset in
part by increases in (i) other assets of approximately $10.3 million, (ii)
investment in BBC of approximately $5.8 million and (iv) real estate
investment as a result of the June 1, 1994 purchase of 23.7 acres of
unimproved land located in Fort Lauderdale, Florida for the purchase price of
$3.6 million.
The increase in other assets and decrease in securities available for sale at
September 30, 1994 was primarily attributable to the March 1994 transfer of
$13.5 million from securities available for sale to an escrow account to fund
the settlement of the 1991 Exchange litigation. Investment in BBC increased
by $5.8 million due to the equity in earnings of BBC for the nine months ended
September 30, 1994 and reduced by the common stock dividends declared in 1994.
The decrease in loans receivable, net was due to the debt restructuring as
discussed in note 9 of notes to the unaudited consolidated financial
statements. The decrease in real estate acquired in debenture exchanges, net
was primarily due to (i) the judicial transfers of the IBM Executive Office
Building in Kingsport Tennessee and Clinton Plaza Shopping Center in
Knoxville, Tennessee, (ii) the sale of Pinebrook Square in Charlotte, North
Carolina and Professional Towers in Louisville, Kentucky and (iii) the
valuation allowance of approximately $531,000 on the 12.73 acres of unimproved
land in Birmingham, Alabama. This decrease was offset by an increase of
approximately $6.5 million due to the adjustment of basis in the property as a
result of the settlement of the litigation relating to the 1991 and 1989
Exchanges.
At September 30, 1994 Exchange debentures, net decreased approximately $18.1
million and deferred interest on the Exchange debentures decreased
approximately $4.2 million due to the settlement of litigation relating to the
1991 and 1989 Exchanges. The decrease in deferred interest on the exchange
debentures was partially offset due to increases in the deferred interest on
the 1989 Exchange and 1991 Exchange debentures pursuant to their terms.
At September 30, 1994, mortgages payable and other borrowing decreased
approximately $8.4 million due to the foreclosures of two properties acquired
in the 1989 Exchange, the sale of two properties acquired in the 1991 Exchange
and the debt restructuring discussed in note 9 of notes to unaudited
consolidated financial statements.
In May 1989, Mr. Abdo, a member of the Company's Board of Directors, and
certain members of his family (the "Abdos") were issued 353,478 shares of the
Company's authorized but unissued Common Stock pursuant to the terms of a
Stock Purchase Agreement with the Company pursuant to which the Company
acquired 282,782 shares of BankAtlantic, owned by the Abdo family. In
connection with the Stock Purchase Agreement, the Company, the Abdos and Mr.
Alan B. Levan, the President of the Company, entered into a Shareholders'
Agreement pursuant to which, among other things, the Abdos had the right to
require the Company to repurchase the shares of Common Stock in the Company
which they received for the higher of the book value or the average market
value (as defined) of the shares. Pursuant to the Shareholders' Agreement,
the Company and Mr. Levan had the right to require the Abdos to sell to either
of them such shares on the same terms. During the first quarter of 1994, the
parties mutually agreed to terminate the above agreement. Therefore, the
amount classified as redeemable common stock was reclassified to additional
paid-in capital in the statement of financial condition.
Liquidity and Capital Resources
- - --------------------------------
Settlements of the litigation against the Company that arose in connection
with the 1991 Exchange was approved by the District Court in May 1994. The
settlements required BFC Financial Corporation to establish a settlement fund
equal to 81.359% of the original face amount of the debentures distributed in
connection with the 1991 Exchange to the 1991 Exchange Class Members. The
settlement fund will be available to 1991 Exchange Class Members as follows:
(a) those members still owning the BFC Financial Corporation debentures
distributed to them in connection with the 1991 Exchange ("1991 Exchange Class
Members Still Owning Debentures") are entitled to receive 81.359% of the
original face amount of the debentures still owned by them, less the
attorneys' fees and costs; (b) those members who no longer own the BFC
Financial Corporation debentures distributed to them in connection with the
1991 Exchange ("1991 Exchange Class Members No Longer Owning Debentures") are
entitled to receive 81.359% of the original face value of the BFC Financial
Corporation debentures distributed to such persons, less the attorneys' fees
and costs and less the gross proceeds received by such persons on the sale or
disposition of their BFC Financial Corporation debentures, provided, however,
that the disposition price shall not be calculated as less than 25% of the
original face amount, regardless of the amounts actually received by such
persons on the disposition of such debentures. Based upon information
obtained from the debenture transfer agent, at least 85.5% of the outstanding
debentures are owned by 1991 Exchange Class Members Still Owning Debentures.
