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, 1996
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 28202-6032
(Address of principal executive offices) (Zip Code)
704/333-1367
(Registrant's telephone number)
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 registrant's
classes of common stock, as of August 12, 1996 (the latest practicable date)..
Common Stock, $.01 par value 3,016,740
(Class) (Number of shares)
Index to exhibits at page 13 Total number of pages: 16
1
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Item No. Page No.
<S> <C> <C>
PART I - Financial Information
1 Financial Statements 3
2 Management's Discussion and Analysis of Financial Condition
and Results of Operations 8
PART II - Other Information
4 Submission of Matters to a Vote of Security Holders 12
5 Other Information 12
6 Exhibits and Reports on Form 8-K 13
</TABLE>
2
<PAGE>
PART I - Financial Information
Item 1. Financial Statements.
BODDIE-NOELL PROPERTIES, INC.
- ------------------------------------------------------------------------------
Balance Sheets
<TABLE>
<CAPTION>
June 30, December 31,
1996 1995
------------------- ------------------
(Unaudited)
<S> <C> <C>
Assets
Real estate investments at cost:
Restaurant properties $ 43,205,075 $43,205,075
Apartment properties 66,250,036 55,315,686
---------- ----------
109,455,111 98,520,761
Less accumulated depreciation (10,180,389) (9,020,948)
----------- ----------
99,274,722 89,499,813
Cash and cash equivalents 685,067 700,863
Rent and other receivables 9,705 244,817
Prepaid expenses and other assets 386,763 293,549
Investment in and advances to Management Company 322,265 326,767
Intangible related to acquisition of management operations, net 2,660,167 2,560,254
Deferred financing costs, net 931,444 725,713
------- -------
Total assets $104,270,133 $94,351,776
============ ===========
Liabilities and Shareholders' Equity
Mortgage and other notes payable $ 70,531,034 $60,105,485
Notes payable to affiliates 7,056,300 7,056,300
Accounts payable and accrued expenses 738,014 531,512
Additional consideration due to former BTVC shareholders 566,668 283,334
Escrowed security deposits and deferred revenue 234,046 175,207
------- -------
Total liabilities 79,126,062 68,151,838
---------- ----------
Shareholders' equity:
Common stock, $.01 par value, 10,000,000 shares authorized,
3,016,740 shares issued and outstanding 30,167 30,167
Additional paid-in capital 33,785,335 33,785,335
Dividends distributed in excess of net income (8,671,431) (7,615,564)
---------- ----------
Total shareholders' equity 25,144,071 26,199,938
---------- ----------
Total liabilities and shareholders' equity $104,270,133 $94,351,776
============ ===========
</TABLE>
3
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BODDIE-NOELL PROPERTIES, INC.
- ------------------------------------------------------------------------------
Statements of Operations
(Unaudited)
<TABLE>
<CAPTION>
Three months ended June 30, Six months ended June 30,
1996 1995 1996 1995
----------------- ----------------- ---------------- -----------------
<S> <C> <C> <C> <C>
Revenues
Restaurant rental income $1,125,000 $1,262,353 $2,250,000 $2,336,724
Apartment rental income 2,439,621 2,082,136 4,582,363 4,143,565
Management fees - 176,697 - 387,300
Equity in income of Management Company 48,870 - 76,288 -
Interest and other income 10,501 6,842 22,846 13,621
------ ----- ------ ------
3,623,992 3,528,028 6,931,497 6,881,210
--------- --------- --------- ---------
Expenses
Depreciation 603,460 547,572 1,159,441 1,094,868
Amortization 133,218 97,637 255,507 207,758
Apartment operations 694,125 605,230 1,360,172 1,222,581
Administrative 265,854 383,838 498,080 747,590
Interest 1,491,997 1,345,487 2,843,785 2,672,043
Write-off of deferred loan costs
at refinancing - 22,139 - 22,139
--------- -------- --------- --------
3,188,654 3,001,903 6,116,985 5,966,979
--------- --------- --------- ---------
Net income $ 435,338 $ 526,125 $ 814,512 $ 914,231
========== ========== ========== ==========
Net income per share $ 0.14 $ 0.18 $ 0.27 $ 0.31
========== ========== ========== ==========
Weighted average number of shares outstanding
3,016,740 3,002,113 3,016,740 2,996,603
========= ========= ========= =========
</TABLE>
Statement of Shareholders' Equity
(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, 1995 3,016,740 $30,167 $33,785,335 $(7,615,564) $26,199,938
Net income 379,174 379,174
Dividends paid
($1.24 per share) - - - (935,189) (935,189)
--------- ------ ---------- --------- ---------
Balance at March 31, 1996 3,016,740 30,167 33,785,335 (8,171,579) 25,643,923
Net income 435,338 435,338
Dividends paid
($1.24 per share) - - - (935,190) (935,190)
--------- ------ ---------- -------- --------
Balance at June 30, 1996 3,106,740 $30,167 $33,785,335 $(8,671,431) $25,144,071
========= ======= =========== =========== ===========
</TABLE>
4
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BODDIE-NOELL PROPERTIES, INC.
