<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
[ 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
OR
[ ]
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 1-9496
Boddie-Noell Properties, Inc.
(Exact name of registrant as specified in its charter)
Delaware 56-1574675
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
3710 One First Union Center, Charlotte, NC 28202
(Address of principal executive offices)
(Zip Code)
704/333-1367
(Registrant s telephone number, including area code)
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 ___
APPLICABLE ONLY TO CORPORATE ISSUERS:
Indicate the number of shares outstanding of each of the issuers
classes of common stock, as of August 4, 1995 (the latest practicable
date).
Common Stock, $0.01 par value 3,016,740
(Class) (Number of shares)
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Item No. Page No.
<S> <C> <C>
PART I - Financial Information
1 Financial Statements 1
2 Management s Discussion and Analysis of Financial Condition
and Results of Operations 7
PART II - Other Information
1 Legal Proceedings 12
4 Submission of Matters to a Vote of Security Holders 12
5 Other Information 13
6 Exhibits and Reports on Form 8-K 13
</TABLE>
<PAGE>
PART I
Item 1. Financial Statements
BODDIE-NOELL PROPERTIES, INC.
Balance Sheets
<TABLE>
<CAPTION>
June 30, December 31,
1995 1994
(Unaudited)
<S> <C> <C>
Assets
Real estate investments at cost:
Restaurant properties $ 43,205,075 $ 43,205,075
Apartment properties 54,936,320 54,723,503
98,141,395 97,928,578
Less accumulated depreciation (7,911,617) (6,827,337)
90,229,778 91,101,241
Cash and cash equivalents 569,706 952,363
Rent and other receivables 483,447 493,306
Other assets, net of applicable amortization:
Intangible related to property management operations, net 2,449,175 2,318,335
Deferred financing costs, net 518,747 466,217
Deferred acquisition costs 316,093 255,999
Prepaid expenses and other assets 578,220 366,753
Total assets $ 95,145,166 $ 95,954,214
Liabilities and Shareholders' Equity
Mortgage and other notes payable $ 59,829,277 $ 59,827,256
Notes payable to affiliates 7,056,300 7,056,300
Deferred acquisition and financing costs payable - 91,000
Accounts payable and accrued expenses 866,646 785,886
Escrowed security deposits and deferred revenue 178,330 225,863
Total liabilities 67,930,553 67,986,305
Shareholders' equity:
Common stock, $.01 par value, 100,000,000 shares authorized,
3,005,240 shares issued and outstanding at June 30, 1995,
2,990,990 shares issued and outstanding at December 31, 1994 30,052 29,910
Additional paid-in capital 33,643,783 33,452,611
Dividends distributed in excess of net income (6,459,222) (5,514,612)
Total shareholders' equity 27,214,613 27,967,909
Total liabilities and shareholders' equity $ 95,145,166 $ 95,954,214
</TABLE>
<PAGE>
BODDIE-NOELL PROPERTIES, INC.
Statements of Operations
(Unaudited)
<TABLE>
<CAPTION>
Three months ended June 30, Six months ended June 30,
1995 1994 1995 1994
<S> <C> <C> <C> <C>
Revenues
Restaurant rental income $ 1,262,353 $ 1,319,668 $ 2,336,724 $ 2,460,682
Apartment rental income 2,082,136 665,233 4,143,565 1,216,073
Management fees 176,697 - 387,300 -
Interest and other income 6,842 37,017 13,621 38,563
3,528,028 2,021,918 6,881,210 3,715,318
Expenses
Depreciation 547,572 291,114 1,094,868 572,502
Amortization 97,637 38,100 207,758 75,228
Apartment operations 605,230 222,946 1,222,581 391,100
Property management fees - 33,097 - 61,359
Administrative 383,838 105,375 747,590 210,750
Advisory fees - 51,709 - 95,734
Interest 1,345,487 518,483 2,672,043 963,312
Write-off of deferred loan costs
at refinancing 22,139 - 22,139 -
3,001,903 1,260,824 5,966,979 2,369,985
Net income $ 526,125 $ 761,094 $ 914,231 $ 1,345,333
Net income per share $ 0.18 $ 0.27 $ 0.31 $ 0.47
Weighted average number
of shares outstanding 3,002,113 2,850,000 2,996,603 2,850,000
</TABLE>
<PAGE>
BODDIE-NOELL PROPERTIES, INC.
Statements of Cash Flows
(Unaudited)
<TABLE>
<CAPTION>
Six months ended June 30,
1995 1994
<S> <C> <C>
Cash flows from operating activities
Net income $ 914,231 $ 1,345,333
Adjustments to reconcile net income to
net cash provided by operations:
Depreciation and amortization 1,302,626 647,730
Write-off of deferred loan costs 22,139 -
Changes in operating assets and liabilities:
Rent and other receivables 9,859 (58,461)
Prepaid expenses and other assets (214,277) 121,197
Accounts payable and accrued expenses (11,260) 106,481
Escrowed security deposits and deferred revenue (55,311) 20,950
Net cash provided by operating activities 1,968,007 2,183,230
Cash flows from investing activities
Acquisitions of apartment properties - (9,366,719)
Additions to apartment properties (179,483) (2,653)
Payment of deferred acquisition and financing costs (314,361) (637,971)
Net cash used in investing activities (493,844) (10,007,343)
Cash flows from financing activities
Payment of dividends (1,858,841) (1,767,000)
Proceeds from notes payable 10,675,000 13,750,000
Principal payments on notes payable (10,672,979) (4,058,172)
Net cash provided by (used in) financing activities (1,856,820) 7,924,828
Increase (decrease) in cash and cash equivalents (382,657) 100,715
Cash and cash equivalents at beginning of period 952,363 121,530
Cash and cash equivalents at end of period $ 569,706 $ 222,245
</TABLE>
<PAGE>
BODDIE-NOELL PROPERTIES, INC.
Statements of Shareholders' Equity
For the Six Months ended June 30, 1995
(Unaudited)
<TABLE>
<CAPTION>
Dividends
Additional distributed
Common Stock paid-in in excess of
Shares Amount capital net income Total
<S> <C> <C> <C> <C> <C>
Balance at December 31, 1994 2,990,990 $ 29,910 $ 33,452,611 $ (5,514,612) $27,967,909
Net income, 1st quarter 388,106 388,106
Common stock issued 3,712 37 49,611 49,648
Dividends paid ($.31 per share) (927,207) (927,207)
Balance at March 31, 1995 2,994,702 29,947 33,502,222 (6,053,713) 27,478,456
Net income, 2nd quarter 526,125 526,125
Common stock issued 10,538 105 141,561 141,666
Dividends paid ($.31 per share) (931,634) (931,634)
Balance at June 30, 1995 3,005,240 $ 30,052 $ 33,643,783 $ (6,459,222) $ 27,214,613
</TABLE>
<PAGE>
BODDIE-NOELL PROPERTIES, INC.
Notes to Financial Statements
June 30, 1995
(Unaudited)
Note 1. Interim financial statements
The accompanying financial statements of Boddie-Noell Properties,
Inc. (the Company) have not been audited by independent accountants,
except for the balance sheet at December 31, 1994. In the opinion of
the Company s management, all adjustments (consisting of normal
recurring accruals) necessary for a fair presentation of the financial
position and results of operations for the periods presented have been
included.
Certain notes and other information have been condensed or omitted
from the interim financial statements presented in this Quarterly Report
on Form 10-Q. Therefore, these financial statements should be read in
conjunction with the Company s 1994 Annual Report on Form 10-K.
The results for the first two quarters of 1995 are not necessarily
indicative of future financial results.
Note 2. Preferred Stock
In June, 1995 the Company s shareholders approved amendments to the
Company s bylaws and certificate of incorporation to authorize the
issuance of ten million shares of preferred stock, issuable in series
the characteristics of which would be set by the Board of Directors. As
of June 30, 1995 no such shares have been issued.
Note 3. Notes Payable
During the quarter ended June 30, 1995, the Company obtained an
amendment which extends its current variable rate revolving line of
credit ( credit facility ) to April, 1996 (previously June, 1995) and
increases the amount of the facility to $24 million (from $20 million).
During the quarter ended June 30, 1995 the Company applied $4,500,000
proceeds of draws against its credit facility to the final $4,000,000
installment on a 8.625 percent note payable and the refinancing of
Harris Hill apartments debt. In addition, $6,175,000 proceeds of an
8.55 percent fixed rate note payable were applied to pay off a variable
rate note balance of approximately $6,472,000 related to Harris Hill
apartments.
