SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------------------
FORM 10-Q
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 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 August 1, 1996:
3,747,993 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 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 .................... .............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>
June 30, December 31,
1996 1995
---- ----
<S> <C> <C>
ASSETS:
Cash and cash equivalents $ 4,383 $ 4,668
Marketable securities 578 538
Receivables 347 188
Mortgage loans 732 732
Real estate rental property, net of depreciation 2,395 2,420
Real estate inventory held for current sale
and land held for future development 9,909 9,446
Other real estate 132 132
Other assets 541 397
------- -------
TOTAL ASSETS $ 19,017 $ 18,521
------- -------
------- -------
LIABILITIES AND STOCKHOLDERS' EQUITY:
Payables and accrued liabilities $ 2,198 $ 2,821
Subordinated debentures, unmatured 811 817
Deferred income taxes 8 16
------- -------
Total Liabilities 3,017 3,654
Stockholders' equity:
Common stock, $.10 par value
Authorized - 10,000,000 shares
Issued and outstanding -
3,747,993 and 3,753,193 shares 375 375
Capital surplus 17,181 17,208
Deficit (1,549) (2,669)
Net unrealized losses from marketable
equity securities (7) (47)
------- -------
Total stockholders' equity 16,000 14,867
------- -------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 19,017 $ 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 OPERATIONS (UNAUDITED)
(in thousands, except per share amounts)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
------------------- ----------------
1996 1995 1996 1995
---- ---- ---- ----
<S> <C> <C> <C> <C>
Revenues:
Real estate sales $ 751 $ 510 $ 1,257 $ 1,296
Real estate rental income and
mortgage loan interest 457 87 913 174
Interest and dividends 67 42 136 102
Other 2 3 5 6
----- ----- ----- -----
1,277 642 2,311 1,578
Costs and Expenses:
Cost of real estate sold 276 98 400 411
Real estate operating 7 144 15 152
Depreciation and amortization 24 13 50 26
Interest on subordinated debentures 16 14 30 28
General and administrative 351 311 696 601
----- ----- ----- -----
674 580 1,191 1,218
Gross profit 603 62 1,120 360
Losses from securities -- (8) -- (8)
----- ----- ----- -----
Net income $ 603 $ 54 $ 1,120 $ 352
----- ----- ----- -----
----- ----- ----- -----
Net income per share $ .15 $ .01 $ .28 $ .09
----- ----- ----- -----
----- ----- ----- -----
</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>
Six Months Ended
June 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 -- (1)
------ ------
End of period $ 375 $ 380
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 (27) (63)
Purchase of stock option -- (12)
------ ------
End of period $17,181 $17,440
------ ------
------ ------
Deficit:
Beginning of period $(2,669) $(3,114)
Net income 1,120 352
------ -----
End of period $(1,549) $(2,762)
------ ------
------ ------
Net Unrealized Gains (Losses) From
Marketable Equity Securities:
Beginning of period $ (47) $ 19
Gain during period 40 38
----- -----
End of period $ (7) $ 57
------ ------
------ ------
</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>
Six Months Ended
June 30,
-----------------
1996 1995
---- ----
<S> <C> <C>
Cash flows from operating activities:
Net income $ 1,120 $ 352
Adjustments to reconcile net income to net cash
provided or used by operating activities:
Gains from sales of real estate (857) (885)
Losses from securities -- 8
Net cash proceeds from sales of real estate 851 802
Real estate development costs (523) (654)
Reimbursement of real estate development costs 165 491
Changes in certain assets and liabilities:
Increase in receivables (159) (36)
Decrease in payables and accrued liabilities (346) (401)
Decrease in deferred income taxes (8) (416)
Other, net (219) (407)
----- -----
Total adjustments to net income (1,096) (1,498)
Net cash provided (used) by
operating activities 24 (1,146)
Cash flows from investing activities:
Proceeds from sales and maturities
of marketable securities -- 1,481
Purchases of marketable securities -- (208)
----- -----
Net cash provided by investing activities -- 1,273
Cash flows from financing activities:
Reductions in subordinated debentures (282) (1,031)
Purchases of the Company's common stock (27) (64)
Other -- (10)
----- -----
Net cash used by financing activities (309) (1,105)
----- -----
Net decrease in cash and cash equivalents (285) (978)
Cash and cash equivalents at beginning of period 4,668 2,975
----- -----
Cash and cash equivalents at end of period $ 4,383 $ 1,997
----- -----
----- -----
Supplemental disclosures of cash flow information:
Cash paid during the period for interest
(net of amount capitalized) $ 28 $ 28
----- -----
----- -----
</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 615 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 $9,909,000 at
June 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 June 30, 1996, the Company had net operating loss carryforwards of
approximately $11,500,000 for financial reporting purposes. Due to timing
differences, at June 30, 1996, the Company had available for federal income
tax purposes unused operating loss carryforwards of approximately $11,100,000.