- ------------------------------------------------------------------------------
Statements of Cash Flows
(Unaudited)
<TABLE>
<CAPTION>
Six months ended June 30,
1996 1995
---------------- -----------------
<S> <C> <C>
Cash flows from operating activities:
Net income $ 814,512 $ 914,231
Adjustments to reconcile net income to
net cash provided by operations:
Equity in income of Management Company (76,288) -
Depreciation and amortization 1,414,948 1,302,626
Write-off of deferred loan costs - 22,139
Changes in operating assets and liabilities:
Rent and other receivables 235,112 9,859
Prepaid expenses and other assets (45,988) (114,277)
Accounts payable and accrued expenses 206,502 (11,260)
Security deposits and deferred revenue 16,849 (55,311)
------ -------
Net cash provided by operating activities 2,565,647 2,068,007
--------- ---------
Cash flows from investing activities:
Acquisitions of apartment properties (10,666,041) -
Additions to apartment properties (234,975) (179,483)
Payment of deferred acquisition costs - (151,094)
Investment in and advances to Management Company (165) (100,000)
Dividends received from Management Company 75,719 -
------ -------
Net cash used in investing activities (10,825,462) (430,577)
----------- --------
Cash flows from financing activities:
Payment of dividends (1,870,379) (1,858,841)
Proceeds from notes payable 10,650,000 10,675,000
Principal payments on notes payable (224,451) (10,672,979)
Payment of deferred financing costs (311,151) (163,267)
-------- --------
Net cash provided by (used in) financing activities 8,244,019 (2,020,087)
--------- ----------
Decrease in cash and cash equivalents (15,796) (382,657)
Cash and cash equivalents at beginning of period 700,863 952,363
------- -------
Cash and cash equivalents at end of period $ 685,067 $ 569,706
=========== ===========
</TABLE>
5
<PAGE>
BODDIE-NOELL PROPERTIES, INC.
- ------------------------------------------------------------------------------
Notes to Financial Statements - June 30, 1996
(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, 1995. 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.
These financial statements should be read in conjunction with the Company's 1995
Annual Report on Form 10-K.
Certain amounts in the 1995 financial statements have been reclassified to
conform to the 1996 presentation.
The results of the first two quarters of 1996 are not necessarily indicative of
future financial results.
Note 2. Acquisition of Paces Village Apartments
On April 29, 1996, the Company acquired Paces Village Apartments for a contract
purchase price of $10,625,000. Transaction costs related to the acquisition,
excluding costs associated with financing the purchase, are estimated at
$40,000. A more detailed description of the acquisition has been included in the
Company's Current Report on Form 8-K as of April 29, 1996.
Note 3. Notes payable
During the quarter ended June 30, 1996, the Company financed the purchase of
Paces Village Apartments through first and second deed of trust loans totaling
$10,000,000 along with a draw of $650,000 from the Company's existing credit
facility. In addition, deeds of trust related to Paces Commons Apartments and
Oakbrook Apartments were modified to extend the terms of each note by five
years. In conjunction with these transactions, the Company paid and recorded
$139,000 in deferred loan costs.
