SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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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, 1996, or
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the transaction period from _____________ to __________________
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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 May 8, 1996:
3,750,793 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 ..................................10
PART II OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K ...........................12
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,
1996 1995
---- ----
<S> <C> <C>
ASSETS:
Cash and cash equivalents $ 4,580 $ 4,668
Marketable securities 687 538
Receivables 332 188
Mortgage loans 732 732
Real estate rental property, net of depreciation 2,408 2,420
Real estate inventory held for current sale
and land held for future development 9,366 9,446
Other real estate 132 132
Other assets 595 397
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TOTAL ASSETS $ 18,832 $ 18,521
-------- --------
-------- --------
LIABILITIES AND STOCKHOLDERS' EQUITY:
Payables and accrued liabilities $ 2,495 $ 2,821
Subordinated debentures, unmatured 813 817
Deferred income taxes 3 16
-------- --------
Total liabilities 3,311 3,654
-------- --------
Stockholders' equity:
Common stock, $.10 par value
Authorized - 10,000,000 shares
Issued and outstanding -
3,750,793 and 3,753,193 shares 375 375
Capital surplus 17,196 17,208
Deficit (2,152) (2,669)
Net unrealized gains from marketable equity securities 102 (47)
-------- --------
Total stockholders' equity 15,521 14,867
-------- --------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 18,832 $ 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
March 31,
---------------------
1996 1995
---- ----
<S> <C> <C>
Revenues:
Real estate sales $ 506 $ 786
Real estate leasing income and
mortgage loan interest 456 87
Interest 69 60
Other 3 3
------ ------
1,034 936
Costs and Expenses:
Cost of real estate sold 124 313
Interest on subordinated debentures 14 14
Depreciation and amortization 26 13
General and administrative 353 298
------ ------
517 638
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Net income $ 517 $ 298
------ ------
------ ------
Net income per share $ .13 $ .07
------ ------
------ ------
</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,
-------------------------
1996 1995
---- ----
<S> <C> <C>
Common stock:
Beginning of period $ 375 $ 376
Restricted stock grant - par value -- 4
Purchases of common stock - par value -- (1)
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End of period $ 375 $ 379
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------- -------
Capital surplus:
Beginning of period $17,208 $17,344
Restricted stock grant - excess over par value -- 170
Purchases of common stock - excess over par value (12) (23)
------- -------
End of period $17,196 $17,491
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------- -------
Deficit:
Beginning of period $(2,669) $(3,114)
Net income 517 298
------- -------
End of period $(2,152) $(2,816)
------- -------
------- -------
Net Unrealized Gains From
Marketable Equity Securities:
Beginning of period $ (47) $ 19
Gain during period 149 78
------- -------
End of period $ 102 $ 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,
-------------------
1996 1995
---- ----
<S> <C> <C>
Cash flows from operating activities:
Net income $ 517 $ 298
Adjustments to reconcile net income to net cash provided or used
by operating activities:
Gains from sales of real estate (382) (473)
Net cash proceeds from sales of real estate 340 562
Real estate development costs (68) (224)
Reimbursement of real estate development costs 190 275
Changes in certain assets and liabilities:
Increase in receivables (144) (223)
Decrease in payables and accrued liabilities (216) (508)
Decrease in deferred income taxes (13) (415)
Other, net (186) (368)
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Total adjustments to net income (479) (1,374)
------- -------
Net cash provided (used) by operating activities 38 (1,076)
Cash flows from investing activities:
Purchases of marketable securities -- (211)
------- -------
Net cash provided by investing activities -- (211)
Cash flows from financing activities:
Reductions in subordinated debentures (114) (512)
Purchases of the Company's common stock (12) (24)
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Net cash used by financing activities (126) (536)
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Net decrease in cash and cash equivalents (88) (1,823)
Cash and cash equivalents at beginning of period 4,668 2,975
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Cash and cash equivalents at end of period $ 4,580 $ 1,152
------- -------
------- -------
Supplemental disclosures of cash flow information:
Cash paid during the period for interest (net of amount capitalized) $ 14 $ 14
------- -------
------- -------
</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. In January 1995, the Company
executed a lease amendment with the original tenant of this property pursuant
to which the tenant vacated portions of the building from time to time and the
lease terminated 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 provided for the phased occupancy and rental
of space by Bank One during 1995, with rental of the entire premises commencing
January 1, 1996. As a result of the new lease, the contractual rental revenues
are now projected as follows:
1996 $ 1,452,000
1997 1,628,000
1998 1,707,200
1999 1,826,000
2000 1,848,000
2001 and after 8,175,200
-----------
$16,636,400
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-----------
On January 1, 1996, the Company began amortizing on a straight-line basis
(1) income from the new lease with Bank One, resulting in annual real estate
leasing income of $1,815,000, and (2) a related $423,000 lease commission with
annual amortization expense of $46,000.