For purposes of establishing the settlement payable, it was assumed that all
persons in the remaining 14.5% of the outstanding debentures sold their
debentures and that all such members of that group received 25% of the
original face amount of the debentures as gross proceeds on the disposition of
the debentures. Therefore, upon the District Court's approval of the 1991
Exchange settlement, the Company on June 30 1994, recorded a redeemed
debenture liability of approximately $12 million and a related gain on the
extinguishment of debt of approximately $7.8 million. If persons in the
remaining 14.5% group are ultimately deemed to belong to the group of 1991
Exchange Class Members Still Owning Debentures because their transfer of
ownership was not in fact a bona fide sale transaction, (i.e., involved a
transfer to street name or to a family member) or if the proceeds from sale
were greater than 25% of the original face amount of the debenture, the
redeemed debenture liability will be adjusted and additional gain recognized.
Separately, the settlement of the litigation brought against the Company in
connection with the 1989 Exchange by the plaintiffs who either voted against
the transaction or did not vote (the "Purcell Litigation") was approved by the
District Court in September 1994. Pursuant to the settlement, BFC will
establish a settlement fund equal to 56% of the original face amount of the
debentures issued to the class members in the Purcell Litigation (the"Purcell
Class"). The settlement fund will be available to the Purcell Class as
follows: (a) those members still owning the BFC Financial Corporation
debentures distributed to them in connection with the 1989 Exchange ("Purcell
Class Still Owning Debentures") are entitled to receive 56% of the original
face amount of the debentures still owned by them, less the attorneys' fees
and costs awarded by the District Court; (b) those members who no longer own
the BFC Financial Corporation debentures distributed to them in connection
with the 1989 Exchange ("Purcell Class No Longer Owning Debentures") are
entitled to receive 56% of the original face value of the BFC Financial
Corporation debentures distributed to such persons, less the attorneys' fees
and costs awarded by the District Court and less the gross proceeds received
by such persons on the sale or disposition of their BFC Financial Corporation
debentures, provided, however, that the disposition price shall not be
calculated as less than 22.5% of the original face amount, regardless of the
amounts actually received by such persons on the disposition of such
debentures. Upon the effectiveness of the settlement, the Purcell Class will
have the right to receive one-half the sums due to them pursuant to the
settlement upon surrender of the BFC debentures. No later than thirty months
after the execution of the settlement agreement and upon effectiveness of the
settlement, the Purcell Class shall have the right to receive the remaining
amount due to them, including seven percent interest on the deferred amount.
Based upon information obtained from the debenture transfer agent, at least
76.8% of the outstanding debentures are owned by Purcell Class Members Still
Owning Debentures. For purposes of establishing the settlement payable, it
was assumed that all persons in the remaining 23.2% of the outstanding
debentures sold their debentures and that all such members of that group
received 22.5% of the original face amount of the debentures as gross proceeds
on the disposition of the debentures. Therefore, upon the District Court's
approval of the Purcell Litigation settlement, the Company recorded a redeemed
debenture liability of approximately $7 million and a related gain on the
extinguishment of debt of approximately $6.4 million. If persons in the
remaining 23.2% group are ultimately deemed to belong to the group of Purcell
Class Still Owning Debentures because their transfer of ownership was not in
fact a bona fide sale transaction, (i.e., involved a transfer to street name
or to a family member) or if the proceeds from sale were greater than 22.5% of
the original face amount of the debenture, the redeemed debenture liability
will be adjusted and additional gain recognized.
In June 1994, ABC Broadcasting Companies, Inc. and William H. Willson
(collectively "ABC") attempted to intervene in the Purcell Litigation. By
attempting to intervene, ABC sought, for the purposes of defending their
conduct in a defamation lawsuit brought against them by BFC and Alan B. Levan,
to prevent the settlement of the Purcell Litigation and to obtain the
protection of the judgment by the District Court following the jury's verdict.