Notes payable consist of the following at June 30, 1996, and December 31, 1995:
<TABLE>
<CAPTION>
June 30, December 31,
1996 1995
--------------- ---------------
<S> <C> <C>
Note payable to a bank in the principal sum of up to $25,500,000 due December
1998, interest on the outstanding principal balance payable monthly at an
effective rate of 8.11%, secured by deeds of trust on 47 restaurant properties
and assignment of rents under the Amended and Restated Master Lease Agreement
for those restaurants. The principal balance of the loan may be prepaid, in
whole or part, subject to certain restrictions and penalties. $23,900,000 $23,250,000
Fixed rate notes payable, comprised of four loans payable in monthly
installments totaling approximately $285,000 including principal and interest at
rates ranging from 7.86% to 8.55%, with maturities in 2000 (balloon of
approximately $12,500,000) through 2025. The notes are secured by deeds of
trust and assignments of rents of four apartment properties. 36,637,545 36,855,485
6
<PAGE>
Variable rate notes payable comprised of two loans ($8,600,000 and $1,400,000,
respectively), payable in monthly installments of $6,511 applied to the
principal balance of the $8,600,000 loan and interest at 30-day LIBOR plus 1.75%
and 2.25% (7.35% and 7.85% at June 30, 1996), respectively, with maturities in
2002 and 1999, respectively. The notes are secured by deeds of
trust and assignments of rents of three apartment properties. 9,993,489 -
Variable rate notes payable to affiliates comprised of two loans due May 1999,
interest at the lower of 30-day LIBOR plus 1.5% (7.10% at June 30, 1996) or 8%,
payable quarterly. Liability for these notes was assumed at the acquisition of
BTVC. 7,056,300 7,056,300
--------- ---------
$77,587,334 $67,161,785
=========== ===========
</TABLE>
As of June 30, 1996, scheduled principal payments are approximately as follows:
1996 - $235,000; 1997 - $495,000; 1998 - $24,431,000; 1999 - $9,026,000; 2000 -
$12,858,000; 2001 - $389,000; thereafter - $30,153,000.
Note 4. Subsequent declaration of dividend
On July 17, 1996, the Company declared a cash dividend of $0.31 per share, which
will be paid on August 15, 1996, to shareholders of record on August 1, 1996.
7
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operation.
Overview
Boddie-Noell Properties, Inc. (the "Company") is a self-managed, self-advised
real estate investment trust ("REIT"). As of June 30, 1996, the Company owned 47
net-lease restaurant properties and five apartment properties containing 1,328
apartments. Through its management subsidiary, the Company manages an additional
nine apartment properties containing 1,713 apartments and two shopping centers.
All of the Company's operations are in the states of North Carolina and
Virginia.
The following discussion should be read in conjunction with the financial
statements and notes thereto included in this Quarterly Report on Form 10-Q, the
Company's audited financial statements and notes thereto included in the
Company's 1995 Annual Report on Form 10-K and the Company's Current Report on
Form 8-K as of April 29, 1996.
Results of Operations
Revenues. The Company's revenues increased by 3 percent for the quarter ended
June 30, 1996, and 1 percent for the six months ended June 30, 1996, compared to
the same prior year periods, reflecting significant increases in apartment
rental income offset by declines in restaurant rental income and the transfer of
all of the Company's third-party management contracts to BNP Management, Inc.
("BNP Management"), an unconsolidated management subsidiary which was formed in
May 1995.
Apartment rental income increased by 17 percent in second quarter 1996 and 11
percent through six months of 1996 compared to 1995. Paces Village Apartments,
acquired April 29, 1996, contributed $266,000 to 1996 apartment rental revenues.
