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, 1997, 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 6, 1997:
3,698,693 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 .................................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,
1997 1996
---- ----
<S> <C> <C>
ASSETS:
Cash and cash equivalents $ 5,378 $ 5,098
Marketable securities 153 40
Receivables 84 119
Mortgage loans 153 100
Real estate rental property, net of depreciation 2,357 2,369
Real estate inventory held for current sale
and land held for future development 11,245 11,179
Other real estate 132 132
Lease contract receivable 481 363
Other assets 563 501
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TOTAL ASSETS $ 20,546 $ 19,901
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LIABILITIES AND STOCKHOLDERS' EQUITY:
Payables and accrued liabilities $ 2,137 $ 2,141
Subordinated debentures, unmatured 805 805
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Total liabilities 2,942 2,946
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Stockholders' equity:
Common stock, $.10 par value
Authorized - 10,000,000 shares
Issued and outstanding -
3,703,893 and 3,733,893 shares 370 373
Capital surplus 16,885 17,078
Retained earnings (deficit) 313 (532)
Net unrealized gains from marketable equity securities 36 36
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Total stockholders' equity 17,604 16,955
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TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 20,546 $ 19,901
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------- -------
</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
March 31,
--------------------
1997 1996
---- ----
<S> <C> <C>
Revenues:
Real estate sales $ 995 $ 506
Real estate rental income 457 454
Interest and dividends 64 69
Other 6 5
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1,522 1,034
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Costs and Expenses:
Cost of real estate sold 252 124
Depreciation and amortization 24 26
Interest on subordinated debentures 14 14
General and administrative 387 353
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677 517
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Income before income taxes 845 517
Provision for income taxes -- --
------ ------
Net income $ 845 $ 517
------ ------
------ ------
Net income per share $ .21 $ .13
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------ ------
</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,
1997 1996
---- ----
<S> <C> <C>
Common stock:
Beginning of period $ 373 $ 375
Purchases of common stock - par value (3) --
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End of period $ 370 $ 375
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------- -------
Capital surplus:
Beginning of period $17,078 $17,208
Purchases of common stock - excess over par value (193) (12)
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End of period $16,885 $17,196
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------- -------
Retained earnings (deficit):
Beginning of period $ (532) $(2,669)
Net income 845 517
------ -------
End of period $ 313 $(2,152)
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------- -------
Net unrealized gains from
marketable equity securities:
Beginning of period $ 36 $ (47)
Gain during period -- 149
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End of period $ 36 $ 102
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------- -------
</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,
-------------------
1997 1996
---- ----
<S> <C> <C>
Cash flows from operating activities:
Net income $ 845 $ 517
Adjustments to reconcile net income to net cash provided or used
by operating activities:
Gains from sales of real estate (743) (382)
Net cash proceeds from sales of real estate 583 340
Real estate development costs (293) (68)
Reimbursement of real estate development costs 311 190
Changes in certain assets and liabilities:
Decrease (increase) in receivables 35 (53)
Increase in lease contract receivable (118) (91)
Decrease in payables and accrued liabilities (8) (216)
Other, net 50 (199)
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Total adjustments to net income (183) (479)
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Net cash provided by operating activities 662 38
Cash flows from investing activities:
Purchases of marketable securities (113) --
------- -------
Net cash used by investing activities (113) --
Cash flows from financing activities:
Reductions in subordinated debentures (73) (114)
Purchases of the Company's common stock (196) (12)
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Net cash used by financing activities (269) (126)
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Net increase (decrease) in cash and cash equivalents 280 (88)
Cash and cash equivalents at beginning of period 5,098 4,668
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Cash and cash equivalents at end of period $ 5,378 $ 4,580
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Supplemental disclosures of cash flow information:
Cash paid during the period for interest (net of amount capitalized) $ 14 $ 14
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</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, 1996.
Note B - New Accounting Pronouncement
In March 1997, the Financial Accounting Standards Board issued Statement of
Financial Accounting No. 128, "Earnings Per Share" (SFAS 128). SFAS 128
requires the disclosure of basic earnings per share and modifies existing
guidance for computing fully diluted earnings per share. Under the new
standard, basic earnings per share is computed as earnings divided by weighted
average shares, excluding the dilutive effects of stock options and other
potentially dilutive securities. The effective date of SFAS 128 is
December 15, 1997 and early adoption is not permitted. The Company intends to
adopt SFAS 128 during the three months and year ended December 31, 1997.
