<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(Mark One)
[X] Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934
For the quarterly period ended June 30, 1995
[_] Transition report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
For the transition period from ______________ to ________________
Commission file number 1-9524
BURNHAM PACIFIC PROPERTIES, INC.
-----------------------------------------------------
(Exact name of Registrant as specified in its Charter)
California 33-0204162
--------------------------------------------- --------------------------------
(State of other jurisdiction of incorporation) (IRS Employer Identification No.)
610 West Ash Street, San Diego, California 92101
------------------------------------------ -------------------------------
(Address of principal executive offices) (Zip Code)
(619) 232-2001
--------------
Registrant's telephone number, including area code
NA
----------
Former name, former address and former fiscal year if changed since last report.
Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
Registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. YES X NO
--- ---
Number of shares of the Registrant's common stock outstanding at August 10,
1995: 17,179,143
1
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PART 1 FINANCIAL INFORMATION
ITEM 1 - FINANCIAL STATEMENTS
-----------------------------
BURNHAM PACIFIC PROPERTIES, INC.
BALANCE SHEETS
JUNE 30, 1995 AND DECEMBER 31, 1994
(IN THOUSANDS, EXCEPT SHARE AMOUNTS)
(UNAUDITED)
<TABLE>
<CAPTION>
ASSETS June 30, 1995 December 31, 1994
-------------- ------------------
<S> <C> <C>
Property $390,042 $387,959
Less Accumulated Depreciation (54,613) (49,506)
-------- --------
Property-Net 335,429 338,453
Cash and Cash Equivalents 701 1,664
Receivables-Net 8,983 9,109
Other Assets 9,350 8,796
-------- --------
Total $354,463 $358,022
======== ========
LIABILITIES AND STOCKHOLDERS'
EQUITY
Liabilities:
Accounts Payable and Other Liabilities $ 1,046 $ 1,877
Accrued Interest on Convertible 943 943
Debentures
Tenant Security Deposits 913 932
Notes Payable 88,941 89,799
Convertible Debentures 25,700 25,700
Line of Credit Advances 28,843 26,000
-------- --------
Total Liabilities 146,386 145,251
-------- --------
Stockholders' Equity:
Preferred Stock, 5,000,000 Shares
Authorized; No Shares Issued or
Outstanding
Common Stock, No Par Value,
40,000,000 Shares Authorized;
17,125,168 and 16,905,276 Shares
Outstanding at June 30, 1995, and
December 31, 1994, Respectively 262,907 260,262
Notes Receivable-Stock Purchase Plan (2,460)
Dividends Paid in Excess of Net Income (52,370) (47,491)
-------- --------
Total Stockholders' Equity 208,077 212,771
-------- --------
Total $354,463 $358,022
======== ========
See the Accompanying Notes
</TABLE>
2
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BURNHAM PACIFIC PROPERTIES, INC.
STATEMENTS OF INCOME
FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 1995 AND 1994
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS)
(UNAUDITED)
<TABLE>
<CAPTION>
REVENUES THREE MONTHS ENDED SIX MONTHS ENDED
June 30, June 30, June 30, June 30,
1995 1994 1995 1994
<S> <C> <C> <C> <C>
Rents $ 12,298 $ 12,748 $ 24,750 $ 25,462
Interest 141 106 241 192
----------- ----------- ----------- -----------
Total Revenues 12,439 12,854 24,991 25,654
----------- ----------- ----------- -----------
COSTS AND EXPENSES
Interest 2,997 2,828 5,935 5,815
Rental Operating 2,867 2,903 5,812 5,936
General and Administrative 536 558 1,033 1,128
Depreciation and Amortization 3,236 2,973 6,247 5,847
----------- ----------- ----------- -----------
Total Costs and Expenses 9,636 9,262 19,027 18,726
----------- ----------- ----------- -----------
Income From Operations Before Gain on
Sale of Property
2,803 3,592 5,964 6,928
Gain on Sale of Property 1,428 1,428
----------- -----------
Net Income $ 4,231 $ 3,592 $ 7,392 $ 6,928
=========== =========== =========== ===========
Net Income Per Share $0.25 $ 0.23 $0.44 $0.45
=========== =========== =========== ===========
Dividends Paid Per Share $0.36 $ 0.35 $0.72 $0.70
=========== =========== =========== ===========
Weighted Average Number of Shares 16,996,271 15,591,293 16,951,533 15,351,291
=========== =========== =========== ===========
</TABLE>
See the Accompanying Notes
3
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BURNHAM PACIFIC PROPERTIES, INC.
