<PAGE>
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
--------------------
FORM 10-Q
(MARK ONE)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED MARCH 31, 1995, OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934
FOR THE TRANSACTION PERIOD FROM _____________ TO __________________
--------------------
COMMISSION FILE NUMBER 0-15932
BF ENTERPRISES, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 94-3038456
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
100 BUSH STREET
SUITE 1250
SAN FRANCISCO, CALIFORNIA 94104
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (415) 989-6580
--------------------
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes X No
----- -----
Indicate the number of shares outstanding of each of the issuer's classes of
common stock as of April 30, 1995:
3,794,393 shares of $.10 par value Common Stock
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<PAGE>
BF ENTERPRISES, INC. AND SUBSIDIARIES
I N D E X
Page
----
PART I FINANCIAL INFORMATION
Item 1. Financial Statements
- Consolidated statements of financial position. . . . . . 3
- Consolidated statements of operations. . . . . . . . . . 4
- Consolidated statements of stockholders' equity. . . . . 5
- Consolidated statements of cash flows. . . . . . . . . . 6
- Notes to financial statements. . . . . . . . . . . . . . 7
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations . . . . . . . . . . . . . . . . . . 10
PART II OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K . . . . . . . . . . . . . . 13
2
<PAGE>
PART I - FINANCIAL INFORMATION
Item 1. FINANCIAL STATEMENTS.
BF ENTERPRISES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF FINANCIAL POSITION (UNAUDITED)
(in thousands, except per share amounts)
<TABLE>
<CAPTION>
March 31, December 31,
1995 1994
---- ----
<S> <C> <C>
ASSETS:
Cash and cash equivalents $ 1,152 $ 2,975
Marketable securities 2,173 1,883
Receivables 367 144
Mortgage loans 881 886
Real estate rental property, net of depreciation 2,459 2,471
Real estate inventory held for current sale
and land held for future development 11,029 11,169
Other real estate 879 879
Other assets 423 39
-------- --------
TOTAL ASSETS $ 19,363 $ 20,446
-------- --------
-------- --------
LIABILITIES AND STOCKHOLDERS' EQUITY:
Payables and accrued liabilities $ 3,378 $ 4,572
Subordinated debentures, unmatured 817 817
Deferred income taxes 17 432
-------- --------
Total liabilities 4,212 5,821
-------- --------
Stockholders' equity:
Common stock, $.10 par value
Authorized - 10,000,000 shares
Issued and outstanding -
3,794,393 and 3,758,393 shares 379 376
Capital surplus 17,491 17,344
Deficit (2,816) (3,114)
Net unrealized gains from marketable
equity securities 97 19
-------- --------
Total stockholders' equity 15,151 14,625
-------- --------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 19,363 $ 20,446
-------- --------
-------- --------
</TABLE>
The accompanying notes to financial statements
are an integral part of these statements.
3
<PAGE>
BF ENTERPRISES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
(in thousands, except per share amounts)
<TABLE>
<CAPTION>
Three Months Ended
March 31,
----------------------
1995 1994
---- ----
<S> <C> <C>
Revenues:
Real estate sales $ 786 $ 865
Real estate leasing income and
mortgage loan interest 87 160
Interest and dividends 60 83
Other 3 --
----- ------
936 1,108
Costs and Expenses:
Cost of real estate sold 313 153
Interest 14 25
Depreciation 13 13
General and administrative 298 326
----- ------
638 517
Gross profit 298 591
Losses from securities -- (2)
----- ------
Net income $ 298 $ 589
----- ------
----- ------
Net income per share $ .07 $ .15
----- ------
----- ------
</TABLE>
The accompanying notes to financial statements
are an integral part of these statements.