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
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 $9,366,000 at March 31,
1996 and $9,446,000 at December 31, 1995, which the Company believes was less
than their fair value.
Note D - Income Taxes
In February 1996, the Company's predecessor, on behalf of the Company, filed a
complaint against the California Franchise Tax Board (the "FTB") for a refund
of assessed income taxes and accrued interest for the year ended December 31,
1981. The suit arises out of the FTB's assessment for 1981 taxes, based on its
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 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 payment to the FTB of the assessment and accrued interest and filed a
request for refund in the full amount of that payment. The Company's request
for refund was denied and the action described above was filed. The amount of
the Company's payment to the FTB, after reimbursement by the Company's
predecessor of the related federal and state income tax benefits, was
approximately $400,000.
At March 31, 1996, the Company had net operating loss carryforwards of
approximately $12,100,000 for financial reporting purposes. Due to timing
differences, at March 31, 1996, the Company had available for federal income
tax purposes unused operating loss carryforwards of approximately $10,800,000.
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 primarily
in the open market. During the three months ended March 31, 1996, the Company
purchased 2,400 shares of its common stock for an aggregate amount of $12,000.
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.
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 $517,000 and $298,000 in the three months ended March 31, 1996
and 1995, respectively, included gains of $382,000 and $462,000 from sales of
developed residential lots within the Company's Meadow Pointe project near
Tampa, Florida, and reflected an increase in revenues from real estate leasing
and mortgage interest from $87,000, in the 1995 first quarter, to $456,000 in
the same period 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. Sales of residential lots during
the three months ended March 31, 1996, were 5% and 27% less than in the same
periods of 1995 and 1994, respectively, and such sales may remain below the
levels set during those two years for the remainder of 1996.
Real estate sales results for the three months ended March 31, 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 period.
Real estate leasing income and mortgage loan interest more than quadrupled
in the three months ended March 31, 1996 as compared to the same period of 1995
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 (See Note B of Notes
to Financial Statements).
Interest and dividends from investments accounted for $69,000 and $60,000 of
revenues in the three months ended March 31, 1996 and 1995, respectively. The
increase in 1996 was due to an increase in the amount of funds available for
investment.
Depreciation and amortization expense doubled in the three months ended
March 31, 1996 compared to the same period of 1995. The increase was due to
the amortization of a commission related to the new lease of the Company's
Tempe, Arizona property which commenced on March 1, 1995 (See Note B of Notes
to Financial Statements).
General and administrative expenses in the three months ended March 31,
1996, were $55,000 higher than in the comparable period in 1995, due
principally to higher employee compensation and benefits expenses.
10
<PAGE>
LIQUIDITY AND CAPITAL RESOURCES
During the three months ended March 31, 1996, cash and cash equivalents
increased by $61,000. At March 31, 1996, the Company held $5,267,000 in cash,
cash equivalents and marketable securities as compared to $3,311,000 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. Since
February 1992, two community development districts encompassing the Meadow
Pointe project have issued approximately $54.5 million of capital improvement
revenue bonds. The Company's budget currently anticipates the future issuance
of approximately $20 million of additional bonds by one of those community
development districts. The proceeds of such bonds have been and are expected
to be used to construct infrastructure improvements necessary for the
development and sale of residential lots, and multifamily and commercial
parcels, in Meadow Pointe (see Note H of Notes of Financial Statements).
There can be no assurance that any additional bonds will be issued.
The Company intends to pay for its other 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,
its other operations and sales of marketable securities, 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.
11
<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 14, 1996 /s/ John M. Price
----------------------------------
John M. Price
Senior Vice President,
Secretary, Treasurer and
General Counsel
(Duly Authorized Officer)
Date: May 14, 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
March 31,
-------------------
1996 1995
---- ----
<S> <C> <C>
Net Income $ 517 $ 298
------ ------
------ ------
Weighted average number of
shares outstanding:
Common stock 3,753 3,798
Common stock equivalents -
stock options 245 217
------ ------
3,998 4,015
------ ------
------ ------
Net income per share -
based on weighted average number
of shares of common stock
and common stock equivalents $ .13 $ .07
------ ------
------ ------
<FN>
(A) A computation of fully diluted per share amounts has been omitted since
there was no dilution during the periods reported.
</FN>
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> MAR-31-1996
<CASH> 4,580
<SECURITIES> 687
<RECEIVABLES> 332
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 18,832
<CURRENT-LIABILITIES> 0
<BONDS> 813
0
0
<COMMON> 375
<OTHER-SE> 15,146
<TOTAL-LIABILITY-AND-EQUITY> 18,832
<SALES> 506
<TOTAL-REVENUES> 1,034
<CGS> 124
<TOTAL-COSTS> 124
<OTHER-EXPENSES> 379
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 14
<INCOME-PRETAX> 517
<INCOME-TAX> 0
<INCOME-CONTINUING> 517
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 517
<EPS-PRIMARY> .13
<EPS-DILUTED> .13