For apartment properties owned throughout the first six months of both 1996 and
1995, increases in apartment income resulted from a 5 percent increase in
average revenue received per apartment, offset somewhat by a 1 percent decline
in economic occupancy. Summary amounts related to apartment properties occupancy
are as follows:
<TABLE>
<CAPTION>
1996 1995
---------------------------------------------------------------------
Harris Paces Paces
Hill Latitudes Oakbrook Commons Village* Overall Overall
<S> <C> <C> <C> <C> <C> <C> <C>
Number of units 184 448 162 336 198 1,328 1,130
Quarter ended June 30--
Average physical occupancy 92.9% 92.7% 93.5% 95.5% 94.0% 93.7% 93.8%
Average economic occupancy 92.8% 93.3% 93.9% 95.7% 93.3% 93.9% 93.8%
Average monthly revenue/unit $704 $641 $782 $677 $697 $683 $655
Six months ended June 30--
Average physical occupancy 93.7% 92.3% 94.3% 94.4% 94.0% 93.4% 94.5%
Average economic occupancy 93.3% 93.1% 94.7% 94.3% 93.3% 93.7% 94.9%
Average monthly revenue/unit $709 $635 $774 $677 $697 $680 $645
<FN>
*Two months activity
</FN>
</TABLE>
In December 1995, the Company entered into a modified lease agreement with
Boddie-Noell Enterprises, Inc. ("BNE"), the operator of its restaurant
properties, which increased the minimum annual rental from $3.46 million to $4.5
million. Percentage rent remains at 9.875% of gross food sales, payable
quarterly to the extent that percentage rent exceeds minimum rent, but subject
to a year-end adjustment to the greater of percentage or minimum rent for the
calendar year. During the first quarter of 1996, the new minimum resulted in
higher restaurant rental payments than were received in the first quarter of
1995. Management now expects that the
8
<PAGE>
Company will receive the minimum rent for the year 1996 (a 3.2 percent decline
from 1995) and has elected to record the minimum rent for the second quarter,
even though the percentage rent calculation provides for approximately $45,000
additional rental. Same-store restaurant sales declined by 7 percent for second
quarter and 8 percent through six months of 1996 compared to 1995, attributed to
the combined effect of severe weather in the Company's markets, continued
widespread price discounting in the quick-service restaurant industry, and the
lack of a strong hamburger product on the Hardee's menu. BNE and Hardee's Food
Systems, the restaurant franchisor, are taking aggressive steps to improve
restaurant sales, including a new advertising campaign and a return to the
chargrill cooking method for hamburger products. In March 1996, BNE began to
convert the Company's restaurants to the chargrill cooking system, and at June
30, 1996, all 28 of the Company's restaurants located in Virginia had been
converted to the chargrill system. The entire cost of the conversion is being
borne by BNE.
The Company received no third-party management fees in 1996, compared to
$177,000 in second quarter and $387,000 year to date in 1995. The Company has a
95 percent economic interest in BNP Management, which now performs all
third-party management activities, and recorded equity in BNP Management's net
income of approximately $49,000 in second quarter and $76,000 through six months
of 1996. Because the Company receives most of the net income of the subsidiary,
management does not expect that the formation or operation of the management
subsidiary will have a significant effect on the Company's financial position or
operating results.
Expenses. Second quarter and year to date 1996 expenses were generally
consistent with management's expectations. The increase in depreciation compared
to 1995 amounts reflects the acquisition of Paces Village Apartments ($10.7
million in apartment property assets) in late April along with improvements at
other apartment properties. The increase in amortization expense is primarily
attributable to quarterly additions to the intangible asset related to the
earn-out provision of the acquisition agreement pursuant to which the Company
acquired BT Venture Corporation ("BTVC") along with addition of approximately
$310,000 in deferred financing costs during the first six months of 1996.
Increases in apartment operations expense in second quarter and year to date
1996 were consistent with related apartment rental income. Operating expenses
related to restaurant rental properties are insignificant because of the
restaurants' triple net lease arrangement. The decline in administrative expense
reflects the transfer of expenses related to third-party management operations
to BNP Management.
The increase in interest expense in 1996 compared to 1995 is primarily
attributable to the addition of $10,650,000 of debt related to the acquisition
of Paces Village in the second quarter of 1996. Weighted average interest rates
were 8.0 percent in second quarter and through six months of 1996 compared to
8.1 percent and 8.0 percent during the same periods in 1995.
Summary results of operations. Funds from operations ("FFO") is defined by the
National Association of Real Estate Investment Trusts ("NAREIT") as "net income
(computed in accordance with generally accepted accounting principles),
excluding gains (losses) from debt restructuring and sales of property, plus
depreciation and amortization, and after adjustments for unconsolidated
partnerships and joint ventures." In 1995 NAREIT issued additional guidance for
interpretation of this definition which provides that only depreciation and
amortization of real estate assets should be added back to net income in
calculating FFO. At December 31, 1995, the Company adopted this interpretation
and restated FFO amounts previously reported.