4
<PAGE>
BF ENTERPRISES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (UNAUDITED)
(in thousands)
<TABLE>
<CAPTION>
Three Months Ended
March 31,
----------------------
1995 1994
---- ----
<S> <C> <C>
Common stock:
Beginning of period $ 376 $ 381
Restricted stock grant - par value 4 --
Purchases of common stock - par value (1) (2)
------- -------
End of period $ 379 $ 379
------- -------
------- -------
Capital surplus:
Beginning of period $17,344 $17,548
Restricted stock grant - excess over par value 170 --
Purchases of common stock - excess over par value (23) (66)
------- -------
End of period $17,491 $17,482
------- -------
------- -------
Deficit:
Beginning of period $(3,114) $(4,722)
Net income 298 589
------- -------
End of period $(2,816) $(4,133)
------- -------
------- -------
Net Unrealized Gains From
Marketable Equity Securities:
Beginning of period $ 19 $ --
Valuation allowance 78 --
------- --------
End of period $ 97 $ --
------- --------
------- --------
</TABLE>
The accompanying notes to financial statements
are an integral part of these statements.
5
<PAGE>
BF ENTERPRISES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
(in thousands)
<TABLE>
<CAPTION>
Three Months Ended
March 31,
----------------------
1995 1994
---- ----
<S> <C> <C>
Cash flows from operating activities:
Net income $ 298 $ 589
Adjustments to reconcile net income to net cash
provided or used by operating activities:
Gains from sales of real estate (473) (712)
Losses from securities -- 2
Net cash proceeds from sales of real estate 562 529
Real estate development costs (224) (327)
Reimbursement of real estate development costs 275 169
Changes in certain assets and liabilities:
Decrease (increase) in receivables (223) 72
Decrease in payables and accrued liabilities (508) (382)
Decrease in deferred income taxes (415) --
Other, net (368) 101
------- -------
Total adjustments to net income (1,374) (548)
------- -------
Net cash provided (used) by operating
activities (1,076) 41
Cash flows from investing activities:
Proceeds from sales of marketable securities -- 2,480
Purchases of marketable securities (211) (3,457)
------- -------
Net cash used by investing activities (211) (977)
Cash flows from financing activities:
Reductions in subordinated debentures (512) (3,521)
Purchases of the Company's common stock (24) (68)
------- -------
Net cash used by financing activities (536) (3,589)
------- -------
Net decrease in cash and cash equivalents (1,823) (4,525)
Cash and cash equivalents at beginning of period 2,975 9,840
------- -------
Cash and cash equivalents at end of period $ 1,152 $ 5,315
------- -------
------- -------
Supplemental disclosures of cash flow information:
Cash paid during the period for interest
(net of amount capitalized) $ 14 $ 87
------- -------
------- -------
</TABLE>
The accompanying notes to financial statements
are an integral part of these statements.
6
<PAGE>
BF ENTERPRISES, INC. AND SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
Note A - Interim Financial Information
The accompanying consolidated financial statements of BF Enterprises, Inc. (the
"Company") and its subsidiaries have been prepared pursuant to the rules and
regulations of the Securities and Exchange Commission ("SEC") and, in
management's opinion, include all adjustments necessary for a fair presentation
for the interim period reported. Certain information and note disclosures
normally included in annual financial statements prepared in accordance with
generally accepted accounting principles have been condensed or omitted pursuant
to SEC rules or regulations. It is suggested that these financial statements be
read in conjunction with the financial statements and the notes thereto included
in the Company's Form 10-K for the year ended December 31, 1994.