In conjunction with these transactions, the Company paid and
recorded $142,000 in loan costs and wrote-off approximately $22,000 in
unamortized loan costs previously deferred.
Notes payable consist of the following at June 30, 1995 and December
31, 1994:
<TABLE>
<CAPTION>
June 30, December 31,
1995 1994
<S> <C> <C>
Variable rate revolving line of credit, originally at $15,000,000
increased to $24,000,000, due April, 1996. Interest is charged and
payable monthly, at the Company s option, at LIBOR plus 1.625%,
floating CD rate plus 1.625%, or prime rate. At June 30, 1995 the
weighted average rate in effect was 7.6875%. The Company is obligated
to pay quarterly a fee equal to 0.25% per annum on the unused amount.
Lender has the right to require Boddie-Noell Enterprises, Inc. to
purchase 24 restaurants in the event of a default. $22,750,000 $18,250,000
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
June 30, December 31,
1995 1994
<S> <C> <C>
Fixed rate notes payable comprised of four loans as of June 30, 1995
(three loans as of December 31, 1994), payable in monthly installments
totaling approximately $292,000 including principal and interest at
rates ranging from 7.86% to 8.55%, with maturities in 2000 (balloon of
approximately $12,500,000) through 2020. The notes are secured by
deeds of trust and assignments of rents of four apartment properties. 37,079,277 31,077,256
8.625% note, payable in equal annual installments plus interest payable
monthly. The note was secured by a mortgage on 14 restaurant
properties and assignment of the master lease as it related to such
properties. The note was retired June, 1995. - 4,000,000
Variable rate mortgage note, payable in monthly principal installments
based on a 25-year amortization schedule (approximately $7,000) plus
interest at 30-day LIBOR plus 1.85% (7.85% at December 31, 1994). The
note was retired May, 1995. - 6,500,000
Variable rate notes payable to affiliates comprised of two loans due
May, 1999, interest at the lower of 30-day LIBOR plus 1.5% (7.5625% at
June 30, 1995) or 8%, payable quarterly. Liability for these notes was
assumed at the acquisition of BT Venture Corporation.
7,056,300 7,056,300
$66,885,577 $66,883,556
</TABLE>
In addition, Boddie-Noell Enterprises, Inc. has extended to the Company
an unsecured revolving line of credit up to $2,000,000. The line of
credit bears interest at a variable rate equal to a bank s prime rate.
At June 30, 1995 and December 31, 1994 there was no obligation
outstanding.
As of June 30, 1995 scheduled principal payments are approximately as
follows: 1995 - $224,000; 1996 - $23,226,000; 1997 - $517,000; 1998 -
$561,000; 1999 - $7,665,000; thereafter - $34,693,000. Loan agreements
related to the credit facility, as amended, include covenants and
restrictions relating to, among other things, certain minimum ratios of
dividend and debt coverage and application of equity issue or loan
proceeds.
Note 4. Subsequent declaration of dividend
On July 18, 1995 the Company declared a cash dividend of $0.31 per
share, which will be paid on August 15, 1995 to shareholders of record
on August 1, 1995.
<PAGE>
Item 2. Managements Discussion and Analysis of Financial Condition and
Results of Operations
Overview
Boddie-Noell Properties, Inc., formerly known as Boddie-Noell Restaurant
Properties, is a Delaware corporation organized in April, 1987. From
its inception through 1992, the Company s investment strategy was
limited to the purchase and ownership of 47 restaurant properties leased
on a triple net basis to Boddie-Noell Enterprises, Inc. ( BNE ). During
this period the Company operated as an advised real estate investment
trust ( REIT ). In 1993 the Company embarked on a plan to diversify its
assets and to reorganize as a self-administered, self-managed REIT with
an emphasis on apartment properties. The Company acquired its first
apartment property in June, 1993, and in 1994 the Company acquired three
apartment communities and BT Venture Corporation ( BTVC ), a fully
integrated apartment management and development company. As a result of
these acquisitions, the Company now owns 47 restaurant properties and
four apartment communities containing a total of 1,130 apartments. The
Company also manages three shopping centers and an additional ten
apartment communities containing a total of 1,947 apartments. The
Company now operates as a self-administered, self-managed REIT with over
80 employees experienced in the acquisition, development, management and
finance of apartment communities.
The following discussion should be read in conjunction with the
financial statements and notes thereto included in this Quarterly Report
on Form 10-Q and with the Company s audited financial statements and
notes thereto included in the Company s 1994 Annual Report on Form 10-K.
Results of Operations
Revenues. For the quarter ended June 30, 1995 the Company s revenues
totaled $3,528,000, increasing 74 percent over second quarter, 1994.
Year-to-date revenues totaled $6,881,000, increasing 85 percent over the
first six months of 1994. The increase is primarily attributable to the
addition of three apartment communities and property management
activities since June, 1994. The Company s revenues come from two
primary sources - restaurant rental payments and apartment rental
income.
Restaurant rental payments are comprised of minimum rent ($288,286 per
month) and percentage rent (equal to 9.875 percent of net sales of the
related restaurant properties less minimum rent payments). In 1994 the
Company began to experience negative prior year comparisons for
restaurant rental revenue. This continued through the second quarter of
1995. Restaurant rental revenue for the second quarter was $1,262,000
and $2,337,000 through the first six months of 1995, a decline of 4.3
percent for the quarter and 5.3 percent for the year-to-date period.
Same-store restaurant sales for locations open for the full periods in
both 1994 and 1995 declined by 8.1 percent for the quarter and 7.6
percent for the year-to-date period. The difference in trends in rental
revenue and same-store sales can be attributed to the closure of several
stores for remodeling at various times during the first and second
quarters of 1994. All stores were open during the first and second
quarters of 1995.
The decline in restaurant rental revenue appears to be the result of
intense competition and price discounting in the quick- service food
industry. Hardee s, the franchisor of the Company s restaurant
properties, and Boddie-Noell Enterprises, the operator of the
restaurants, have begun to implement a number of actions to address this
situation. These actions include, but are not limited to, the
implementation of an aggressive new advertising campaign, new
promotional programs, and menu changes and additions. It is too early
to judge the impact of these actions.
To date, the addition of apartment properties and improvement in
apartment operations have more than offset the negative impact of
declining restaurant rental revenue. Management is cautiously
optimistic that the corrective actions implemented by Hardees and
Boddie-Noell Enterprises will have a positive impact on restaurant
rental revenue and that continued improvement in apartment operations
will lessen the impact of any decline in restaurant rental revenue.
Apartment rental revenue totaled $2,082,000 in second quarter, 1995 and
$4,144,000 through six months of 1995 (compared to $665,000 and
$1,216,000 in 1994, respectively), reflecting the addition of Oakbrook,
Latitudes, and
<PAGE>
Harris Hill apartments in June, October, and December, 1994,
respectively. Paces Commons, the only apartment property that was owned
throughout the entire first six months of 1994, provided revenue of
$1,193,000 through six months of 1995, an increase of 6 percent over
prior year.
Summary amounts related to apartment properties occupancy are as
follows:
<TABLE>
<CAPTION>
Paces
Harris Hill Latitudes Oakbrook Commons Overall
Number of units: 184 448 162 336 1,130
<S> <C> <C> <C> <C> <C>
Quarter ended June 30, 1995
Average physical occupancy 98.1% 93.9% 95.8% 90.5% 93.8%
Average economic occupancy 98.2% 94.3% 96.3% 89.3% 93.8%
Average monthly revenue
per unit $667 $616 $745 $659 $655
Six months ended June 30, 1995
Average physical occupancy 96.9% 94.4% 96.7% 92.3% 94.5%
Average economic occupancy 96.7% 95.4% 97.2% 92.0% 94.9%
Average monthly revenue
per unit $659 $607 $736 $644 $645
</TABLE>
Summary amounts for Paces Commons for second quarter, 1994 were average
economic occupancy of 95 percent and average monthly revenue per unit of
$585.
The Company now receives property management and administrative fees
arising from the management contracts it obtained as part of the
acquisition of BTVC in October, 1994. These fees totaled approximately
$177,000 in second quarter, 1995 and $387,000 through six months of
1995. Effective June 1, 1995 the Company transferred five third-party
management contracts to BNP Management, Inc. (the Management Company,
), a subsidiary in which the Company owns a 1 percent voting interest
and a 95 percent economic interest. The remaining interest in the
Management Company is held by certain officers of the Company. The
Company s interest in the Management Company is accounted for under the
cost method. The Company does not expect the formation or operations of
this subsidiary to have a significant effect on the financial position
or results of operations of the Company.
