1
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-QSB
/X/ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
FOR QUARTER ENDED MARCH 31, 1996
/ / TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the period from __________ to __________
Commission File Number 0-4559
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BEVERLY HILLS BANCORP
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(Exact name of registrant as specified in its charter)
CALIFORNIA 95-2588374
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(State of Incorporation) (I.R.S. Employer Identification Number)
100 WILSHIRE BOULEVARD, SUITE 1940, SANTA MONICA, CA 90401
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: 310-395-7754
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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 .
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Number of shares of Common Stock, $1.00 par value, outstanding as of March 31,
1996: 1,194,432.
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BEVERLY HILLS BANCORP
TABLE OF CONTENTS
Page
PART I. Financial Information Number
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Item 1. Financial Statements
Condensed Financial Statements 3-4
Condensed Statement of Net Assets
in Liquidation at March 31, 1996 5
Condensed Consolidated Statement of
Operations for the three months ended
March 31, 1995 6
Condensed Statements of Cash
Flows for the three months ended
March 31, 1996 and 1995 7
Notes to Condensed Financial Statements 8-10
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations 11-12
PART II. Other Information
Item 1. Legal Proceedings 13
Item 6. Exhibits and Reports on Form 8-K 13
SIGNATURE 14
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PART I. Financial Information
Item 1. Beverly Hills Bancorp -- Financial Statements
Condensed Financial Statements
(Unaudited)
The Condensed Financial Statements included herein
have been prepared by Beverly Hills Bancorp (the "Company"), without audit,
pursuant to the rules and regulations of the Securities and Exchange Commission.
Certain information and footnote disclosures normally included in financial
statements prepared in accordance with generally accepted accounting principles
have been condensed or omitted pursuant to such rules and regulations, although
the Company believes the disclosures which are made are adequate to make the
information presented not misleading. Further, the Condensed Financial
Statements have been prepared in accordance with generally accepted accounting
principles for interim financial information, the instructions to Form 10-QSB
and Regulation S-B (including Item 310(b) thereof) and reflect, in the opinion
of management, all adjustments necessary to present fairly the net assets and
results of operations as of and for the periods indicated.
It is suggested that these Condensed Financial
Statements be read in conjunction with the Financial Statements and the Notes
thereto for the year ended December 31, 1995, included in the Beverly Hills
Bancorp Form 10-KSB Annual Report to the Securities and Exchange Commission.
The Company has adopted the liquidation basis of
accounting as of September 30, 1995. Therefore, the Company's investments in
subsidiaries are stated at their estimated realizable value and the
subsidiaries' assets and liabilities are no longer consolidated with the
Company's financial statements. This basis of accounting is considered
appropriate when the Company has adopted a Plan of Complete Liquidation and
Dissolution (the "Plan") and liquidation appears imminent, the Company is no
longer viewed as a going concern and the net realizable value of the Company's
assets are reasonably determinable. Under this basis of accounting, assets and
liabilities are stated at their estimated net realizable value and estimated
costs of liquidating the Company are provided to the extent they are reasonably
determinable.
The Plan provides for the liquidation of all of the
Company's assets. In connection with the adoption of the liquidation basis of
accounting, the Company has accrued what management believes are reasonable
estimates of realizable value and costs to liquidate its remaining assets. The
actual realizable value and costs may differ significantly depending on a number
of factors, including the length of time it takes to dispose of and the amount
received for the remaining assets and the holding costs associated therewith.
Estimated costs to liquidate are reflected in the Statement of Net Assets as
"Reserve for Remaining Lease Obligations" and "Reserve for Estimated Costs of
Operation, Liquidation and Dissolution."
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4
The Condensed Consolidated Statements of Operations
and of Cash Flows for the three months ended March 31, 1995 were prepared on a
going concern basis of accounting which contemplated the realization of assets
and the satisfaction of liabilities in the normal course of business. The
Condensed Financial Statements for the three months ended March 31, 1996 were
prepared on the liquidation basis of accounting. The effects of adopting the
Plan are explained in Note 2 - Plan of Complete Liquidation and Dissolution.
The Condensed Financial Statements for the three
months ended March 31, 1996 are not necessarily indicative of results to be
expected for the entire year ending December 31, 1996.
See Item 2 - "Management's Discussion and Analysis of
Financial Condition and Results of Operations."
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BEVERLY HILLS BANCORP
CONDENSED STATEMENT OF NET ASSETS IN LIQUIDATION
(UNAUDITED)
MARCH 31, 1996
ASSETS
Cash and Cash Equivalents $5,221,000
Investments in Subsidiaries 526,000
Investment in Comprehensive Holdings Corporation, S.A 200,000
Other Assets 50,000
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Total Assets 5,997,000
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LIABILITIES
Accounts Payable and Accrued Liabilities 36,000
Reserve for Remaining Lease Obligations 60,000
Reserve for Estimated Costs of Operation, Liquidation
and Dissolution 231,000
Other Liabilities 35,000
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Total Liabilities 362,000
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Net Assets in Liquidation $5,635,000
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Number of Common Shares Outstanding 1,194,432
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Net Assets in Liquidation Per Share $ 4.72
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See Accompanying Notes to Condensed Financial Statements.