On June 30, 1994, the District Court entered an order denying ABC's motion to
intervene. On September 12, 1994, the District Court entered a final judgment
which approved and ratified the settlement agreement and set aside, vacated,
dissolved and nullified the December 18, 1992 jury verdict and the District
Court's December 18, 1992 judgment (the "Final Judgment"). On October 5,
1994, ABC filed an appeal of the Final Judgment and an appeal of the order
entered by the District Court denying ABC the right to intervene in the
Purcell Litigation. All parties to the Purcell Litigation believe that the
appeals filed by ABC are without merit. Nevertheless, until these appeals
have been dismissed or are finally resolved and the Final Judgment becomes
final for appellate purposes, the payment of amounts due to the Purcell Class
pursuant to the settlement will be delayed.
The litigation brought by the plaintiffs who voted yes in connection with the
1989 Exchange (the "Meador Litigation") has also now been settled subject to
receipt of court approval. A hearing for the purpose of obtaining court
approval has been scheduled in December 1994. The settlement agreement in
the Meador Litigation contains the same financial terms as those set forth in
the description of the settlement of the Purcell Litigation. There will be no
financial statement recognition to the Meador Litigation settlement until it
has been approved by the District Court.
In connection with certain litigation related to the purchase and sale of an
apartment complex in Indiana (See item 3. "Litigation ", Short vs Eden
United, Inc., et.al. in the Company's 1993 Annual Report), on February 25,
1994, the court on remand awarded plaintiff a judgment totaling approximately
$4.5 million, including interest. The Company is appealing the trial court's
order and has posted an appeal bond. The bond is collateralized by
approximately $4.8 million of securities available for sale. The Company had
accrued approximately $400,000 in prior years and based upon this order, at
December 31, 1993, accrued an additional $4.1 million for an aggregate $4.5
million provision for this litigation.
In addition to the litigation discussed above, an appellate court entered an
order reversing a lower court decision in favor of the Company and its
affiliates which related to the sale of units in two partnerships which
participated in the 1991 Exchange. (See Item 3. "Litigation", Martha Hess,
et.al. vs Gordon, Boula, et.al. in the Company's 1993 Annual Report.) The
effect of this decision, which the Company has appealed, is to create a
potential liability of approximately $1.9 million. At December 31, 1992 and
September 30, 1994, the company accrued $1.8 million and $99,000,
respectively. There is no requirement for a bond in connection with the
appeal of this matter.
As a result of the exchange litigation settlements discussed above, the
Company's obligation to pay interest on debentures is limited to only those
debentures held by persons that acquired debentures in an arms length
transaction prior to the date on which settlements were agreed upon ("Holders
in Due Course"), persons that opted out of the litigation or those debentures
still held by Meador Class Members. The Company's ability to meet its
obligations and to pay interest on the debentures issued in the 1989 Exchange
and the 1991 Exchange as discussed above is substantially dependent on the
earnings and regulatory capital position of BBC. However, pursuant to the
terms of the debentures issued in the 1989 Exchange and the 1991 Exchange, the
Company may elect to defer interest payments on its subordinated debentures if
management of the Company determines in its discretion that the payment of
interest would impair the operations of the Company. Additionally, until the
Company can ascertain which debentures are held by Holders in Due Course,
interest will continue to be deferred. Such deferrals do not create a
default. Since December 31, 1991, the Company has deferred interest payments
on its subordinated debentures. The Company, not considering BBC, has
sufficient current liquidity to meet its normal operating expenses, but it is
not anticipated that it will make current payments of interest on the Exchange
debentures until at least such time as the Meador Litigation is finalized and
it determines Holders in Due Course. "Litigation" in the Company's 1993 Annual
Report have been resolved.
Much of the funds required currently for the litigation described above have
already been provided. Other funds required, in addition to those currently
available, may come from operations, borrowings against BBC stock, BBC
dividends, return of excess funds placed in escrow for litigation settlements,
refund of the bond on the Short lawsuit, or sale and/or refinancing of real
estate and mortgages owned.