Expenses. Depreciation and amortization totaled $645,000 for the
quarter and $1,303,000 for the six months ended June 30, 1995,
approximately double 1994 amounts. The significant increase is due
primarily to acquisition of three apartment properties totaling
approximately $40 million in June, October, and December, 1994 along
with the $2.3 million intangible related to property management
operations acquired in October, 1994.
Apartment operating expenses totaled $605,000 in second quarter and
$1,223,000 through six months of 1995, compared to $223,000 and
$391,000, respectively, in 1994. The significant increase again
reflects the impact of 1994 apartment property acquisitions. Through
June, 1995 these expenses were generally consistent with budgets and
management s expectations. Operating expenses related to restaurant
rental income are insignificant because of the restaurant properties
triple net leases.
Administrative expenses totaled $384,000 for the three months and
$745,000 for the six months ended June 30, 1995, compared to $190,000
and $368,000, respectively, for administrative and property management
and advisory fees expenses during the same period in 1994 (prior to
becoming self-managed and self-advised in October, 1994).
Interest expense of $1,345,000 in second quarter and $2,672,000 through
six months in 1995 (compared to $518,000 and $963,000 in 1994,
respectively) again reflects the impact of approximately $40 million
debt assumed
<PAGE>
in conjunction with 1994 apartment property acquisitions.
The weighted average interest rate in second quarter, 1995 was
approximately 8.1 percent compared to approximately 6.9 percent in
second quarter of 1994.
Summary results of operations. Funds from operations ( FFO ) is defined
by the National Association of Real Estate Investment Trusts as net
income (computed in accordance with generally accepted accounting
principles), excluding gains (or losses) from debt restructuring and
sales of property, plus depreciation and amortization, and after
adjustments for unconsolidated partnerships and joint ventures. The
Company considers FFO in evaluating property acquisitions and its
operating performance and believes that FFO should be considered along
with, but not as an alternative to, net income and cash flows as a
measure of the Company s operating performance and liquidity. FFO does
not represent cash generated from operating activities in accordance
with generally accepted accounting principles and is not necessarily
indicative of cash available to fund cash needs.
A reconciliation of net income, funds from operations, and net cash
provided by operating activities, along with related per share amounts,
is as follows (all amounts in thousands except per share amounts):
<TABLE>
<CAPTION>
Three months ended June 30, Six months ended June 30,
1995 1994 1995 1994
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Net income $ 526 $0.18 $ 761 $0.27 $ 914 $0..31 $1,345 $0.47
Depreciation 548 291 1,095 573
Amortization--
--property mgmt. intangible 63 - 119 -
--deferred financing costs 34 38 89 75
Write-off deferred loan costs 22 22
- -
Funds from operations 1,193 0.40 1,090 0.38 2,239 0.75 1,993 0.70
Changes in operating assets
and liabilities (154) 13 (271) 190
Net cash provided by
operating activities $1,039 0.35 $1,103 0.39 $1,968 0.66 $2,183 0.77
</TABLE>
As expected, net income decreased approximately 31 percent for the
quarter and 32 percent year-to-date compared to 1994, reflecting the
effect of depreciation and amortization of assets related to apartment
property acquisitions. Funds from operations increased 9.5% for second
quarter and 12.3% year to date compared to 1994, reflecting the
favorable impact of apartment operations and in spite of the unfavorable
trend in restaurant rental revenue. The decrease in net cash provided
by operating activities reflects a $100,000 advance made to BNP
Management, Inc. along with timing of rent receipts and payments for
trade payables, taxes, escrow funds, etc.
Liquidity and Capital Resources
Capital resources. As of June 30, 1995 the Company s total book
capitalization was $94,100,000, comprised of $27,215,000 of shareholders
equity and $66,886,000 of debt. In March and April, 1995 the Company
issued a total of 14,250 shares of common stock to the former BTVC
shareholders in conjunction with an earn-out provision of that
acquisition agreement. Subsequent to June 30, 1995 the Company will
issue 11,500 shares of common stock (valued at $141,667) as additional
consideration earned during the second quarter of 1995 under the
earn-out provision.
During second quarter, 1995, the Company obtained an amendment which
extends its current credit facility to April, 1996 (previously June,
1995) and increases the amount of the facility to $24 million (from $20
million). The Company intends to refinance the credit facility at
maturity. In addition, during second quarter, 1995 the Company
refinanced the Harris Hill debt (previously variable rate debt at 30-day
LIBOR plus 1.85 percent) at a fixed 8.55 percent, with monthly principal
and interest payments of $47,699 and a balloon payment of $5,485,000 in
June, 2005.
<PAGE>
A summary of long-term debt as of June 30, 1995 has been included in the
notes to the financial statements included in Item 1 herein. At June
30, 1995 the weighted average interest rate on debt outstanding was 8.0
percent. A 1 percent increase in variable interest rates would impact
the Company by increasing interest expense by approximately $258,000 on
an annual basis; conversely, a 1 percent decrease in variable interest
rates would impact the Company by decreasing interest expense by
approximately $298,000 on an annual basis
Cash flows and liquidity. The Company s cash and cash equivalents
decreased by $13,000 during the second quarter and $383,000 during the
first six months of 1995. Funds from operations improved by 12 percent
through six months of 1995 compared to 1994. Cash flows from operating
activities decreased by 10 percent, or $215,000 during the six month
period compared to 1994, primarily attributable to a $100,000 operating
advance to the Management Company and timing of receipts and payments
for operating activities. (See discussion of FFO and operating
activities above in summary results of operations.)
Net cash used in investing activities through six months of 1995 totaled
$494,000, including $179,000 improvements to apartment properties and
$314,000 payment of deferred acquisition and financing costs (including
$163,000 in loan costs and $91,000 costs related to 1994 acquisitions
and previously accrued in 1994). Investing activities during the first
six months of 1994 included $9,369,000 for acquisition of Oakbrook
apartments and nominal improvements to existing apartments along with
$638,000 payments for deferred costs.
As discussed above and in the notes to financial statements, during
second quarter, 1995 the Company amended and increased its revolving
line of credit, and applied approximately $4,500,000 proceeds of draws
against that credit facility to the scheduled final $4,000,000
installment on a note payable secured by certain restaurant properties
and the refinancing of Harris Hillapartments debt (in addition to
$6,175,000 proceeds of an 8.55 percent fixed rate mortgage applied to
retire a variable rate mortgage balance of $6,472,000). Net cash used
in financing activities during the first six months of 1995 totaled
$1,857,000, including $1,859,000 payments of regular quarterly
dividends. Financing activities during the first six months of 1994
included $13,750,000 proceeds from revolving and other notes payable for
acquisition of Oakbrook apartments and payment of the scheduled
installment on the restaurant note payable, along with dividends of
$1,767,000.
Short- and long-term liquidity requirements. The Company expects to
meet its short-term liquidity requirements generally through net cash
provided by operations and utilization of credit facilities. The
Company believes that net cash provided by operations will be adequate
and anticipates that it will continue to be adequate to meet both
operating requirements and payment of dividends in accordance with REIT
requirements in both the short- and the long term. The Company
anticipates funding acquisition activities, if any, primarily by using
secured debt. The Company expects to meet certain of its long-term
liquidity requirements through long-term secured and unsecured
borrowings and the issuance of debt securities or additional equity
securities. The Company believes that it has sufficient resources to
meet its short- and long-term liquidity requirements.
Capitalization of fixed assets and property improvements. The Company
has established a policy of capitalizing those expenditures relating to
acquiring new assets, materially enhancing the value of an existing
asset, or substantially extending the useful life of an existing asset.
Carpet, vinyl, and wallpaper replacements are generally expensed as
incurred, except when those replacements are made in conjunction with a
plan of acquisition.