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BEVERLY HILLS BANCORP AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
(UNAUDITED)
FOR THE THREE MONTHS ENDED MARCH 31, 1995
Income:
Interest, Dividend and Other $ 66,000
Equity in Loss of Investment (10,000)
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Total Income 56,000
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Operating Expenses:
General and Administrative 97,000
Amortization of Excess Cost of Investment 44,000
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Total Expenses 141,000
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Loss Before Minority Interests (85,000)
Minority Interest in Subsidiaries' Losses 1,000
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Net Loss $ (84,000)
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Net Loss Per Share $ (.07)
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Weighted Average Number of Common
Shares Outstanding 1,194,432
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See Accompanying Notes to Condensed Financial Statements.
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BEVERLY HILLS BANCORP
CONDENSED STATEMENTS OF CASH FLOWS
(UNAUDITED)
FOR THE THREE MONTHS ENDED
MARCH 31,
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1996 1995
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(Liquidation Basis) (Going Concern Basis)
(Consolidated)
Cash Flows from Operating Activities:
Net Loss $ -- $ (84,000)
Adjustments to Reconcile Net Loss to Net
Cash Provided by/(Used in) Operating Activities:
Equity in Loss of Investment -- 10,000
Amortization of Excess Cost of Investment -- 44,000
Change in Assets and Liabilities:
Decrease in Notes and Interest Receivable 166,000 --
Increase in Other Assets (50,000) --
Decrease in Accounts Payable and
Accrued Liabilities (18,000) (3,000)
Decrease in Reserve for Remaining
Lease Obligations (12,000) --
Increase in Estimated Costs of Operation,
Liquidation and Dissolution 14,000 --
Increase in Other Liabilities 35,000 --
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Net Cash Provided by/(Used in) Operating
Activities and Net Increase/(Decrease)
in Cash and Cash Equivalents 135,000 (33,000)
Cash and Cash Equivalents at Beginning
of Period 5,086,000 1,744,000
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Cash and Cash Equivalents at End
of Period $ 5,221,000 $ 1,711,000
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See Accompanying Notes to Condensed Financial Statements.
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BEVERLY HILLS BANCORP
NOTES TO CONDENSED FINANCIAL STATEMENTS
(UNAUDITED)
MARCH 31, 1996
Note 1 - Basis of Presentation:
The Condensed Financial Statements included herein have been
prepared by Beverly Hills Bancorp (the "Company"), without audit, pursuant to
the rules and regulations of the Securities and Exchange Commission. Certain
information and footnote disclosures normally included in financial statements
prepared in accordance with generally accepted accounting principles have been
condensed or omitted pursuant to such rules and regulations, although the
Company believes the disclosures which are made are adequate to make the
information presented not misleading. Further, the Condensed Financial
Statements have been prepared in accordance with generally accepted accounting
principles for interim financial information, the instructions to Form 10-QSB
and Regulation S-B (including Item 310(b) thereof) and reflect, in the opinion
of management, all adjustments necessary to present fairly the net assets and
results of operations as of and for the periods indicated.
It is suggested that these Condensed Financial Statements be read
in conjunction with the Financial Statements and the Notes thereto for the year
ended December 31, 1995, included in the Beverly Hills Bancorp Form 10-KSB
Annual Report to the Securities and Exchange Commission.
The Company has adopted the liquidation basis of accounting as of
September 30, 1995. Therefore, the Company's investments in subsidiaries are
stated at their estimated realizable value and the subsidiaries' assets and
liabilities are no longer consolidated with the Company's financial statements.
This basis of accounting is considered appropriate when the Company has adopted
a Plan of Complete Liquidation and Dissolution (the "Plan") and liquidation
appears imminent, the Company is no longer viewed as a going concern and the net
realizable value of the Company's assets are reasonably determinable. Under this
basis of accounting, assets and liabilities are stated at their estimated net
realizable value and estimated costs of liquidating the Company are provided to
the extent they are reasonably determinable.
The Plan provides for the liquidation of all of the Company's
assets. In connection with the adoption of the liquidation basis of accounting,
the Company has accrued what management believes are reasonable estimates of
realizable value and costs to liquidate its remaining assets. The actual
realizable value and costs may differ significantly depending on a number of
factors, including the length of time it takes to dispose of and the amount
received for the remaining assets and the holding costs associated therewith.
Estimated costs to liquidate are reflected in the Statement of Net Assets as
"Reserve for Remaining Lease Obligations" and "Reserve for Estimated Costs of
Operation, Liquidation and Dissolution."
