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 September 30, 1996, 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 November 11, 1996:
3,733,893 shares of $.10 par value Common Stock
<PAGE>
BF ENTERPRISES, INC. AND SUBSIDIARIES
I N D E X
Page
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PART I FINANCIAL INFORMATION
Item 1. Financial Statements
- Consolidated statements of financial position..............3
- Consolidated statements of income .........................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 ....................................9
PART II OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security Holders .........11
Item 6. Exhibits and Reports on Form 8-K ............................11
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>
September 30, December 31,
1996 1995
---- ----
<S> <C> <C>
ASSETS:
Cash and cash equivalents $ 6,029 $ 4,668
Marketable securities 43 538
Receivables 268 188
Mortgage loans 100 732
Real estate rental property, net of depreciation 2,382 2,420
Real estate inventory held for current sale
and land held for future development 10,039 9,446
Other real estate 132 132
Other assets 542 397
-------- --------
TOTAL ASSETS $ 19,535 $ 18,521
-------- --------
-------- --------
LIABILITIES AND STOCKHOLDERS' EQUITY:
Payables and accrued liabilities $ 2,150 $ 2,821
Subordinated debentures, unmatured 805 817
Deferred income taxes 8 16
-------- --------
Total liabilities 2,963 3,654
-------- --------
Stockholders' equity:
Common stock, $.10 par value
Authorized - 10,000,000 shares
Issued and outstanding -
3,745,393 and 3,753,193 shares 375 375
Capital surplus 17,152 17,208
Deficit (994) (2,669)
Net unrealized gains (losses) from marketable
equity securities 39 (47)
-------- --------
Total stockholders' equity 16,572 14,867
-------- --------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 19,535 $ 18,521
-------- --------
-------- --------
</TABLE>
The accompanying notes to financial statements
are an integral part of these statements.
3
<PAGE>
BF ENTERPRISES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
(in thousands, except per share amounts)
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
September 30, September 30,
------------------ ------------------
1996 1995 1996 1995
---- ---- ---- ----
<S> <C> <C> <C> <C>
Revenues:
Real estate sales $ 581 $ 1,303 $ 1,838 $ 2,599
Real estate rental income and
mortgage loan interest 459 84 1,372 258
Interest and dividends 69 38 205 140
Other -- 4 5 10
----- ----- ----- -----
1,109 1,429 3,420 3,007
----- ----- ----- -----
Costs and Expenses:
Cost of real estate sold 239 1,019 639 1,430
Real estate operating 34 4 49 156
Depreciation and amortization 24 12 74 38
Interest on subordinated debentures 14 15 44 43
General and administrative 337 299 1,033 900
----- ----- ----- -----
648 1,349 1,839 2,567
----- ----- ----- -----
Gross profit 461 80 1,581 440
Gains (losses) from securities 94 -- 94 (8)
----- ------ ----- -----
Net income $ 555 $ 80 $ 1,675 $ 432
----- ------ ------ ------
----- ------ ------ ------
Net income per share $ .14 $ .02 $ .42 $ .11
----- ------ ------ ------
----- ------ ------ ------
</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>
Nine Months Ended
September 30,
----------------------
1996 1995
---- ----
<S> <C> <C>
Common stock:
Beginning of period $ 375 $ 376
Restricted stock grant - par value -- 4
Exercise of stock options - par value -- 1
Purchases of common stock - par value -- (3)
------- -------
End of period $ 375 $ 378
------- -------
------- -------
Capital surplus:
Beginning of period $17,208 $17,344
Restricted stock grant - excess over par value -- 170
Exercise of stock options - excess over par value -- 1
Purchases of common stock - excess over par value (45) (151)
Purchases of stock options (11) (12)
------- -------
End of period $17,152 $17,352
------- -------
------- -------
Deficit:
Beginning of period $(2,669) $(3,114)
Net income 1,675 432
------- -------
End of period $ (994) $(2,682)
------- -------
------- -------
Net Unrealized Gains (Losses) From
Marketable Equity Securities:
Beginning of period $ (47) $ 19
Gain (loss) during period 86 (1)
------- -------
End of period $ 39 $ 18
------- -------
------- -------
</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>
Nine Months Ended
September 30,
------------------
1996 1995
---- ----
<S> <C> <C>
Cash flows from operating activities:
Net income $ 1,675 $ 432
Adjustments to reconcile net income to net
cash provided or used by operating activities:
Gains from sales of real estate (1,199) (1,169)
(Gains) losses from securities (94) 8
Net cash proceeds from sales of real estate 1,244 1,295
Real estate development costs (758) (833)
Reimbursement of real estate development costs 219 682
Mortgage loan payments 610 116
Changes in certain assets and liabilities:
Increase in receivables (80) (34)
Decrease in payables and accrued liabilities (309) (368)
Decrease in deferred income taxes (8) (416)
Other, net (186) (485)
----- -----
Total adjustments to net income (561) (1,204)
----- -----
Net cash provided (used) by operating activities 1,114 (772)
Cash flows from investing activities:
Proceeds from sales and maturities of marketable
securities 675 1,481
Purchases of marketable securities -- (208)
----- -----
Net cash provided by investing activities 675 1,273
Cash flows from financing activities:
Reductions in subordinated debentures (372) (1,293)
Purchases of the Company's common stock (45) (154)
Other (11) (10)
----- -----
Net cash used by financing activities (428) (1,457)
----- -----
Net increase (decrease) in cash and cash equivalents 1,361 (956)
Cash and cash equivalents at beginning of period 4,668 2,975
----- -----
Cash and cash equivalents at end of period $ 6,029 $ 2,019
----- -----
----- -----
Supplemental disclosures of cash flow information:
Cash paid during the period for interest
(net of amount capitalized) $ 44 $ 29
----- -----
----- -----
Non cash operating activities:
Mortgage note received as a portion of the
proceeds due from the sale of real estate:
Face value of note $ -- $ 680
Discount -- (48)
----- -----
Carrying value of note $ -- $ 632
----- -----
----- -----
</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, 1995.
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, leased to Bank One, Arizona, NA.
On January 1, 1996, the Company began amortizing on a straight-line basis
(1) income from the lease with Bank One, resulting in annual real estate rental
income of $1,815,000 for the period ending February 28, 2005, and (2) a related
lease commission with annual amortization expense of $46,000 over the
same period.
Note C - Real Estate Inventory Held for Current Sale and Land
Held for Future Development
Real estate inventory held for current sale and land held for future
development consists primarily of approximately 580 acres in the Company's
master-planned, mixed use development known as Meadow Pointe near Tampa,
Florida. The parcels within this project are in various stages of development.
Parcels on which the Company has completed substantially all of its development
activities are considered to be held for current sale. Parcels on which
development is not yet complete are considered to be held for future
development. These assets were carried at a cost of $10,039,000 at
September 30, 1996 and $9,446,000 at December 31, 1995, which the Company
believes was less than their fair value.
7
<PAGE>
BF ENTERPRISES, INC. AND SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
Note D - Income Taxes
At September 30, 1996, the Company had net operating loss carryforwards
of approximately $10,900,000 for financial reporting and federal income tax
purposes.
Note E - Stockholders' Equity
From time to time, the Company purchases shares of its common stock primarily
in the open market. During the nine months ended September 30, 1996, the
Company purchased 7,800 shares of its common stock for an aggregate amount
of $45,000. During the nine months ended September 30, 1995, the Company
purchased 28,300 shares of its common stock for an aggregate amount of $154,000.
8
<PAGE>
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations.
----------------------------------------------
Results of Operations
- ---------------------
Net income of $555,000 and $1,675,000, respectively, in the three months
and nine months ended September 30, 1996, included gains of $342,000 and
$1,199,000 from sales of property within the Company's Meadow Pointe project
near Tampa, Florida and $94,000 in gains from securities. In the three months
and nine months ended September 30, 1995, net income was $80,000 and $432,000
and included gains of $311,000 and $1,198,000, respectively, from sales of
Meadow Pointe property. The Company sold 206 developed residential lots at
Meadow Pointe during the nine months ended September 30, 1996, which
represented a 31% increase over the number of lots sold during the same period
of 1995. Revenues from real estate rental and mortgage interest increased from
$84,000 and $258,000, respectively, in the three months and nine months ended
September 30, 1995, to $459,000 and $1,372,000 in the same periods of 1996
(see below).
The Company's reported gains from property sales at Meadow Pointe are based
in part upon estimates of the total revenues and costs to be derived by the
Company over the life of the project. The Company periodically reviews these
estimates and makes cumulative adjustments to reflect any revised estimates.
Property sales at Meadow Pointe are dependent upon, among other things, the
strength of the general economy in the Tampa area, 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.