<PAGE>
Capitalized property additions, replacements and improvements are
summarized as follows:
<TABLE>
<CAPTION>
Three months
ended Six months ended June 30,
June 30, 1995 1995 1994
<S> <C> <C> <C>
Acquisition of new apartment properties $ - $ - $9,366,719
Capitalized carpet, vinyl, and wallpaper
replacements 25,238 42,353 1,259
Exterior painting - 74,588 -
Other property additions and improvements 46,227 62,542 1,394
71,465 179,483 9,369,372
Allocation of BTVC purchase price additional
consideration 16,667 33,334 -
$88,132 $212,817 $9,369,372
</TABLE>
Inflation. Management does not believe that inflation poses a material
risk to the Company. Leases of the Company s apartment properties are
short-term in nature, the majority for terms of one year or less, with
none longer than two years. All apartment leases allow, at the time of
renewal, for adjustments in the rent payable thereunder and thus enable
the Company to seek increases in rents to compensate for increases in
expenses brought about by inflation. In addition, the apartment lease
agreements give the Company the right to terminate any lease at the end
of its term on 60 days notice. The restaurant properties are leased on
a triple-net basis, which places the risk of rising operating and
maintenance costs on the lessee.
<PAGE>
PART II
Item 1. Legal Proceedings
The Company is a party to a number of legal actions arising out of its
normal business activities related to the ownership and management of
apartment properties. In the aggregate these are not considered to be
material.
The Company is a party to one legal action alleging damages of
$2,000,000 arising out of a rape of a tenant at one of the Company s
managed apartment properties by an unaffiliated assailant. The Company
s involvement is as a successor-in-interest to BT Venture Corporation,
and its exposure to the claim is covered by its primary insurance policy
($2,000,000) , an umbrella liability policy ($5,000,000), and a
hold-harmless agreement with Boddie Investment Company. As such, the
claim is not considered to be material to the Company s operations.
Item 4. Submission of Matters to a Vote of Security Holders
The Company held its Annual Meeting of Shareholders on June 29, 1995.
At that meeting the following proposals were approved:
<TABLE>
<CAPTION>
Withheld/ Broker
For Against Abstained Non-votes
<S> <C> <C> <C> <C>
Election of five directors:
B. Mayo Boddie 2,585,270 - 14,620 217,802
Nicholas B. Boddie 2,585,270 - 14,620 217,802
James B. Powers 2,581,494 - 18,396 217,802
William H. Stanley 2,584,274 - 15,616 217,802
Richard A. Urquhart 2,578,408 - 21,482 217,802
Amend the Certificate of Incorporation to
authorize the issuance of 10 million shares of
preferred stock, issuable in series the
characteristics of which would be set by the 1,702,427 289,077 61,409 764,779
Board of Directors.
Amend the Certificate of Incorporation to
increase the number of shares of common stock
that the Company has authority to issue from 10
million to 100 million shares. 2,318,889 236,480 44,521 217,802
Amend the bylaws to eliminate the restrictions on
the issuance of Preferred Stock. 1,686,487 296,016 70,410 764,779
Approve issuances of 20 percent or more of the
Company s outstanding common stock (or securities
convertible into 20 percent or more of the common
stock) to a single person or group in connection
with acquisitions. 1,752,433 231,085 69,396 764,779
Amend the bylaws to eliminate the restrictions on
making loans to other persons. 1,743,014 251,081 58,818 764,779
</TABLE>
<PAGE>
Item 5. Other Information
The Company has announced the election of the following officers:
<TABLE>
<CAPTION>
<S> <C>
D. Scott Wilkerson President and Chief Executive Officer
Philip S. Payne Executive Vice President, Treasurer, and
Chief Financial Officer
Lisa McCourt Vice President - Property Management
Pamela B. Novak Vice President - Controller
Douglas E. Anderson Vice President - Secretary
W. Craig Worthy Vice President - Assistant Treasurer
</TABLE>
Item 6. Exhibits and Reports on Form 8-K
a) Exhibits:
<TABLE>
<CAPTION>
<S> <C> <C>
Exhibit 3(ii) Amended and Restated Bylaws Page 15
Exhibit 11 Computation of per share earnings Page 32
Exhibit 27 Financial data schedule (electronic filing) Page 33
</TABLE>
b) Reports on Form 8-K: none
<PAGE>
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.
BODDIE-NOELL PROPERTIES, INC.
(Registrant)
August 14, 1995 /s/ Philip S. Payne
Philip S. Payne
Executive Vice President and
Chief Financial Officer
(Duly Authorized Officer)
August 14, 1995 /s/ Pamela B. Novak
Pamela B. Novak
Vice President - Controller
(Chief Accounting Officer)
<PAGE>
Exhibit 3(ii)
STATE OF DELAWARE
AMENDED AND RESTATED
BYLAWS
OF
BODDIE-NOELL PROPERTIES, INC.
ARTICLE I
OFFICES
Section 1.01 Registered Office. The registered office in Delaware
shall be in the City of Wilmington, County of New Castle, State of Delaware.
Section 1.02 Other Offices. The Corporation may also have offices
at such other places both within and without the State of Delaware as the
Board of Directors may from time to time determine or the business of the
Corporation may require, including, without limitation, the principal office
at 3710 One First Union Center, Charlotte, North Carolina 28202.
ARTICLE II
MEETINGS OF STOCKHOLDERS
Section 2.01 Location. Meetings of Stockholders for any purpose
may be held at such time and place, within or without the State of Delaware,
as shall be stated in the notice of the meeting or in a duly executed waiver
of notice thereof.
Section 2.02 Annual Meeting. Annual meetings of Stockholders shall
be held on a date and a time as may be determined from time to time by the
Board, at which the Stockholders shall elect by plurality vote a Board of
Directors, and transact such other business as may properly be brought before
the meeting in accordance with Section 2.04 herein.
Section 2.03 Director Nominations. Only persons who are nominated
in accordance with the procedures set forth in this Section 2.03 shall be
eligible for election as Directors. Prior to each annual meeting of
Stockholders (or special meeting of Stockholders held for the election of
Directors), the Board of Directors shall nominate a slate of persons to stand
for election to the Board of Directors at the annual meeting. The notice of
the Stockholders of the meeting shall set forth the names and backgrounds of
the persons nominated by the Board of Directors. Nominations of persons for
election to the Board of Directors of the Corporation may also be made at a
meeting of Stockholders or by any Stockholder of the Corporation entitled to
vote for the election of Directors at the meeting who complies with the notice
procedures set forth in this Section 2.03. Such nominations, other than those
made by or at the direction of the Board
<PAGE>
of Directors, shall be made pursuant to timely notice in writing to
the Secretary of the Corporation. To be timely, a Stockholder's notice
shall be delivered to or mailed and received at the principal executive
offices of the Corporation not later than (i) with respect to an
election to be held at an annual meeting of Stockholders, ninety days prior
to the anniversary date of the immediately preceding annual meeting, and
(ii) with respect to an election to be held at a special meeting
of Stockholders for the election of Directors, the close of business on the
tenth day following the date on which notice of such meeting is first given to
Stockholders. Such Stockholder's notice shall set forth (a) as to each person
whom the Stockholder proposes to nominate for election or reelection as a
Director, (i) the name, age, business address and residence address of such
person, (ii) the principal occupation or employment of such person, (iii) the
class and number of shares of the Corporation which are beneficially owned by
such person and (iv) any other information relating to such person that is
required to be disclosed in solicitations of proxies for election of
Directors, or is otherwise required, in each case pursuant to Regulation 14A
under the Securities Exchange Act of 1934, as amended (including without
limitation such person's written consent to being named in the proxy statement
as a nominee and to serving as a Director if elected); and (b) as to the
Stockholder giving the notice, (i) the name and address, as they appear on the
Corporation's books, of such Stockholder and (ii) the class and number of
shares of the Corporation which are beneficially owned by such Stockholder.
At the request of the Board of Directors, any person nominated by the Board of
Directors for election as a Director shall furnish to the Secretary of the
Corporation that information required to be set forth in a Stockholder's
notice of nomination which pertains to the nominee. The Chairman of the
meeting shall, if the facts warrant, determine and declare to the meeting that
a nomination was not made in accordance with the procedures prescribed by the
Bylaws, and if he should so determine, he shall so declare to the meeting and
the defective nomination shall be disregarded.
Section 2.04 Notice and Business to be Conducted. Written notice
of the annual meeting shall be given to each Stockholder entitled to vote
thereat at least 10 but not more than 60 days before the date of the meeting.
At an annual meeting of the Stockholders, only such business shall be
conducted as shall have been properly brought before the meeting. To be
properly brought before an annual meeting, business must be (a) specified in
the notice of meeting (or any supplement thereto) given by or at the direction
of the Board of Directors, (b) otherwise properly brought before the meeting
by or at the direction of the Board of Directors or (c) otherwise properly
brought before the meeting by a Stockholder. For business to be properly
brought before an annual meeting by a Stockholder, the Stockholder must have
given timely notice thereof in writing to the Secretary of the Corporation.