Pursuant to an agreement entered into on May 10, 1989 between BFC, its
affiliates and BankAtlantic's primary regulator, BFC is obligated to infuse
additional capital into BankAtlantic in the event that BankAtlantic's net
capital (as defined) falls below the lesser of the industry's minimum capital
requirement (as defined) or six percent of BankAtlantic's assets. However,
there is no assurance that BFC will be in a position to infuse additional
capital in the event it is called upon to do so. This obligation will expire
ten years from the date of the agreement, or at such earlier time as
BankAtlantic's net capital exceeds its fully phased-in capital requirement (as
defined) for a period of two consecutive years. BankAtlantic's net capital
has exceeded its fully phased in capital requirements from the end of 1992
through September 30, 1994.
An OTS regulation, effective August 1, 1990, limits all capital distributions
made by savings institutions, including cash dividends, by permitting only
certain institutions that meet specified capital levels to make capital
distributions without prior OTS approval. The regulation established a three-
tiered system, with the greatest flexibility afforded to well-capitalized
institutions. An institution that meets all of its fully phased-in capital
requirements and is not in need of more than normal supervision would be a
"Tier 1 Institution". An institution that meets its minimum regulatory
capital requirements but does not meet its fully phased-in capital
requirements would be a "Tier 2 Institution". An institution that does not
meet all of its minimum regulatory capital requirements would be "Tier 3
Institution". A Tier 1 Institution may, after prior notice but without the
approval of the OTS, make capital distributions during a calendar year up to
100% of net income earned to date during the current calendar year plus 50% of
its capital surplus ("surplus" being the amount of capital over its fully
phased-in capital requirement). Any additional capital distributions would
require prior regulatory approval. A Tier 2 Institution may, after prior
notice but without the approval of the OTS, make capital distributions of
between 50% and 75% of its net income over the most recent four-quarter period
(less any dividends previously paid during such four-quarter period) depending
on how close the institution is to its fully phased-in risk-based capital
requirement. A Tier 3 Institution would not be authorized to make any capital
distributions without the prior approval of the OTS. Notwithstanding the
provision described above, the OTS also reserves the right to object to the
payment of a dividend on safety and soundness grounds. In August and December
1993, BankAtlantic declared cash dividends of $0.06 per share, payable
September 1993 and January 1994, respectively, to its common stockholders. A
15% common stock dividend was declared in May 1993. Since April 1994, the
Company has been receiving a cash dividend of approximately $0.06 per share on
its investment in BBC.
Cash Flows
- - -----------
A summary of the Company's consolidated cash flows is as follows (in
thousands):
Nine months ended
September 30,
-------------------
Net cash provided (used) by: 1994 1993
------ ------
Operating activities $ 2,079 246
Investing activities (4,955) 422
Financing activities 2,943 (694)
------ ------
Increase (Decrease) in cash $ 67 (26)
====== ======
The changes in cash flow used or provided in operating activities are affected
by the changes in operations, which are discussed elsewhere herein, and by
certain other adjustments. These adjustments include additions to operating
cash flows for non-operating charges such as depreciation, valuation allowance
of real estate acquired in the debenture exchange and provision for loans
receivable. Cash flow from operating activities is also adjusted to reflect
the use or the providing of cash for increases and decreases, respectively, in
operating assets, decreases or increases, respectively of operating
liabilities, and increases in exchange debentures deferred interest.
Accordingly, the changes in cash flow from operating activities in the periods
indicated above has been impacted not only by the changes in operations during
the periods but also by these other adjustments.
The primary sources of funds to the Company, for the nine months ended
September 30, 1994 were revenues from property operations, collections on
mortgage receivables, increase on borrowings, the sale of real estate and
dividends from BBC. These funds were primarily utilized for operating
expenses at the properties, capital improvements at the properties, mortgage
payables on the properties, increase in escrow and general and administrative
expenses.
Investing activities for the nine months ended September 30, 1994 included
inflows of approximately $2 million from the sale of real estate acquired in
the Exchange transactions and outflows of approximately $3 million to fund an
escrow account to be utilized in connection with the settlement of the Purcell
Litigation and approximately $3.6 million utilized in connection with the
acquisition of a piece of real estate. Financing activities for the nine
months ended September 30, 1994 includes the borrowing of $3.5 million that
was utilized to fund Exchange litigation settlements.