STATEMENTS OF CASH FLOWS
FOR THE SIX MONTHS ENDED JUNE 30, 1995 AND 1994
(IN THOUSANDS)
(UNAUDITED)
<TABLE>
<CAPTION>
SIX MONTHS ENDED
June 30, June 30,
1995 1994
--------- ---------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net Income $ 7,392 $ 6,928
Adjustments to Reconcile Net Income to
Net Cash Provided By Operating
Activities:
Depreciation and Amortization 6,247 5,847
Gain on Sale of Property (1,428)
Changes in Other Assets and
Liabilities:
Receivables and Other Assets (1,261) (2,348)
Accounts Payable and Other (831) (396)
Tenant Security Deposits (19) (10)
-------- --------
Net Cash Provided By Operating 10,100 10,021
Activities -------- --------
CASH FLOWS FROM INVESTING ACTIVITIES
Payments for Acquisitions of Property (3,807) (2,018)
Proceeds from Sale of Property 2,619
Principal Payments on Notes Receivable 226 741
Net Cash Used For Investing Activities (962) (1,277)
-------- --------
CASH FLOWS FROM FINANCING ACTIVITIES
Borrowings Under Line of Credit 15,525 14,960
Agreements
Repayments Under Line of Credit (12,682) (16,320)
Agreements
Principal Payments of Notes Payable (858) (555)
Repurchase of Common Stock (1,255) 2,771
Repayment of Notes Receivable-Stock 64
Purchase Plan
Dividends Paid (12,271) (10,853)
Dividend Reinvestment 1,376 1,196
-------- --------
Net Cash (Used for) Provided by (10,101) (8,801)
Financing Activities -------- --------
Net Decrease in Cash and Cash (963) (57)
Equivalents
Cash and Cash Equivalents at Beginning 1,664 900
Of Period -------- --------
Cash and Cash Equivalents at End Of $ 701 $ 843
Period ======== ========
SUPPLEMENTAL DISCLOSURES OF CASH
FLOW INFORMATION
Cash Paid During Six Months For Interest $ 5,947 $ 6,156
======== ========
SUPPLEMENTAL DISCLOSURE OF NON-CASH
INVESTING AND FINANCING ACTIVITIES
Conversion of Debentures Into Common $ 0 $ 8,324
Stock ======== ========
Notes Receivable-Stock Purchase Plan $ 2,524 $ 0
======== ========
</TABLE>
See the Accompanying Notes
4
<PAGE>
BURNHAM PACIFIC PROPERTIES, INC.
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 1995, DECEMBER 31, 1994, AND JUNE 30, 1994
(UNAUDITED)
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The accompanying financial statements are unaudited but, in the opinion of
management, reflect all normal recurring adjustments necessary for a fair
presentation of operating results. These financial statements should be
read in conjunction with the latest audited financial statements of Burnham
Pacific Properties, Inc. for the year ended December 31, 1994. Certain of
the 1994 amounts have been reclassified to conform to 1995 presentation.
Dividends Per Share - Dividends of 36 cents per share were paid on June 30,
1995 to shareholders of record on June 22, 1995.
2. NET INCOME PER SHARE
Net Income per share is computed by dividing net income for the respective
periods by the weighted average number of shares outstanding during the
applicable period.
3. REGISTRATION STATEMENT
During September 1993, the Corporation filed with the Securities and
Exchange Commission a $200 million shelf registration statement on Form
S-3. This registration statement was filed for the purpose of issuing
either common stock or debentures for the purpose of repaying outstanding
debt, potential future acquisitions of commercial properties and for
general corporate purposes. As of June 30, 1995, no such issuances have
occurred.