To be timely, a Stockholder's notice must be delivered to or mailed and
received at the principal executive offices of the Corporation not later than
ninety days prior to the anniversary
<PAGE>
date of the immediately preceding annual meeting. A Stockholder's notice
to the Secretary shall set forth as to each matter the Stockholder
proposes to bring before the annual meeting (a) a brief description
of the business desired to be brought before the annual meeting
and the reasons for conducting such business at the annual meeting, (b) the
name and address, as they appear on the Corporation's books, of the
Stockholder proposing such business, (c) the class and number of shares of the
Corporation which are beneficially owned by the Stockholder and (d) any
material interest of the Stockholder in such business. Notwithstanding
anything in the Bylaws to the contrary, no business shall be conducted at any
annual meeting except in accordance with the procedures set forth in this
Section. The Chairman of the annual meeting shall, if the facts warrant,
determine and declare to the meeting that business was not properly brought
before the meeting in accordance with the provisions of this Section, and if
he should so determine, he shall so declare to the meeting and any such
business not properly brought before the meeting shall not be transacted.
Section 2.05 Stock Ledger. The officer who has charge of the stock
ledger of the Corporation shall prepare and make, at least ten days before
every election of Directors, a complete list of the Stockholders entitled to
vote at said election, arranged in alphabetical order, showing the address of
and the number of shares registered in the name of each Stockholder. Such
list shall be open to the examination of any Stockholder, during ordinary
business hours, for a period of at least ten days prior to the election,
either at a place within the city, town or village where the election is to be
held and which place shall be specified in the notice of the meeting, or, if
not specified, at the place where said meeting is to be held. The list shall
also be produced and kept at the time and place of the meeting during the
whole time thereof, and subject to the inspection of any Stockholder who may
be present.
Section 2.06 Special Meetings. At any time in the interval between
annual meetings, special meetings of the Stockholders, unless otherwise
provided by law or by the Certificate of Incorporation, may be called by the
Chief Executive Officer and shall be called by the Chief Executive Officer
upon the request in writing of a majority of the Board of Directors or a
majority of the Independent Directors (as defined in Section 3.01 hereof), or
upon the written request of the holders of shares representing a majority of
the shares of capital stock of the Corporation which would be entitled to vote
thereat. Such written request of the Stockholders shall state the purpose or
purposes of such meeting.
Section 2.07 Notice of Special Meeting. Written notice of a
special meeting of Stockholders, stating the time, place and purpose or
purposes thereof, shall be given in accordance with Section 222 of the General
Corporation Law of the State of Delaware to each Stockholder entitled to vote
thereat, at least ten days before the date fixed for the meeting.
<PAGE>
Section 2.08 Business at Special Meeting. Business transacted at
any special meeting of Stockholders shall be limited to the purposes stated in
the notice.
Section 2.09 Quorum. The holders of a majority of the total
capital stock issued and outstanding and entitled to vote thereat, present in
person or represented by proxy, shall constitute a quorum at all meetings of
the Stockholders for the transaction of business except as otherwise provided
by statute or by the Certificate of Incorporation. If, however, such quorum
shall not be present or represented at any meeting of the Stockholders, the
Stockholders entitled to vote thereat, present in person or represented by
proxy, shall have power to adjourn the meeting from time to time, without
notice other than announcement at the meeting, until a quorum shall be present
or represented. At such adjourned meeting at which a quorum shall be present
or represented any business may be transacted which might have been transacted
at the meeting as originally notified.
Section 2.10 Vote. When a quorum is present at any meeting, the
vote of the holders of a majority of the shares of capital stock entitled to
be voted on a question brought before such meeting whose holders are present
in person or represented by proxy shall decide such question unless the
question is one upon which, by express provision of statute or of the
Certificate of Incorporation, a different vote is required, in which case such
express provision shall govern and control the decision of such question.
Section 2.11 Proxies. Each Stockholder shall at every meeting of
the Stockholders be entitled in person or by proxy to the number of votes
provided for in the Corporation's Certificate of Incorporation (or in a
resolution of the Board of Directors fixing the powers, designations,
preferences and relative, participating, optional or other special rights of a
particular series of stock within any class thereof) for each share of the
Corporation's capital stock having voting power held by such Stockholder, but
no proxy shall be voted on or after three years from its date, unless the
proxy provides for a longer period, and, except where a date has been fixed as
a record date for determination of its Stockholders entitled to vote, no share
of stock shall be voted at any election for Directors which has been
transferred on the books of the Corporation within twenty days next preceding
such election of Directors. A duly executed proxy shall be irrevocable if it
states that it is irrevocable and if, and only as long as, it is coupled with
an interest sufficient in law to support an irrevocable power. A Stockholder
may revoke any proxy which is not irrevocable by attending the meeting and
voting in person or by filing an instrument in writing revoking the proxy or
another duly executed proxy bearing a later date with the Secretary of the
Corporation. Voting at meetings of Stockholders need not be by written ballot
and need not be conducted by inspectors unless the holders of a majority of
the outstanding shares of all classes of stock entitled to vote thereon
present in person or by proxy at such meeting shall so determine.
<PAGE>
Section 2.12 Action Without Meeting. Whenever the vote of
Stockholders at a meeting thereof is required or permitted to be taken in
connection with any corporate action by any provisions of the statutes or of
the Certificate of Incorporation, the meeting and vote of Stockholders may be
dispensed with if a consent in writing setting forth the action so taken shall
be signed by the holders of outstanding stock having not less than the minimum
number of votes that would be necessary to authorize or take such action at a
meeting at which all shares entitled to vote thereon were present and voted.
Prompt notice of the taking of the corporate action without a meeting by less
than unanimous written consent shall be given to those Stockholders who have
not consented in writing.
ARTICLE III
DIRECTORS
Section 3.01 Number, Election and Term. The number of Directors of
the Corporation that shall constitute the whole Board shall be fixed from time
to time by resolution by the Board of Directors but shall not be less than
five; provided, however, that the tenure of office of a Director shall not be
affected by any decrease or increase in the number of Directors so made by the
Board. At all times that the Corporation intends to be qualified as a real
estate investment trust under the Internal Revenue Code of 1986, as amended,
or any successor statute, a majority of the Board of Directors shall be
Independent Directors (as hereinafter defined). For purposes of these Bylaws,
"Independent Director" shall mean a Director of the Corporation who is not an
Affiliated Person (as hereinafter defined) of the Corporation. For purposes
of these Bylaws, an "Affiliated Person" of the Corporation means (a) any
person directly or indirectly owning, controlling, or holding with power to
vote, 5 per centum or more of the outstanding voting securities of the
Corporation; (b) any person 5 per centum or more of whose outstanding voting
securities are directly or indirectly owned, controlled, or held with power to
vote, by the Corporation; (c) any person directly or indirectly controlling,
controlled by, or under common control with, the Corporation; or (d) any
officer, partner, or employee of the Corporation. The Directors shall be
elected at the annual meeting of the Stockholders, except as provided in
Section 3.03 of this Article III, and the Directors so elected shall hold
office until the next annual meeting or until their successors are elected and
qualify.
Section 3.02 Powers. The business and affairs of the Corporation
shall be managed in accordance with the Certificate of Incorporation and these
Bylaws under the direction of its Board of Directors and where applicable, the
Independent Directors, which may exercise all of the powers of the
Corporation, except such as are by law or by the Corporation's Certificate of
Incorporation or by these Bylaws conferred upon or reserved to the
Stockholders.
<PAGE>
Section 3.03 Vacancies. Any vacancy occurring in the Board of
Directors for any cause may be filled by a majority of the remaining members
of the Board of Directors, although such majority is less than a quorum;
provided, however, that if the Corporation has sought to qualify as a real
estate investment trust and in accordance with Section 3.01 a majority of the
Board of Directors are required to be Independent Directors, then Independent
Directors shall nominate replacements for vacancies among the Independent
Directors. If the Stockholders of any class or series are entitled separately
to elect one or more Directors, a majority of the remaining Directors elected
by that class or series or the sole remaining Director elected by that class
or series may fill any vacancy among the number of Directors elected by that
class or series. A Director elected by the Board of Directors to fill a
vacancy shall be elected to hold office until the next annual meeting of
Stockholders or until his successor is elected and qualifies.