In addition to Meadow Pointe residential lot sales activity, real estate
revenue in the three months ended September 30, 1995, included revenue of
$804,000 from the one-time sale of a commercial building and underlying
property in Edina, Minnesota. The cost of real estate sold attributable to
the Edina property was $831,000, which included a $48,000 discount of the
$680,000 note received in the transaction. Results for the nine months ended
September 30, 1995, also included aggregate revenue and cost of $216,000 and
$205,000, respectively, for lots in a residential development adjacent to
Meadow Pointe and a model home within the Meadow Pointe project. There were no
such revenues or costs in the comparable periods of 1996.
Real estate rental income and mortgage loan interest in the three months
and nine months ended September 30, 1996, was more than five times what it was
in the same periods of 1995, primarily as a result of the execution of a new
9
<PAGE>
lease of the Company's Tempe, Arizona property. Depreciation and amortization
expense nearly doubled in the 1996 periods compared to the same periods of 1995
due to the amortization of a commission related to the new lease which
commenced on March 1, 1995. Real estate operating expenses in the nine months
ended September 30, 1995 included costs of $124,000 for property taxes,
insurance and certain other operating expenses related to the new lease which
did not recur in the comparable 1996 period and are not expected to recur in
subsequent periods.
Interest and dividends from investments accounted for $69,000 and $205,000
of revenues in the three months and nine months ended September 30, 1996,
respectively, and $38,000 and $140,000 in the comparable periods in 1995.
The increase in 1996 was due to an increase in the amount of funds available
for investment.
General and administrative expenses in the three months and nine months
ended September 30, 1996 were, respectively, $38,000 and $133,000 higher than
in the comparable periods in 1995, due principally to higher employee
compensation and benefits expenses.
Liquidity and Capital Resources
- -------------------------------
During the nine months ended September 30, 1996 cash, cash equivalents and
marketable securities increased by $866,000. On July 3, 1996 the Company
received $610,000 from the payoff of a note secured by a commercial building
and underlying land in Edina, Minnesota. The Company received the note in
connection with the sale of this property in July 1995 (see above).
At September 30, 1996 the Company held $6,072,000 in cash, cash equivalents
and marketable securities as compared to $2,963,000 for all short-term and
long-term liabilities. From time to time the Company purchases shares of its
common stock primarily in the open market (see Note E 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. The
Company anticipates that these expenditures will be financed primarily through
the issuance of capital improvement revenue bonds by a community development
district.
10
<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, there unto duly authorized.
BF ENTERPRISES, INC.
(Registrant)
Date: November 11, 1996 /s/ John M. Price
-------------------------------
John M. Price
Senior Vice President,
Secretary, Treasurer and
General Counsel
(Duly Authorized Officer)
Date: November 11, 1996 /s/ S. Douglas Post
--------------------------------
S. Douglas Post
Vice President and Controller
(Principal Accounting Officer)
11
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 Nine Months Ended
September 30, September 30,
------------------- ------------------
1996 1995 1996 1995
---- ---- ---- ----
<S> <C> <C> <C> <C>
Net Income $ 555 $ 80 $ 1,675 $ 432
----- ----- ----- -----
----- ----- ----- -----
Weighted average number of
shares outstanding:
Common stock 3,747 3,791 3,749 3,795
Common stock equivalents -
stock options 329 251 287 244
----- ----- ----- -----
4,076 4,042 4,036 4,039
----- ----- ----- -----
----- ----- ----- -----
Net income per share -
based on weighted average number
of shares of common stock
and common stock equivalents $ .14 $ .02 $ .42 $ .11
----- ----- ----- -----
----- ----- ----- -----
<FN>
(A) A computation of fully diluted per share amounts has been omitted since
there was no significant dilution during the periods reported.
</FN>
12
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> SEP-30-1996
<CASH> 6,029
<SECURITIES> 43
<RECEIVABLES> 268
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 19,535
<CURRENT-LIABILITIES> 0
<BONDS> 805
0
0
<COMMON> 375
<OTHER-SE> 16,197
<TOTAL-LIABILITY-AND-EQUITY> 19,535
<SALES> 1,838
<TOTAL-REVENUES> 3,420
<CGS> 639
<TOTAL-COSTS> 639
<OTHER-EXPENSES> 1,156
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 44
<INCOME-PRETAX> 1,675
<INCOME-TAX> 0
<INCOME-CONTINUING> 1,675
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,675
<EPS-PRIMARY> .42
<EPS-DILUTED> .42