4. RELATED PARTY TRANSACTIONS
On June 1, 1995, the Corporation's board of directors approved a stock
purchase plan (the "Plan") for directors, officers and certain employees of
the Corporation (the "Participants"). Each Participant was granted the
option to purchase a specified amount of the Corporation's common stock at
$12.50 (the closing price on the New York Stock Exchange of the
Corporation's common stock on June 1, 1995). Under terms of the Plan,
payment for the exercise of the option may be made in the form of cash or
by recourse promissory notes (the "Notes"). The Notes provide for
interest equal to the Corporation's borrowing cost most similar to the
Notes and are secured by the stock purchased (the "Pledged Stock"). Any
dividends paid on the Pledged Stock must be paid to the Corporation first
to satisfy the interest charges on the Notes and then to reduce principal
outstanding on the Notes. All purchase options expired on July 31,
5
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1995. The Corporation granted options to acquire 255,900 shares of the
Corporation's common stock. As of June 30, 1995 options were exercised to
acquire 201,900 shares. As of June 30, 1995, the Notes had an outstanding
balance of $2,460,302. Subsequent to June 30, 1995 additional options were
exercised to acquire 54,000 shares.
5. REPURCHASE OF STOCK
The Board of Directors has approved the repurchase of shares of the
Corporation's common stock. During the second quarter of 1995, the
Corporation purchased 94,500 shares of stock at an average price of $13.28.
6. SUBSEQUENT EVENTS
In July 1995, the Corporation signed a letter of intent with Mr. David
Martin and The Martin Group of Companies, Inc. pursuant to which would name
David Martin as president, chief executive officer and director of the
Corporation and under which the Corporation would acquire a portfolio of
retail properties in various degrees of development, in Northern
California, partially with common stock of the Corporation. Pursuant to a
separate letter of intent with an advisor to an institutional investor, the
Corporation would enter into a joint venture with the investor whereby the
investor would make a $50 million investment in the joint venture. In
addition, the advisor would be added to the Corporation's board of
directors.
ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
-------------------------------------------------------------------------
RESULTS OF OPERATIONS.
----------------------
(1) MATERIAL CHANGES IN FINANCIAL CONDITION
June 30, 1995 compared to December 31, 1994:
The Corporation experienced no material changes in financial condition during
the six months ended June 30, 1995.
As of June 30, 1995, other assets increased $554,000, or 6%, from December 31,
1994. This was primarily due to the straight-lining of rent in connection with
certain leases. As of June 30, 1995 approximately $1,777,000 of such accrued
rent is included in other assets.
(2) MATERIAL CHANGES IN RESULTS OF OPERATIONS
Six Months Ended June 30, 1995 and 1994:
During the six months ended June 30, 1995, net income increased $464,000, or 7%,
to $7.4 million ($0.44 per share) compared to $6.9 million ($0.45 per share) for
the same period in 1994. Funds from operations decreased $564,000, or 4%, to
$12.2 million for the 1995 period.
6
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For the six months ended June 30, 1995, compared to the same period in 1994, the
Corporation experienced a decrease in rental revenue of $712,000. This was
primarily the result of temporary vacancies at Wiegand Plaza in 1995 which were
necessary to assemble new space for the addition of T.J. Maxx as an anchor
tenant, lower estimates for percentage rents and lower tenant reimbursements
resulting from decreased expenses.
Interest expense increased $100,000 for the six months ended June 30, 1995 to
$5.9 million, as compared to $5.8 million for the same period in 1994. This was
primarily due to rising interest rates.
Depreciation and Amortization was $6.2 million for the six months ended June 30,
1995 and $5.8 million for the same period in 1994. This increase was primarily
due to construction during 1994 at Independence Square, San Diego Factory Outlet
Center and the Beverly Garland Holiday Inn.
The Corporation recognized a $1.4 million gain on the sale of A-Storage Place
during June 1995.
Three Months Ended June 30, 1995 and 1994.
During the three months ended June 30, 1995, net income increased $600,000, or
17%, to $4.2 million ($0.25 per share) compared to $3.6 million ($0.23 per
share) for the same period in 1994. Funds from operations decreased $526,000,
or 8%, to $6.0 million for the same period.
During the three months ended June 30, 1995, compared to the same period in
1994, the Corporation experienced a decrease in rental revenue of $450,000. This
was primarily the result of temporary vacancies at Wiegand Plaza in 1995 which
were necessary to assemble new space for the addition of T.J. Maxx as an anchor
tenant, lower estimates for percentage rents and lower tenant reimbursements
resulting from decreased expenses.
Interest expense increased $200,000 for the three months ended June 30, 1995 to
$3.0 million, as compared to $2.8 million for the same period in 1994. This was
primarily due to rising interest rates.