Section 3.04 Resignations. Any Director or member of a committee
may resign at any time. Such resignation shall be made in writing and shall
take effect at the time specified therein, or if no time is specified, at the
time of the receipt by the Chairman of the Board, the Chief Executive Officer
or the Secretary. The acceptance of a resignation shall not be necessary to
make it effective.
Section 3.05 Committees of the Board of Directors. The Board of
Directors may appoint from among its members one or more committees composed
of three or more Directors. A majority of the members of any committee so
appointed shall be Independent Directors (as defined in Section 3.01). The
Board of Directors may delegate to any committee any of the powers of the
Board of Directors except the power to declare dividends or distributions on
stock, recommend to the Stockholders any action which requires Stockholder
approval, amend the Bylaws, approve any merger or share exchange or issue
stock. However, if the Board of Directors has given general authorization for
the issuance of stock, a committee of the Board, in accordance with a general
formula or method specified by the Board of Directors by resolution or by
adoption of a stock option plan, may fix the terms of stock subject to
classification or reclassification and the terms on which any stock may be
issued.
Notice of committee meetings shall be given in the same manner as notice
for special meetings of the Board of Directors.
One-third, but not less than two, of the members of any committee shall
be present in person or by telephonic communication at any meeting of such
committee in order to constitute a quorum for the transaction of business at
such meeting, and the act of a majority of those present shall be the act of
such committee. The Board of Directors may designate a Chairman of any
committee and such Chairman or any two members of any committee may fix the
time and place of its meetings unless the Board shall otherwise provide. In
the absence or disqualification of any member of any such committee, the
<PAGE>
members thereof present at any meeting and not disqualified from voting,
whether or not they constitute a quorum, may unanimously appoint another
Director to act at the meeting in the place of such absent or disqualified
members; provided, however, that in the event of the absence or
disqualification of an Independent Director, such appointee shall be an
Independent Director.
Each committee shall keep minutes of its proceedings and shall report
the same to the Board of Directors when required, and any action taken by the
committees shall be subject to revision and alteration by the Board of
Directors, provided that no rights of third persons shall be affected by any
such revision or alteration.
Subject to the provisions hereof, the Board of Directors shall have the
power at any time to change the membership of any committee, to fill all
vacancies, to designate alternate members to replace any absent or
disqualified member, or to dissolve any committee.
Section 3.06 Meetings of the Board of Directors. Meetings of the
Board of Directors, regular or special, may be held at any place in or out of
the State of Delaware as the Board may from time to time determine or as shall
be specified in the notice of such meeting.
The first meeting of each newly elected Board of Directors shall be held
as soon as practicable after the annual meeting of the Stockholders at which
the Directors were elected. The meeting may be held at such time and place as
shall be specified in a notice given as hereinafter provided for special
meetings of the Board of Directors, except that no notice shall be necessary
if such meeting is held immediately after the adjournment and at the site of
the annual meeting of the Stockholders.
Regular meetings of the Board of Directors may be held with or without
notice at such time and place as shall from time to time be determined by the
Board of Directors.
Special meetings of the Board of Directors may be called at any time by
two or more Directors or by the Chairman of the Board or the Chief Executive
Officer.
Notice of the place and time of every special meeting of the Board of
Directors shall be delivered to each Director either personally or by
telephone, telegram or telegraph, or by leaving the same at his residence or
usual place of business at least forty-eight hours before the time at which
such meeting is to be held, or by first-class mail, at least three days before
the day on which such meeting is to be held. If mailed, such notice shall be
deemed to be given when deposited in the United States mail addressed to the
Director at his post-office address as it appears on the records of the
Corporation, with postage thereon prepaid.
<PAGE>
Section 3.07 Quorum and Voting. At all meetings of the Board, a
majority of the entire Board of Directors shall constitute a quorum for the
transaction of business and the action of a majority of the Directors present
at any meeting at which a quorum is present shall be the action of the Board
of Directors unless the concurrence of a greater proportion, or the
concurrence of a majority of the Independent Directors is required for such
action by law, the Corporation's Certificate of Incorporation or these Bylaws.
If a quorum shall not be present at any meeting of Directors, the Directors
present may, by a majority vote, adjourn the meeting from time to time,
without notice other than announcement at the meeting, until a quorum shall be
present.
Notwithstanding the first paragraph of this Section 3.07, any action
pertaining to a transaction involving the Corporation in which any Director or
officer of the Corporation or any affiliate of any of the foregoing persons
has an interest shall specifically be approved with respect to any isolated
transactions or generally be approved with respect to any series of similar
transactions, by a majority of the members of the Board of Directors,
including a majority of the Independent Directors who are not parties to and
have no financial interest in such transaction and so are not affiliates of
such interested party, even if such Directors constitute less than a quorum.
In approving any contract, joint venture or other transaction or series
of transactions between the Corporation and any Director or officer of the
Corporation or any affiliate of such persons, a majority of the Directors
including a majority of the Independent Directors must determine that:
(a) the contract, joint venture or other transaction as contemplated
is fair and reasonable to the Corporation and its Stockholders and on terms
and conditions no less favorable to the Corporation than those available from
unaffiliated third parties;
(b) if an acquisition of property other than mortgage loans is
involved, the total consideration (determined at the time the acquisition is
approved by the Independent Directors) for the property being acquired is not
in excess of the (i) appraised value of such property as stated in an
appraisal by a qualified independent appraiser with experience in appraising
assets of the type being acquired, or (ii) fair value of such property as
stated in an opinion by a qualified independent consultant, selected,
approved or ratified by the Independent Directors prior to any such
acquisition, and if the price is in excess of the cost of the asset to such
seller thereof, the Independent Directors shall determine that substantial
justification for such excess exists and that such excess is not unreasonable;
and
(c) if the transaction involves the making of loans or the borrowing
of money, the transaction is fair, competitive, and commercially reasonable
and no less favorable
<PAGE>
to the Corporation than loans between unaffiliated lenders and borrowers
under the same circumstances.
Section 3.08 Organization. The Chairman of the Board shall preside
at each meeting of the Board of Directors, or in the absence or inability of
the Chairman of the Board to preside at a meeting, another Director chosen by
a majority of the Directors present shall act as Chairman of the meeting and
preside thereat. The Secretary (or, in his absence or inability to act, any
person appointed by the Chairman of the meeting) shall act as Secretary of the
meeting and keep the minutes thereof.
Section 3.09 Meeting by Conference Telephone. Unless otherwise
restricted by the Certificate of Incorporation, members of the Board of
Directors may participate in a meeting by means of a conference telephone or
similar communications equipment if all persons participating in the meeting
can hear each other at the same time. Participation in a meeting by these
means constitutes presence in person at a meeting.
Section 3.10 Action Without Meeting. Any action required or
permitted to be taken at any meeting of the Board of Directors or of any
committee thereof may be taken without a meeting, if a written consent to such
action is signed by all members of the Board or of such committee, as the case
may be, and such written consent is filed with the minutes of proceedings of
the Board or committee.
Section 3.11 Compensation of Directors. The Directors may be paid
their expenses, if any, of attendance at each meeting of the Board of
Directors and may be paid a fixed sum for attendance at each meeting of the
Board of Directors or a stated salary as Director. No such payment shall
preclude any Director from serving the Corporation in any other capacity and
receiving compensation therefor. Members of committees of the Board may be
allowed like compensation for attending committee meetings.
Section 3.12 Investment Policies and Restrictions. It shall be the
duty of the Board of Directors to ensure that the purchase, sale, retention
and disposal of the Corporation's assets, and the investment policies of the
Corporation and the limitations thereon or amendment thereto are at all times:
(a) consistent with such policies, limitations and restrictions
as are contained in this Section 3.12, or recited in the Registration
Statement on Form S-11 (the "Registration Statement") filed with the
Securities and Exchange Commission in connection with this Corporation's
initial offering of common stock (the "Initial Offering"); and
<PAGE>
(b) in compliance with the restrictions applicable to real
estate investment trusts pursuant to the Internal Revenue Code of 1986,
as amended.
The Corporation shall not:
(a) invest in mortgage loans unless an appraisal is obtained
concerning the underlying property;
(b) invest more than 10% of the Company's total assets in
unimproved real property or mortgage loans on unimproved real property;
(c) invest in commodity or commodity future contracts other than
interest rate futures used solely for hedging purposes;
(d) issue equity securities which are redeemable at the option
of the holders thereof;
(e) issue debt securities unless the historical debt service
coverage of the most recently completed fiscal year, as adjusted for
known changes, is sufficient to service the higher level of debt
(without regard to any applicable balloon principal payments);
(f) issue options or warrants to purchase shares of the Company
at an exercise price less than the fair market value of such shares or
which are for more than 10% of the outstanding shares;
(g) invest in real estate contracts for sale, unless such real
estate contracts are recordable in the chain of title; or
(h) act in any way that would disqualify the Company as a real
estate investment trust under the provisions of the Code.