Management considers FFO to be useful in evaluating potential property
acquisitions and measuring the operating performance of an equity REIT because,
together with net income and cash flows, FFO provides investors with an
additional basis to evaluate the ability of a REIT to incur and service debt and
to fund acquisitions and other capital expenditures. FFO does not represent net
income or cash flows from operations as defined by generally accepted accounting
principles ("GAAP"), and FFO should not be considered as an alternative to net
income as an indicator of the Company's operating performance or as an
alternative to cash flows as a measure of liquidity. FFO does not measure
whether cash flow is sufficient to fund all of the Company's cash needs,
including principal amortization, capital improvements and distributions to
shareholders. FFO does not represent cash flows from
9
<PAGE>
operating, investing or financing activities as defined by GAAP. Further, FFO as
disclosed by other REITs may not be comparable to the Company's calculation of
FFO, as described above.
A reconciliation of net income, funds from operations, and net cash provided by
operating activities is as follows (all amounts in thousands):
<TABLE>
<CAPTION>
Three months ended Six months ended
June 30, June 30,
1996 1995 1996 1995
--------------- -------------- -------------- ---------------
<S> <C> <C> <C> <C>
Net income $ 435 $ 526 $ 815 $ 914
Depreciation 604 548 1,159 1,095
Amortization of management intangible 77 63 150 119
Write-off of deferred costs - 22 - 22
----- -- ----- --
Funds from operations 1,116 1,159 2,124 2,150
Equity in income of Management Company (49) - (76) -
Amortization of deferred financing costs 56 34 106 89
Changes in operating assets and liabilities 202 (54) 412 (171)
--- --- --- ----
Net cash provided by operating activities $ 1,325 $ 1,139 $ 2,566 $ 2,068
========= ======= ========= ========
Net cash used in investing activities $ (10,583) $ (197) $ (10,825) $ (431)
========= ======= ========= ========
Net cash provided by (used in) financing
activities $ 9,447 $ (955) $ 8,244 $ (2,020)
========= ======= ========= ========
</TABLE>
Funds from operations declined by 4 percent during second quarter and 1 percent
year to date in 1996 compared to the same periods in1995, attributed to declines
in restaurant rental income which were partially offset by increased apartment
income. Declines in net income for comparable periods further reflect the impact
of increased non-cash charges for depreciation and amortization. Changes in
operating assets and liabilities reflect timing of rent receipts and payments
for trade payables, taxes, escrow funds and other prepaid items.
Liquidity and Capital Resources
Capital resources. At June 30, 1996, the Company's total book capitalization was
$102,731,000, comprised of $25,144,000 of shareholders' equity and $77,587,000
of debt.
On April 29, 1996, the Company acquired Paces Village Apartments for a contract
purchase price of $10,625,000. The Company financed the purchase with loans
totaling $10,000,000 along with a draw of $650,000 from the Company's existing
credit facility. The loans used to acquire Paces Village loans include a first
deed of trust loan of $8,600,000 payable in monthly installments of $6,511 plus
interest at 30-day LIBOR plus 1.75 percent, maturing in 2002, and a second deed
of trust loan of $1,400,000 which is due in full in 1999 and provides for
interest only payments monthly at 30-day LIBOR plus 2.25 percent. In conjunction
with execution of the new loans, the Company modified existing loans on Paces
Commons and Oakbrook Apartments to extend the terms of these loans from 25 to 30
years and to increase interest rate lock periods by two years for each loan.
Total cost of the acquisition and related financing is estimated at $10,805,000.
A more detailed description of the acquisition and related financing
transactions has been included in the Company's Current Report on Form 8-K as of
April 29, 1996.
During 1995 the Company issued a total of 25,750 shares of common stock to the
former BTVC shareholders to satisfy an earn-out provision in the BTVC
acquisition agreement. Under the terms of the acquisition agreement, at June 30,
1996, the former BTVC shareholders are due additional consideration totaling
$567,000, payable at the Company's option in up to 44,338 shares of common stock
or cash.
10
<PAGE>
Cash flows and liquidity. Net cash provided by operating activities totaled
$2,566,000 and $2,068,000 through six months of 1996 and 1995, respectively. As
discussed above, net income and funds from operations declined in second quarter
and year to date in 1996 compared to 1995. Changes in operating assets and
liabilities arise from timing of rental receipts and payments for trade
payables, taxes, escrow funds and other prepaid items.