Depreciation and Amortization was $3.2 million for the three months ended June
30, 1995 and $3.0 million for the same period in 1994. This increase was
primarily due to construction during 1994 at Independence Square, San Diego
Factory Outlet Center, and the Beverly Garland Holiday Inn.
The Corporation recognized a $1.4 million gain on the sale of A-Storage Place
during June 1995.
7
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(3) LIQUIDITY AND CAPITAL RESOURCES
During March 1995, the maturities of the Corporation's revolving credit
facilities were extended from May 1995 to June 1, 1997. In addition, the $30.0
million secured facility was increased to a $40.0 million secured facility and
the $5.0 million unsecured facility was increased to a $10.0 million unsecured
facility.
As of June 30, 1995, the Corporation had $28.8 million outstanding under its
secured facility and nothing outstanding under its unsecured facility.
Outstanding borrowings resulted primarily from the October 1993 acquisition of
the Plaza at Puente Hills.
The Corporation has on file with the Securities and Exchange Commission a $200
million shelf registration statement on Form S-3. This registration statement
was filed for the purpose of issuing either common stock or debentures for the
purpose of repaying outstanding debt, potential future acquisitions of
commercial properties and for general corporate purposes. As of June 30, 1995,
no such issuances have occurred.
The Corporation expects to continue to seek additional retail property
acquisitions through the use of additional equity and/or debt securities
offerings, mortgage borrowings, and the use of bank lines of credit. Such
acquisitions could be pursuant to transactions in which the Corporation or a
Partnership controlled by it, issues securities of the Corporation or of such
Partnership to property owners in exchange for their properties. The
Corporation anticipates that cash flow from operations, cash on hand, available
borrowings under credit facilities and the use of project financing, as well as
other debt and equity alternatives, will be adequate to fund debt service
obligations, dividend payments in accordance with REIT qualification
requirements and provide the necessary capital to achieve growth.
PART II OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS:
The Corporation was not a party to any material legal proceedings during the
period covered by this report or subsequently.
ITEM 2. CHANGES IN SECURITIES:
Not Applicable.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES:
Not Applicable.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS:
On May 4, 1995, the Corporation held its regular Annual Meeting of
Shareholders. Proxies for such meeting were solicited pursuant to Regulation 14
under the Act. At such meeting, one matter was presented for vote. The matter
was the re-election of incumbent directors and there was no solicitation in
opposition to such nominees. All such incumbent directors were
8
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re-elected for a one-year term. Of 15,090,019 shares voting, 14,730,477 voted in
favor of the re-election of directors and 359,542 voted against it.
ITEM 5. OTHER INFORMATION:
Not Applicable.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K:
Not Applicable.
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.
BURNHAM PACIFIC PROPERTIES, INC.
Date: August 10, 1995 By: //Malin Burnham//
--------------- ------------------------
Malin Burnham, President
Date: August 10, 1995 By: //Jeffrey R. Fisher//
--------------- ------------------------
Jeffrey R. Fisher, Vice President/Finance
9
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> JUN-30-1995
<PERIOD-END> JUN-30-1995
<CASH> 701
<SECURITIES> 0
<RECEIVABLES> 9,723
<ALLOWANCES> 740
<INVENTORY> 0
<CURRENT-ASSETS> 19,034
<PP&E> 390,042
<DEPRECIATION> 54,613
<TOTAL-ASSETS> 354,463
<CURRENT-LIABILITIES> 2,902
<BONDS> 143,484
<COMMON> 262,907
0
0
<OTHER-SE> (54,830)
<TOTAL-LIABILITY-AND-EQUITY> 354,463
<SALES> 24,750
<TOTAL-REVENUES> 24,991
<CGS> 5,672
<TOTAL-COSTS> 5,672
<OTHER-EXPENSES> 7,280
<LOSS-PROVISION> 140
<INTEREST-EXPENSE> 5,935
<INCOME-PRETAX> 5,964
<INCOME-TAX> 0
<INCOME-CONTINUING> 5,964
<DISCONTINUED> 0
<EXTRAORDINARY> 1,428
<CHANGES> 0
<NET-INCOME> 7,392
<EPS-PRIMARY> .44
<EPS-DILUTED> .44
</TABLE>