The Corporation does not intend to invest in the securities of other
issuers for the purposes of exercising control (other than with respect to
wholly owned subsidiaries), to engage in the trading of or to underwrite
securities for other issuers, to engage in the purchase and sale (or turnover)
of investments other than as described in the Registration Statement, to offer
securities in exchange for property unless deemed prudent by a majority of the
Directors, to repurchase or otherwise reacquire shares of the Corporation
except as may be necessary to maintain qualification as a real estate
investment trust, to issue senior securities or to make loans to other
persons.
<PAGE>
The Independent Directors shall review the investment policies of the
Corporation at least annually to determine that the policies then being
followed by the Corporation are in the best interests of its Stockholders.
Each such determination and the basis therefore shall be set forth in the
minutes of the Board of Directors.
The Directors shall review the borrowings of the Corporation quarterly
for reasonableness in relation to the Corporation's net assets. The
Corporation shall not incur indebtedness if, after giving effect to the
incurrence thereof, aggregate indebtedness, secured and unsecured, would
exceed three hundred percent (300%) of the Corporation's net assets, on a
consolidated basis, unless approved by a majority of the Directors, including
a majority of the Independent Directors, and disclosed to the Stockholders in
the next quarterly report of the Corporation, along with justification for
such excess. For this purpose, the term "Net Assets" means the total assets
(less intangibles) of the Corporation at cost, before deducting depreciation
or other non-cash reserves, less total liabilities, as calculated at the end
of each quarter on a basis consistently applied.
The foregoing prohibitions and restrictions set forth in this Section
3.12 shall not be changed without the approval of the Stockholders of the
Corporation.
Section 3.13. Mandatory Retirement. A Director shall be required to
retire at the next annual meeting of Stockholders following his or her 75th
birthday; provided, however, that a Director who is 75 or older at the time of
the adoption of this Section 3.13 shall not be required to retire until the
1996 annual meeting of Stockholders.
ARTICLE IV
NOTICES
Section 4.01 Writing. Notices to Directors and Stockholders when
in writing or by telegram as required by provisions of statutes, or by the
Certificate of Incorporation, or by these Bylaws, shall be delivered
personally or mailed to the Directors or Stockholders at their addresses
appearing on the books of the Corporation.
Section 4.02 Waiver. Whenever any notice is required to be given
under provisions of the statutes or of the Certificate of Incorporation or of
these Bylaws, a waiver thereof in writing, signed by the person or persons
entitled to said notice, whether before or after the time stated therein,
shall be deemed equivalent thereto.
<PAGE>
ARTICLE V
OFFICERS
Section 5.01 Principal Officers. The principal officers of the
Corporation shall be a Chief Executive Officer, a President, one or more Vice
Presidents, a Treasurer and a Secretary. The Corporation may also have such
other principal officers, including one or more Controllers, as the Board may
in its discretion appoint. One person may hold the offices and perform the
duties of any two or more of said offices, except that no one person shall
hold the offices and perform the duties of President and Secretary.
Section 5.02 Election, Term of Office and Remuneration. The principal
officers of the Corporation shall be elected annually by the Board of
Directors at the annual meeting thereof. Each such officer shall hold office
until his successor is elected and qualified or until his earlier death,
resignation or removal. The remuneration of all officers of the Corporation
shall be fixed by the Board of Directors. Any vacancy in any office shall be
filled in such manner as the Board of Directors shall determine.
Section 5.03 Subordinate Officers. In addition to the principal
officers enumerated in Section 5.01 of this Article V, the Corporation may
have one or more Assistant Treasurers, Assistant Secretaries and Assistant
Controllers and such other subordinate officers, agents and employees as the
Board of Directors may deem necessary, each of whom shall hold office for such
period as the Board of Directors may from time to time determine. The Board
of Directors may delegate to any principal officer the power to appoint and to
remove any such subordinate officer, agents or employees.
Section 5.04 Removal. Except as otherwise permitted with respect to
subordinate officers, any officer may be removed, with or without cause, at
any time, by resolution adopted by the Board of Directors.
Section 5.05 Resignations. Any officer may resign at any time by giving
written notice to the Board of Directors (or to a principal officer if the
Board of Directors has delegated to such principal officer the power to
appoint and to remove such officer). The resignation of any officer shall
take effect upon receipt of notice thereof or at such later time as shall be
specified in such notice; and unless otherwise specified therein, the
acceptance of such resignation shall not be necessary to make it effective.
Section 5.06 Powers and Duties. The officers of the Corporation shall
have such powers and perform such duties incident to each of their respective
offices and such other duties as may from time to time be conferred upon or
assigned to them by the Board of Directors.
<PAGE>
ARTICLE VI
CERTIFICATE OF STOCK
Section 6.01 Certificates. Every holder of stock in the
Corporation shall be entitled to have a certificate, signed by, or in the name
of the Corporation by, the Chairman or Vice Chairman of the Board of Directors
or the President or a Vice-President, and by the Treasurer or an Assistant
Treasurer or the Secretary or an Assistant Secretary of the Corporation,
certifying the number of shares owned by him in the Corporation. Any or all
of the signatures on the certificate may be a facsimile. In case any officer
or officers who have signed, or whose facsimile signature or signatures have
been used on, any such certificate or certificates shall cease to be such
officer or officers of the Corporation, whether because of death, resignation
or otherwise, before such certificate or certificates have been delivered by
the Corporation, such certificate or certificates may nevertheless be adopted
by the Corporation and be issued and delivered as though the person or persons
who signed such certificate or certificates or whose facsimile signature or
signatures have been used thereon had not ceased to be such officer or
officers of the Corporation. If the Corporation shall be authorized to issue
more than one class of stock, or more than one series of any call, the
designations, preference and relative, participating, optional or other
special rights of each class of stock or series thereof and the
qualifications, limitations or restrictions of such preferences and/or rights
shall be set forth in full or summarization on the face or the back of the
certificate which the Corporation shall issue to represent such class of
stock; provided, however, that except as otherwise provided in Section 202 of
the General Corporation law of Delaware, in lieu of the foregoing
requirements, there may be set forth on the face or back of the certificate
which the Corporation shall issue to represent such class or series of stock,
a statement that the Corporation will furnish without charge to each
Stockholder who so requests, the designations, preferences and relative,
participating, option or other special rights of each class of stock or series
thereof and the qualifications, limitations or restrictions of such
preferences and/or rights.
Section 6.02 Lost Certificates. The Board of Directors may direct
a new certificate or certificates to be issued in place of any certificate or
certificates theretofore issued by the Corporation alleged to have been lost
or destroyed, upon the making of an affidavit of the fact by the person
claiming the certificate of stock to be lost or destroyed. When authorizing
such issue of a new certificate or certificates, the Board of Directors may,
in its discretion and as a condition precedent to the issuance thereof,
require the owner of such lost or destroyed certificate or certificates, or
his legal representative, to advertise the same in such manner as it shall
require and/or to give the Corporation a bond in such sum as it may direct as
indemnity against any claim that may be made against the Corporation with
respect to the certificate alleged to have been lost or destroyed.
<PAGE>
Section 6.03 Transfer of Stock. No transfers of shares of stock of
the Corporation shall be made if (i) void ab initio pursuant to Article X of
the Corporation's Certificate of Incorporation, or (ii) the Board of
Directors, pursuant to such Article X, shall have refused to offer such
shares. The Board of Directors of the Corporation may:
(a) redeem the outstanding shares of stock of the Corporation or
restrict the transfer of such shares to the extent necessary to prevent
the concentration of ownership of more than 50% of the outstanding
shares of the Corporation in the hands of five or fewer individuals or
entities and to ensure that the Corporation always has at least 100
Stockholders;
(b) refuse to effect a transfer of shares of stock of the
Corporation to any person who as a result would beneficially own shares
in excess of 9.8% of the outstanding shares of the Corporation ("Excess
Shares"); and
(c) redeem Excess Shares held by any Stockholder of the
Corporation.