PART II - OTHER INFORMATION
Item 1. Litigation
Cheryl and Wayne Hubbell, et al., vs. I.R.E. Advisors Series 26, Corp. et al.,
in the California Superior Court in Los Angeles, California, Case No.
BC049913. In May 1993, a motion to dismiss was filed by the plaintiffs to
dismiss all claims against all defendants relating to I.R.E. Real Estate Fund,
Ltd. - Series 25, I.R.E. Real Estate Fund, Ltd. - Series 27 and I.R.E. Real
Estate Income Fund, Ltd., whether exchange related or not. This motion was
approved by the Courts in September 1994.
Martha Hess, et. al., on behalf of themselves and all others similarly
situated, v. Gordon, Boula, Financial Concepts, Ltd., KFB Securities, Inc., et
al. In March 1994, plaintiffs amended their complaints for rescission to
reassert the class allegations through new class representatives and to
request attorneys' fees.
Short vs. Eden United, Inc., et al. in the Marion County Superior Court, State
of Indiana. Civil Division Case No. S382 0011. In April 1994, BFC Financial
Corporation posted a $4.8 million appeal bond with respect to the appeal in
this case. Such bond is collateralized by approximately $4.8 million of other
investment securities owned by the Company.
Arthur Arrighi, et al. vs. KPMG Peat Marwick, BFC Financial Corporation;
et.al., in the United States District Court for the District of New Jersey,
Case No. 92-1206-CDR. and Shirley B. Daniels, Robert S. and Ruby L. Avans,
et.al. vs. BFC Financial Corporation; et.al, in the United States District
Court for the Southern District of Florida, Fort Lauderdale Division, Case No.
92-6588-Civ-King. On May 20, 1994, the District Court approved the settlement
of these actions.
Timothy J. Chelling vs. BFC Financial Corporation, Alan B. Levan, I.R.E.
Advisors Series 21, Corp. and First Equity Corporation, U.S. District Court,
Southern District of Florida Case No. 89-1850-Civ Nesbitt. John D. Purcell
and Debra A. Purcell vs. BFC Financial Corporation, Alan B. Levan, Scott
Kranz, Frank Grieco, I.R.E. Advisors Series 23, Corp. and First Equity
Corporation, U.S. District Court, Southern District of Florida, Case No.
89-1284- Civ-Ryskamp. William A. Smith and Else M. Smith vs. BFC Financial
Corporation, Alan B. Levan and I.R.E. Advisors Series 24, Corp. and First
Equity Corporation, U.S. District Court, Southern District of Florida, Case
No. 89-1605- Civ-Marcus. In September 1994, the District Court entered a
Final Judgment approving an agreement to settle these actions pursuant to
which BFC will pay approximately fifty-six percent (56%) of the face amount of
the outstanding debentures held by plaintiffs and the debentures will be
canceled pursuant to the procedures outlined in the agreement. In October
1994, ABC Broadcasting Companies, Inc. and William Willson (collectively
"ABC") filed an appeal of the Final Judgment and an appeal of an order entered
by the District Court denying ABC the right to intervene in this matter.
Marjory Meador, et.al., vs. BFC Financial Corporation, et.al., in the Circuit
Court of the Seventeenth Judicial Circuit in and for Broward County, Florida,
Case No. 91-29892 (CA-17). In October 1994, the parties entered into an
agreement to settle these actions pursuant to which BFC will pay approximately
fifty-six percent (56%) of the face amount of the outstanding debentures held
by plaintiffs and the debentures will be canceled pursuant to the procedures
outlined in the agreement. The settlement is subject to, among other things,
court approval. Upon effectiveness, the settlement of this action will be
dismissed with prejudice and the parties will exchange releases.
Item 2 and 3.
Not applicable.
Item 4. Submissions of Matters to a Bote of Security Holders.
On September 28, 1994, Registrant held its annual shareholder meeting.
Item 5.
Not applicable
Item 6. Exhibits and Reports on Form 8-K
a) Exhibit 27 - Financial Data Schedule
b) No report on Form 8-K was filed during the quarter ended September 30,
1994.
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 thereunto duly authorized.
BFC Financial Corporation
Date: November 10, 1994 By: /s/ Glen R. Gilbert
------------------------------------
Glen R. Gilbert, Senior Vice President
and Chief Financial Officer
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