Net cash used in investing activities totaled $10,825,000 through six months in
1996, including approximately $10,500,000 expended during second quarter in the
Paces Village acquisition. No significant investing activities occurred during
the first six months of 1995.
Significant financing activities in 1996 include financing the Paces Village
Apartments acquisition with debt totaling $10,650,000 and payments of regular
quarterly dividends totaling $1,870,000 (compared to $1,858,000 paid through six
months in 1995). The Company has consistently paid quarterly dividends of $0.31
per share every quarter since 1992.
Short- and long-term liquidity requirements. The Company continues to produce
sufficient cash flow to fund its regular dividend. The Company has announced
that it will pay a regular quarterly dividend of $0.31 per share on August 15,
1996, to shareholders of record on August 1, 1996.
At June 30, 1996, the weighted average interest rate on outstanding debt was 8.0
percent compared to 8.1 percent at March 31, 1996, reflecting the favorable
impact of new variable rate debt related to the Paces Village acquisition. A 1
percent increase in variable rates would increase annual interest expense by
approximately $164,000, while a 1 percent decrease in variable rates would
decrease annual interest expense by approximately $170,000. Additional
discussion of notes payable and related maturities has been included in the
notes to the financial statements at June 30, 1996.
The Company expects to meet its short-term liquidity requirements with net cash
provided by operations and utilization of credit facilities. Management believes
that net cash provided by operations will be adequate to meet both operating
requirements and payment of dividends to satisfy Internal Revenue Service REIT
requirements in both the short- and long term. The Company anticipates funding
acquisition activities, if any, primarily by using secured debt, and expects to
meet certain of its long-term liquidity requirements with long-term secured and
unsecured borrowings and the issuance of debt securities or additional equity
securities of the Company. Management 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. Apartment property
carpet, vinyl and wallpaper are capitalized and depreciated over five years.
Capitalized property additions, replacements and improvements are summarized as
follows (amounts in thousands):
<TABLE>
<CAPTION>
Three months ended Six months ended
June 30, June 30,
1996 1995 1996 1995
---------------- ---------------- --------------- ----------------
<S> <C> <C> <C> <C>
Capitalized carpet, vinyl and wallpaper
replacements $ 40 $ 53* $ 83 $ 86*
Exterior painting - - - 75
Other property additions 66 46 152 62
-- -- --- --
106 99 235 223
Allocation of BTVC purchase price
additional consideration 17 17 33 33
-- -- -- --
$123 $116 $268 $256
==== ==== ==== ====
11
<PAGE>
<FN>
*Includes approximately $28,000 and $44,000 for the three months and six months,
respectively, which was originally expensed and subsequently capitalized through
a fourth quarter adjustment.
</FN>
</TABLE>
Inflation. Management does not believe that inflation poses a material risk to
the Company. The leases at the Company's apartment properties are short-term in
nature. The majority of the apartment leases are 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.
PART II - Other Information
Item 4. Submission of Matters to a Vote of Security Holders
The Company held its Annual Meeting of Shareholders on May 23, 1996. At that
meeting the following proposal was approved:
<TABLE>
<CAPTION>
Withheld/ Broker
For Against Abstained Non-votes
------------------- ------------------ ------------------ -------------------
<S> <C> <C> <C> <C>
Election of five directors:
B. Mayo Boddie 2,514,295 - 9,249 190,015
Nicholas B. Boddie 2,514,543 - 9,001 190,015
Donald R. Pesta, Jr. 2,512,131 - 11,414 190,015
William H. Stanley 2,514,443 - 9,101 190,015
Richard A. Urquhart 2,509,453 - 14,091 190,015
</TABLE>
Item 5. Other Information
Amendment of Automatic Dividend Reinvestment Plan
On July 2, 1996, the Company announced the amendment of its Automatic Dividend
Reinvestment Plan (the "Plan") effective July 26, 1996. The Plan will continue
to provide a simple and convenient method for shareholders to invest cash
dividends and optional cash payments in shares of the Company's common stock.