Permitted transfers of shares of stock of the Corporation shall be made
on the stock records of the Corporation only upon the instruction of the
registered holder thereof, or by his attorney thereunto authorized by power of
attorney duly executed and filed with the Secretary or with a transfer agent
or transfer clerk duly authorized by the Board of Directors, and upon
surrender of the certificate or certificates, is issued for such shares
properly endorsed or accompanied by a duly executed stock transfer power and
the payment of all taxes thereon. Upon surrender to the Corporation or the
duly authorized transfer agent of the Corporation of a certificate for shares
duly endorsed or accompanied by proper evidence of succession, assignment or
authority to transfer, as to any transfer not prohibited by the Corporation's
Certificate of Incorporation, these Bylaws, or by action of the Board of
Directors thereunder, it shall be the duty of the Corporation to issue a new
certificate to the person entitled thereto, cancel the old certificate and
record the transaction upon its books.
Section 6.04 Setting of Record Date on Transfer Books. The Board
of Directors shall fix in advance a date, not exceeding sixty days preceding
the date of any meeting of Stockholders, or the date for the payment of any
dividend, or the date for the allotment of rights, or the date when any change
or conversion or exchange of capital stock shall go into effect, or a date in
connection with obtaining the consent of Stockholders for any purpose, as a
record date for the determination of the Stockholders entitled to notice of,
and to vote
<PAGE>
at, any such meeting, and any adjournment thereof, or entitled to
receive payment of any such dividend, or to any such allotment of rights, or
to exercise the rights in respect of any such change, conversion or exchange
of capital stock, or to give such consent, and in such case such Stockholders
and only such Stockholders as shall be Stockholders of record on the date so
fixed shall be entitled to such notice of, and to vote at, such meeting and
any adjournment thereof, or to receive payment of such dividend, or to receive
such allotment of rights, or to exercise such rights, or to give such consent,
as the case may be notwithstanding any transfer of any stock on the books of
the Corporation after any such record date fixed as aforesaid.
Section 6.05 Registered Stockholders. The Corporation shall be
entitled to recognize the exclusive right of a person registered on its books
as the owner of shares to receive dividends, and to vote as such owner, and to
hold liable for calls and assessments a person registered on its books as the
owner of shares, and shall not be bound to recognize any equitable or other
claim to or interest in such share or shares on the part of any other person,
whether or not it shall have express or other notice thereof, except as
otherwise provided by the laws of Delaware.
ARTICLE VII
GENERAL PROVISIONS
Section 7.01 Dividends. Dividends upon the capital stock of the
Corporation, subject to the provisions of the Certificate of Incorporation, if
any, may be declared by the Board of Directors at any regular or special
meeting, pursuant to law. Dividends may be paid in cash, in property, or in
shares of the capital stock, subject to the provisions of the Certificate of
Incorporation.
Section 7.02 Reserves. Before payment of any dividend, there may
be set aside out of any funds of the Corporation available for dividends such
sum or sums as the Directors from time to time, in their absolute discretion,
think proper as a reserve or reserves to meet contingencies, or for equalizing
dividends, or for repairing or maintaining any property of the Corporation, or
for such other purpose as the Directors shall think conducive to the interest
of the Corporation, and the Directors may modify or abolish any such reserve
in the manner in which it was created.
Section 7.03 Annual Report. The officers of the Corporation shall
prepare or cause to be prepared annually a full and correct report of the
affairs of the Corporation, including financial statements for the preceding
fiscal year, which shall be prepared in accordance with generally accepted
accounting principles, audited and certified by independent certified public
accountants and distributed to Stockholders within one hundred twenty (120)
days after the close of the Corporation's fiscal year and a reasonable period
of time (at least 10 days) prior to the annual meeting of Stockholders. Such
report shall also be submitted at the annual meeting. The annual report shall
also include full disclosure of all material terms, factors and circumstances
surrounding any transactions between the Corporation and any Director, or any
affiliates of such Director.
<Page.
The Independent Directors will comment on the fairness of such transactions
in the annual report.
The Corporation shall also publish in the annual report the ratio of the
cost of raising capital during the year to the capital raised
Section 7.04 Quarterly Report. The officers of the Corporation
shall also prepare or cause to be prepared quarterly for each of the first
three quarters of each fiscal year, a full and correct report of the affairs
of the Corporation, including a balance sheet and financial statement of
operations for the preceding fiscal quarter, which need not be certified by
independent certified public accountants and shall be distributed to
Stockholders within forty-five (45) days after the close of the Corporation's
preceding fiscal quarter.
Section 7.05 Books of Account and Records. The Corporation shall
maintain at its office in the City of Charlotte and State of North Carolina
correct and complete books and records of account of all the business and
transactions of the Corporation, such books and records to include, without
limitation, current names and addresses of all Stockholders as well as
Stockholder records. Upon the request of, and reasonable notice given by, any
Stockholder, there shall be made available for inspection such books and
records in accordance with the provisions of Delaware law during regular
business hours of the Corporation.
Section 7.06 Checks. All checks or demands for money and notes of
the Corporation shall be signed by such officer or officers or such other
person or persons as the Board of Directors may from time to time designate.
Section 7.07 Fiscal Year. The fiscal year of the Corporation shall
be fixed by resolution of the Board of Directors.
Section 7.09 Seal. The corporate seal shall have inscribed thereon
the name of the Corporation, the year of its organization and the words
"Corporate Seal, Delaware." The seal may be used by causing it or a facsimile
thereof to be impressed or affixed or reproduced or otherwise.
<PAGE>
ARTICLE VIII
GENERAL PROVISIONS
Section 8.01 Amendments. These Bylaws may be altered or repealed
or new bylaws may be made by the Stockholders entitled to vote thereon at any
annual or special meeting thereof or by the Board of Directors.
<PAGE>
<PAGE>
BODDIE-NOELL PROPERTIES, INC.
EXHIBIT 11: COMPUTATION OF PER SHARE EARNINGS
SIX MONTHS ENDED JUNE 30, 1995
<TABLE>
<CAPTION>
Price # SHARES Total Amt.
<S> <C> <C> <C>
Common shares outstanding:
January 1 - March 30 2,990,990
March 31 - April 27 2,994,702
April 28 - June 30 3,005,240
Weighted average 2,996,603
Common stock equivalents:
Options granted October 17, 1994 $13.75 160,000
Other potentially dilutive securities: none
Assumed exercise of options @ January 1 13.75 160,000 $2,200,000
Assumed purchase of treasury stock w/proceeds
Average price of stock (per AMEX reports)
January 12.76
February 12.95
March 13.43
April 13.01
May 12.74
June 12.34
Overall average $12.87 (170,918) (2,200,000)
Assumed increase(decrease) in # shares/equity $ (10,918) $0
Weighted average # shares outstanding 2,996,603
Assumed # shares for calculation of
earnings per common and common equivalent share 2,985,685
Net income, six months ended June 30, 1995 $914,231
Earnings per share, weighted average common shares outstanding $0.3051
Earnings per common and common equivalent share 0.3062
Dilution percentage -0.37%*
* Reduction of less than 3% in the aggregate is not considered dilution; financial statement
presentation of fully diluted earnings per share is not required. Primary earnings per
is presented based on weighted average number of common shares outstanding.
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THE SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM
BODDIE-NOELL PROPERTIES, INC. FINANCIAL STATEMENTS AS OF AND FOR THE
SIX MONTHS ENDED JUNE 30, 1995 AND IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> JUN-30-1995
<CASH> 569,706
<SECURITIES> 0
<RECEIVABLES> 537,978
<ALLOWANCES> (54,531)
<INVENTORY> 0
<CURRENT-ASSETS> 1,631,373
<PP&E> 98,141,395
<DEPRECIATION> (7,911,617)
<TOTAL-ASSETS> 95,145,166
<CURRENT-LIABILITIES> 1,044,976
<BONDS> 66,885,577
<COMMON> 30,052
0
0
<OTHER-SE> 27,184,561
<TOTAL-LIABILITY-AND-EQUITY> 95,145,166
<SALES> 0
<TOTAL-REVENUES> 6,946,640
<CGS> 0
<TOTAL-COSTS> 2,525,207
<OTHER-EXPENSES> 769,729
<LOSS-PROVISION> (65,430)
<INTEREST-EXPENSE> 2,672,043
<INCOME-PRETAX> 914,231
<INCOME-TAX> 0
<INCOME-CONTINUING> 914,231
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 914,231
<EPS-PRIMARY> 0.31
<EPS-DILUTED> 0
</TABLE>