Note B - Real Estate Rental Property
Real estate rental property is an office and manufacturing building and
underlying 16 acres of land in Tempe, Arizona. In January 1995, the Company
executed a lease amendment with the original tenant of this property, IDEA
Courier Incorporated, under the terms of which IDEA Courier is to vacate
portions of the building from time to time during the first six months of 1995,
with the lease terminating in its entirety on June 30, 1995. In March 1995, the
Company entered into a new 10-year net lease with Bank One, Arizona, NA, a
subsidiary of Banc One Corporation, as the tenant of the entire property. That
lease became effective March 1, 1995, and provides for the phased occupancy and
rental of space by Bank One during 1995, with rental of the entire premises
commencing January 1, 1996. Effective March 1, 1995, Bank One also took
assignment of the amended lease with IDEA Courier and indemnified the Company
against any claims arising out of that lease from that date. As a result of the
new lease, the rental revenues are now projected at $312,000 in 1995, $1,452,000
in 1996, $1,628,000 in 1997, $1,707,200 in 1998, $1,826,000 in 1999 and
$10,023,200 for the subsequent five year period.
In May 1995, IDEA Courier filed an action in an Arizona superior court naming
the Company and Bank One as defendants, claiming, among other things, that
actions by the defendants resulted in unreasonable interference with the
plaintiff's use of its leased premises. The Company's management believes that
the plaintiffs claims are without merit and, moreover, that any damages assessed
by the court against the Company would be subject to indemnification by Bank
One. In the event the court were to find in favor of the plaintiff in its
actions against the Company and the Bank One indemnity be deemed inapplicable,
the Company's future operating results could be materially adversely affected.
7
<PAGE>
BF ENTERPRISES, INC. AND SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
Note C - Real Estate Inventory Held for Current Sale and Land Held for Future
Development
At March 31, 1995, such real estate assets consisted primarily of approximately
1,042 acres of land in a master-planned, mixed-use project known as Meadow
Pointe near Tampa, Florida. The Company carries its Meadow Pointe project and
all other real estate properties held for sale, investment or development at the
lower of cost or estimated net realizable value, which is the estimated sales
proceeds of the property less costs to complete the project and holding and
disposition costs as applicable. All such properties are currently carried at
cost. The Company capitalizes costs directly associated with the Meadow Pointe
project, including certain project related employee compensation costs.
Note D - Income Taxes
The Company is currently engaged in a dispute with the California Franchise Tax
Board (the "FTB") arising from the FTB's assessment for income taxes for the
year ended December 31, 1981. The assessment arose out of the FTB's contention
that a loss attributable to the 1981 acquisition by the Company's predecessor of
a warrant for the purchase of its common stock should have been treated for tax
purposes as a business deduction rather than a non-business deduction. The
Company appealed the FTB's assessment to the California State Board of
Equalization, which denied the appeal in July 1994. In March 1995, the Company
made a $650,000 payment to the FTB, the amount of the assessment and accrued
interest, and subsequently filed a request for refund in the full amount of its
payment. If the Company's request for refund is denied, the Company intends to
bring an action for the refund in a California superior court.
At March 31, 1995, the Company had net operating loss carryforwards of
approximately $12,400,000 for financial reporting purposes. Due to timing
differences, at March 31, 1995, the Company had available for federal income tax
purposes unused operating and capital loss carryforwards of approximately
$11,000,000.
8
<PAGE>
BF ENTERPRISES, INC. AND SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
Note E - Stockholders' Equity
From time to time, the Company purchases shares of its common stock in the open
market. During the three months ended March 31, 1995, the Company purchased
5,000 shares of its common stock for an aggregate amount of $24,000. During the
three months ended March 31, 1994, the Company purchased 17,500 shares of its
common stock for an aggregate amount of $68,000.
In January 1995, five officers of the Company were issued an aggregate of 41,000
shares of restricted stock pursuant to the Company's 1993 Long-Term Equity
Incentive Plan. The market value of these shares at the date of issue was
$174,000.
9
<PAGE>
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS.
RESULTS OF OPERATIONS
Net income of $298,000 and $589,000 in the three months ended March 31,
1995 and 1994, respectively, included gains of $475,000 and $712,000,
respectively, from sales of property within the Company's Meadow Pointe project
near Tampa, Florida. Sales of developed residential lots during the three
months ended March 31, 1995, were 23% and 16% less than in the same periods of
1994 and 1993, respectively, and such sales may remain below the levels set
during those two years for the remainder of 1995 depending upon, among other
things, the strength of the general economy in the Tampa area and nationally,
residential mortgage interest rates, competitive residential developments
serving the same group of home buyers and other factors related to the local
Tampa real estate market.