Note E - Stockholders' Equity
From time to time, the Company purchases shares of its common stock primarily
in the open market. During the six months ended June 30, 1996, the Company
purchased 5,200 shares of its common stock for an aggregate amount of $27,000.
During the six months ended June 30, 1995, the Company purchased 12,300 shares
of its common stock for an aggregate amount of $64,000.
8
<PAGE>
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations.
----------------------------------------------
Results of Operations
- ---------------------
Net income of $603,000 and $1,120,000, respectively, in the three months
and six months ended June 30, 1996, included gains of $475,000 and $857,000
from sales of property within the Company's Meadow Pointe project near Tampa,
Florida. In the three months and six months ended June 30, 1995, net income
was $54,000 and $352,000 and included gains of $412,000 and $887,000,
respectively, from sales of Meadow Pointe property. The Company sold 141
developed residential lots at Meadow Pointe during the six months ended
June 30, 1996, which represented a 44% increase over the same period of 1995.
Revenues from real estate rental and mortgage interest increased from $87,000
and $174,000, respectively, in the three months and six months ended June 30,
1995, to $457,000 and $913,000 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.
Real estate sales results for the six months ended June 30, 1995 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
1996 periods.
Real estate rental income and mortgage loan interest more than quadrupled in
the three months and six months ended June 30, 1996 as compared to the same
periods of 1995 primarily as a result of the execution of a new 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 three months and six
months ended June 30, 1995 included costs of $135,000 for property taxes,
insurance and certain other operating expenses related to the new lease which
did not recur in the 1996 periods and are not expected to recur in subsequent
periods.
9
<PAGE>
Interest and dividends from investments accounted for $67,000 and $136,000
of revenues in the three months and six months ended June 30, 1996,
respectively, and $42,000 and $102,000 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 six months ended
June 30, 1996 were, respectively, $40,000 and $95,000 higher than in the
comparable periods in 1995, due principally to higher employee compensation
and benefits expenses.
Liquidity and Capital Resources
- -------------------------------
During the six months ended June 30, 1996 cash, cash equivalents and
marketable securities declined by $245,000. At June 30, 1996 the Company held
$4,961,000 in cash, cash equivalents and marketable securities as compared to
$3,017,000 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).
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.
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 primarily financed through
the issuance of capital improvement revenue bonds by a community development
district.
10
<PAGE>
PART II - OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security Holders.
----------------------------------------------------
The Annual Meeting of Stockholders of BF Enterprises, Inc.
(the "Company") was held on May 13, 1996, for the purpose of electing four
directors. All of the nominees for director were elected. As of the record
date for the meeting, there were 3,750,793 shares of the Company's common stock
outstanding, of which 3,556,140 shares (95% of the shares outstanding) were
voted, as follows:
<TABLE>
<CAPTION>
Voted Against
Voted For or Withheld
--------- -----------
<S> <C> <C>
Brian P. Burns 3,554,984 1,156
Ralph T. McElvenny, Jr. 3,554,984 1,156
Charles E.F. Millard 3,554,984 1,156
Paul Woodberry 3,554,984 1,156
</TABLE>
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.
11
<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.
BF ENTERPRISES, INC.
(Registrant)
Date: August 1, 1996 /s/ John M. Price
-----------------------------
John M. Price
Senior Vice President,
Secretary, Treasurer and
General Counsel
(Duly Authorized Officer)
Date: August 1, 1996 /s/ S. Douglas Post
------------------------------
S. Douglas Post
Vice President and Controller
(Principal Accounting Officer)
12
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 Six Months Ended
June 30, June 30,
----------------- -----------------
1996 1995 1996 1995
---- ---- ---- ----
<S> <C> <C> <C> <C>
Net Income $ 603 $ 54 $ 1,120 $ 352
Weighted average number of
shares outstanding:
Common stock 3,749 3,796 3,751 3,797
Common stock equivalents -
stock options 292 260 269 241
----- ----- ----- -----
4,041 4,056 4,020 4,038
----- ----- ----- -----
----- ----- ----- -----
Net income per share -
based on weighted average number
of shares of common stock
and common stock equivalents $ .15 $ .01 $ .28 $ .09
----- ----- ----- -----
----- ----- ----- -----
<FN>
(A) A computation of fully diluted per share amounts has been omitted since
there was no significant dilution during the periods reported.
</FN>
13
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> JUN-30-1996
<CASH> 4,383
<SECURITIES> 578
<RECEIVABLES> 347
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 19,017
<CURRENT-LIABILITIES> 0
<BONDS> 811
0
0
<COMMON> 375
<OTHER-SE> 15,625
<TOTAL-LIABILITY-AND-EQUITY> 19,017
<SALES> 1,257
<TOTAL-REVENUES> 2,311
<CGS> 400
<TOTAL-COSTS> 400
<OTHER-EXPENSES> 761
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 30
<INCOME-PRETAX> 1,120
<INCOME-TAX> 0
<INCOME-CONTINUING> 1,120
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,120
<EPS-PRIMARY> .28
<EPS-DILUTED> .28