Under the amended Plan, the Company will now pay all costs, including brokerage
commissions, incurred in connection with purchases under the Plan. In addition,
the Plan has been amended to give the Company the option of issuing shares
directly to Plan participants rather than causing all purchases under the Plan
to be made on the open market.
Re-election of officers
The Company has announced the re-election of the following officers:
D. Scott Wilkerson President and Chief Executive Officer
Philip S. Payne Executive Vice President, Treasurer, and
Chief Financial Officer
Douglas E. Anderson Vice President - Secretary
Lisa K. McCourt Vice President - Property Management
12
<PAGE>
Pamela B. Novak Vice President - Controller
W. Craig Worthy Vice President - Assistant Treasurer
Item 6. Exhibits and Reports on Form 8-K.
a) Exhibits:
<TABLE>
<S> <C> <C>
Exhibit 4 Boddie-Noell Properties, Inc. Dividend Reinvestment and *
Stock Purchase Plan, as amended effective July 26, 1996
(Form S-3D filed July 2, 1996, and incorporated herein by
reference).
Exhibit 11 Computation of per share earnings Page 15
Exhibit 27 Financial data schedule (electronic filing) Page 16
<FN>
*Incorporated herein by reference
</FN>
</TABLE>
b) Reports on Form 8-K:
The Company filed a Current Report on Form 8-K dated April 29, 1996,
relating to the acquisition of Paces Village Apartments.
13
<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, thereunto duly authorized.
BODDIE-NOELL PROPERTIES, INC.
(Registrant)
August 12, 1996 /s/ Philip S. Payne
Philip S. Payne
Executive Vice President and
Chief Financial Officer
(Duly authorized officer)
August 12, 1996 /s/ Pamela B. Novak
Pamela B. Novak
Vice President - Controller
(Chief accounting officer)
14
<PAGE>
BODDIE-NOELL PROPERTIES, INC.
- ------------------------------------------------------------------------------
EXHIBIT 11: COMPUTATION OF PER SHARE EARNINGS
SIX MONTHS ENDED JUNE 30, 1996
<TABLE>
<CAPTION>
Price # SHARES Total Amt.
<S> <C> <C> <C>
Common shares outstanding:
January 1 - June 30 3,016,740
==============
Weighted average 3,016,740
==============
Common stock equivalents:
Options granted October 17, 1994,
as repriced January, 1996 $ 12.50 160,000
==============
Other potentially dilutive securities: none
==============
Assumed exercise of options @ January 1 12.50 160,000 $ 2,000,000
Assumed purchase of treasury stock w/proceeds
Average price of stock (per AMEX reports)
January 12.59
February 12.95
March 13.05
April 12.44
May 12.48
June 12.71
Overall average 12.70 (157,439) (2,000,000)
-------------- ================
Assumed increase(decrease) in # shares/equity $ 2,561 $ -
================
Weighted average # shares outstanding 3,016,740
Assumed # shares for calculation of
==============
earnings per common and common equivalent share 3,019,301
==============
Net income, six months ended June 30, 1996 $ 814,512
================
Earnings per share, weighted average common shares outstanding $ 0.2700
================
Earnings per common and common equivalent share $ 0.2698
================
Dilution percentage 0.08% *
==============
<FN>
*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 share is presented based on weighted average
number of common shares outstanding.
</FN>
</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, 1996, AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL
STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> JUN-30-1996
<CASH> 685,067
<SECURITIES> 0
<RECEIVABLES> 9,705
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 1,081,535
<PP&E> 109,455,111
<DEPRECIATION> (10,180,389)
<TOTAL-ASSETS> 104,270,133
<CURRENT-LIABILITIES> 1,538,728
<BONDS> 77,587,334
<COMMON> 30,167
0
0
<OTHER-SE> 25,113,904
<TOTAL-LIABILITY-AND-EQUITY> 104,270,133
<SALES> 0
<TOTAL-REVENUES> 6,931,497
<CGS> 0
<TOTAL-COSTS> 2,519,613
<OTHER-EXPENSES> 753,587
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 2,843,785
<INCOME-PRETAX> 814,512
<INCOME-TAX> 0
<INCOME-CONTINUING> 814,512
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 814,512
<EPS-PRIMARY> 0.27
<EPS-DILUTED> 0
</TABLE>