Real estate leasing income and mortgage loan interest decreased 46% in the
three months ended March 31, 1995 as compared to the same period of 1994
primarily as a result of an amendment of the original lease, and the execution
of a new lease, of the Company's Tempe, Arizona property. Due to these changes,
annual rental income from the Tempe property is expected to decrease from
$505,000 in 1994 to $312,000 in 1995. (See Note B of Notes to Financial
Statements.) In addition, the Company expects to incur costs during 1995 for
property taxes, insurance and certain other operating expenses related to the
lease of the Tempe property of approximately $150,000 which it did not incur in
prior years, and most of which costs it does not expect to incur after 1995.
Interest and dividends from investments accounted for $60,000 and $83,000
of revenues in the three months ended March 31, 1995 and 1994, respectively.
The decline in investment revenue in 1995 was due to a reduction in the amount
of funds available for investment.
The cost of real estate sold in the three months ended March 31, 1995,
included the cost of lots in a residential development adjacent to Meadow Pointe
and the cost of a model home within the Meadow Pointe project, in the aggregate
amount of $205,000. There were no such costs in the three months ended March
31, 1994.
Interest expense for the three months ended March 31, 1995 and 1994, was
$14,000 and $25,000, respectively. The decrease resulted from a reduction in
the amount of the Company's unmatured subordinated debentures. These interest
amounts were entirely attributable to unmatured subordinated debentures.
Interest expense in the 1994 three month period was net of capitalized interest
of $75,000.
General and administrative expenses in the three months ended March 31,
1995, were $28,000 lower than in the comparable period in 1994, due principally
to lower employee compensation and benefits expenses and a reduction in office
rental expense. The Company
10
<PAGE>
reduced its headquarters office space in the 1995 period. Employee compensation
expenses capitalized against Tampa, Florida real estate were $40,000 in each of
the three month periods ended March 31, 1995 and 1994, 18% and 19%,
respectively, of total compensation for such periods. The Company capitalizes a
portion of the compensation of certain employees who devote a significant
portion of their time to the Meadow Pointe project.
LIQUIDITY AND CAPITAL RESOURCES
During the three months ended March 31, 1995, cash, cash equivalents and
marketable securities decreased by $1,533,000. This decrease was due
principally to redemptions of the Company's subordinated debentures, aggregating
$512,000, and to a $650,000 payment to the California Franchise Tax Board (the
"FTB") in the amount of the FTB's assessment for income taxes for the year ended
December 31, 1981, together with accrued interest (See Note D of Notes to
Financial Statements).
At March 31, 1995, the Company held $3,325,000 in cash, cash equivalents
and marketable securities as compared to $4,412,000 for all short-term and long-
term liabilities. From time to time the Company purchases shares of its common
stock in the open market (See Note E of Notes to Financial Statements).
The Company expects that its net rental income from its Tempe building,
which had been $505,000 annually under the original lease with IDEA Courier
Incorporated, will be reduced to about $312,000 for 1995. Beginning in 1996,
however, when the new lessee, Bank One, Arizona, NA, will be paying rent on the
entire building, the net rental is projected to increase substantially, and over
the 10-year term of the lease is projected to aggregate approximately
$17,000,000. In May 1995, IDEA Courier filed an action in an Arizona superior
court naming the Company and Bank One as defendants, claiming, among other
things, that actions by the defendants resulted in unreasonable interference
with the plaintiff's use of its leased premises. The Company's management
believes that the plaintiffs claims are without merit and, moreover, that any
damages assessed by the court against the Company would be subject to
indemnification by Bank One. In the event the court were to find in favor of
the plaintiff in its actions against the Company and the Bank One indemnity be
deemed inapplicable, the Company's future operating results could be materially
adversely affected. (See Note B of Notes to Financial Statements.)