Had the provisions of SFAS 128 been applied to the Company's results of
operations for the three months ended March 31, 1997 and 1996, the Company's
basic earnings per share would have been $.23 and $.14 per share,
respectively, and its diluted earnings per share would have been $.21 and $.13
per share, respectively.
Note C - Real Estate Rental Property
Real estate rental property is an office building and 16 acres of land in
Tempe, Arizona. In 1995, the Company entered into a 10-year net lease with
Bank One, Arizona, NA, a subsidiary of Banc One Corporation. The lease
provided for the phased occupancy and rental of space by Bank One during 1995,
with rental of the entire premises commencing January 1, 1996. At December 31,
1996, contractual rental revenues from the lease with Bank One are projected as
follows:
1997 $1,628,000
1998 1,707,200
1999 1,826,000
7
<PAGE>
BF ENTERPRISES, INC. AND SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
2000 1,848,000
2001 1,936,000
2002 and after 6,239,200
On January 1, 1996, as required by generally accepted accounting principles,
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 for the period ending February 28, 2005, and (2) a related $423,000
lease commission, with annual amortization expense of $46,000 over the same
period.
Note D - 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 552 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 $11,245,000 at March 31,
1997 and $11,179,000 at December 31, 1996, which the Company believes was less
than their fair value.
Note E - 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 Court has
set the matter for trial in June 1997. 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, 1997, the Company had available for federal income tax purposes
unused operating loss carryfowards of approximately $10,500,000.
8
<PAGE>
BF ENTERPRISES, INC. AND SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
Note F - 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, 1997, the Company
purchased 30,000 shares of its common stock for an aggregate amount of $196,000.
During the three months ended March 31, 1997, the Company purchased 2,400
shares of its common stock for an aggregate amount of $12,000.
9
<PAGE>
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations.
Results of Operations
- ---------------------
Net income of $845,000 and $517,000 in the three months ended March 31, 1997
and 1996 respectively, included gains of $743,000 and $382,000 from sales of
property within the Company's Meadow Pointe project near Tampa, Florida. The
Company sold 79 developed residential lots at Meadow Pointe during the three
months ended March 31, 1997, which represented a 44% increase over the number
of lots sold during the same period of 1996. In the 1997 period, the Company
also sold a two-acre church site and a one-acre day care center site at Meadow
Pointe.
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.
Interest and dividends from investments accounted for $64,000 and $69,000 of
revenues in the three months ended March 31, 1997 and 1996, respectively. The
decrease in 1997 was due to a slight decline in yield on the Company's
investments.
General and administrative expenses in the three months ended March 31, 1997
were $34,000 higher than in the comparable period in 1996, due principally to
higher employee compensation expenses and higher professional fees.
Liquidity and Capital Resources
- -------------------------------
At March 31, 1997 the Company held $5,531,000 in cash, cash equivalents and
marketable securities as compared to $2,942,000 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 F 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 with funds raised
from capital improvement revenue bonds issued by the two community development
districts and cash generated from operations and cash and cash equivalents on
hand.
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: May 7, 1997 /s/ John M. Price
---------------------------
John M. Price
Senior Vice President,
Secretary, Treasurer and
General Counsel
(Duly Authorized Officer)
Date: May 7, 1997 /s/ S. Douglas Post
---------------------------
S. Douglas Post
Vice President and Controller
(Principal Accounting Officer)
11
<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,
------------------
1997 1996
---- ----
<S> <C> <C>
Net Income $ 845 $ 517
----- -----
----- -----
Weighted average number of
shares outstanding:
Common stock 3,718 3,753
Common stock equivalents -
stock options 320 245
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4,038 3,998
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Net income per share -
based on weighted average number
of shares of common stock
and common stock equivalents $ .21 $ .13
----- -----
----- -----
<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> 3-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> MAR-31-1997
<CASH> 5,378
<SECURITIES> 153
<RECEIVABLES> 84
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 20,546
<CURRENT-LIABILITIES> 0
<BONDS> 805
0
0
<COMMON> 370
<OTHER-SE> 17,234
<TOTAL-LIABILITY-AND-EQUITY> 20,546
<SALES> 995
<TOTAL-REVENUES> 1,522
<CGS> 252
<TOTAL-COSTS> 252
<OTHER-EXPENSES> 411
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 14
<INCOME-PRETAX> 845
<INCOME-TAX> 0
<INCOME-CONTINUING> 845
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 845
<EPS-PRIMARY> .21
<EPS-DILUTED> .21