The Company's business plan calls for substantial expenditures during the
next several years relating to the planned development of Meadow Pointe. Since
February 1992, the Meadow Pointe Community Development District, encompassing
approximately 902 acres in the western portion of Meadow Pointe, has issued
$38,400,000 of its capital improvement revenue bonds. The Company's budget
currently anticipates the future issuance of approximately $42,000,000 of
additional bonds by the Meadow Pointe II Community Development District, which
encompasses approximately 822 acres in the eastern portion of Meadow Pointe.
The proceeds of such bonds have been and are expected to be used to construct
infrastructure
11
<PAGE>
improvements necessary for the development and sale of residential lots, and
multifamily and commercial parcels, in Meadow Pointe. There can be no assurance
that any additional bonds will be issued.
The Company intends to pay for its budgeted expenditures at Meadow Pointe
and its other operating expenses (including those related to debenture payments)
with (i) cash generated from sales of property within Meadow Pointe, rental from
its Tempe building and its other operations and (ii) cash and cash equivalents
on hand. There can be no assurance that the Company will generate sufficient
cash or have sufficient cash and cash equivalents on hand to cover such
expenditures. Moreover, there can be no assurance that the amounts currently
budgeted will be sufficient to develop the long-term Meadow Pointe project.
12
<PAGE>
PART II - OTHER INFORMATION
Item 6. EXHIBITS AND REPORTS ON FORM 8-K.
(a) Exhibits.
Exhibit
Number
-------
11 Statement re computation of per share earnings.
(b) Reports on Form 8-K.
The registrant did not file any reports on Form 8-K during the period
covered by this report.
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.
BF ENTERPRISES, INC.
(Registrant)
Date: May 10, 1995 /s/ John M. Price
----------------------------------
John M. Price
Senior Vice President,
Secretary, Treasurer and
General Counsel
(Duly Authorized Officer)
Date: May 10, 1995 /s/ S. Douglas Post
----------------------------------
S. Douglas Post
Vice President and Controller
(Principal Accounting Officer)
13
<PAGE>
EXHIBIT 11 TO FORM 10-Q
BF ENTERPRISES, INC. AND SUBSIDIARIES
COMPUTATION OF PER SHARE EARNINGS (UNAUDITED)
(in thousands, except per share amounts)
<TABLE>
<CAPTION>
Three Months Ended
March 31,
-------------------
1995 1994
---- ----
<S> <C> <C>
Net income $ 298 $ 589
------ ------
------ ------
Weighted average number of shares outstanding:
Common stock 3,798 3,800
Common stock equivalents - stock options 217 154
------ ------
4,015 3,954
------ ------
------ ------
Net income per share - based on weighted number of
shares of common stock and common stock equivalents $ .07 $ .15
------ ------
------ ------
<FN>
(A) A computation of fully diluted per share amounts has been omitted since
there was no significant dilution during the periods reported.
</TABLE>
14
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1994
<PERIOD-START> JAN-01-1995
<PERIOD-END> MAR-31-1995
<CASH> 1,152
<SECURITIES> 2,173
<RECEIVABLES> 367
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 19,363
<CURRENT-LIABILITIES> 0
<BONDS> 817
<COMMON> 379
0
0
<OTHER-SE> 14,772
<TOTAL-LIABILITY-AND-EQUITY> 19,363
<SALES> 786
<TOTAL-REVENUES> 936
<CGS> 313
<TOTAL-COSTS> 313
<OTHER-EXPENSES> 311
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 14
<INCOME-PRETAX> 298
<INCOME-TAX> 0
<INCOME-CONTINUING> 298
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 298
<EPS-PRIMARY> .07
<EPS-DILUTED> 0
</TABLE>