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The Condensed Consolidated Statements of Operations and of Cash
Flows for the three months ended March 31, 1995 were prepared on a going concern
basis of accounting which contemplated the realization of assets and the
satisfaction of liabilities in the normal course of business. The Condensed
Financial Statements for the three months ended March 31, 1996 were prepared on
the liquidation basis of accounting. The effects of adopting the Plan are
explained in Note 2 - Plan of Complete Liquidation and Dissolution.
Use of Estimates:
The preparation of financial statements in conformity with
generally accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates. There were
no changes in the estimates for the three months ended March 31, 1996.
Reclassification:
Certain prior years' amounts have been reclassified to conform to
the current year presentation.
Note 2 - Plan of Complete Liquidation and Dissolution:
Estimated Effects of Liquidation:
The net adjustment at September 30, 1995 required to convert from
the going concern (historical cost) basis to the liquidation basis of accounting
was an increase in the carrying value of net assets of $643,000 which was
included in the Statement of Net Assets and of Changes in Net Assets. This
increase is a result of recording estimated realizable values and costs, which
costs may be subject to change as facts and circumstances change, as follows:
1. Increase in valuation of Investment in
Tigera Group, Inc. ("Tigera") to realizable
value of $.90 per share $ 995,000(A)
2. Reserve for Remaining Lease Obligation (80,000)
3. Reserve for Estimated Costs of Operations,
Liquidation and Dissolution (272,000)
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Estimated Effects of Liquidation $ 643,000
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(A) The increase in valuation of the Tigera shares is based on the sale of
such shares on November 8, 1995.
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The Company, as part of the Plan of Complete Liquidation and
Dissolution discussed in the Proxy Statement dated April 14, 1995, made a
payment of $3.50 per share of common stock outstanding on April 30, 1996, to
shareholders of record as of April 16, 1996.
Note 3 - Net Loss per Share:
Net loss per share is based on the weighted average number of
common shares outstanding.
Note 4 - Investments in Subsidiaries:
As stated, the Company has adopted the liquidation basis of
accounting. Therefore, the Company's investments in subsidiaries are stated at
their estimated realizable value and the subsidiaries' assets and liabilities
are no longer consolidated with the Company's financial statements.
Note 5 - Income Taxes:
The Company files consolidated federal income and combined
California franchise tax returns on a cash basis. As of December 31, 1995, the
Company has net operating loss carryforwards of approximately $5,000,000 which
are available to offset future taxable income expiring from 1997 through 2009.
Examination by taxing authorities of open tax years could result in tax
assessments and material changes to the net operating loss carryforwards.
As a result of its reorganization, the Company is required to
report income for financial statement purposes as if no tax loss carryforward
existed. However, since the Company's tax status is not affected by the
reorganization, it is entitled to a reduction of federal income taxes, except
for personal holding taxes, arising from the utilization of its net operating
losses incurred prior to reorganization. Such reduction is credited to capital
surplus, when realized, rather than reflected in the income statement.
Federal statutes place significant restrictions on the utilization
of net operating loss deductions. Under present tax law, there is substantial
risk that net operating loss carryforwards will be reduced if certain conditions
are present in connection with an acquisition, merger or reorganization.
As of December 31, 1995, the deferred tax assets related to the
net operating loss carryforwards totaling approximately $2,000,000 have been
fully offset by valuation allowances, since the utilization of such amounts is
uncertain.
Due to the Plan of Complete Liquidation and Dissolution, it is
anticipated that the Company will not fully utilize these net operating loss
carryforwards.
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Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations
March 31, 1996
Results of Operations
Interest, dividend and other income was $66,000 for
the three months ended March 31, 1995, and consisted primarily of an interest
payment of $48,125 from Sixty Eight Thousand, Inc. for the interest due on notes
receivable for 1994 and the first quarter of 1995.
The equity in loss of investment and amortization of
excess cost of investment for the three months ended March 31, 1995, relate to
the Company's prior ownership of 22.5% of the outstanding shares of Tigera which
had net losses of $46,000 for the three months ended March 31, 1995.
General and administrative expenses were $97,000 for
the three months ended March 31, 1995. They consisted of day-to-day operational
costs and professional fees in connection with the sale of the Tigera shares and
Plan of Complete Liquidation and Dissolution.
The Company files consolidated federal income and
combined California franchise tax returns on a cash basis. As of December 31,
1995, the Company has net operating loss carryforwards of approximately
$5,000,000 which are available to offset future taxable income expiring from
1997 through 2009. Examination by taxing authorities of open tax years could
result in tax assessments and material changes to the net operating loss
carryforwards.
As a result of its reorganization, the Company is
required to report income for financial statement purposes as if no tax loss
carryforward existed. However, since the Company's tax status is not affected by
the reorganization, it is entitled to a reduction of federal income taxes,
except for personal holding taxes, arising from the utilization of its net
operating losses incurred prior to reorganization. Such reduction is credited to
capital surplus, when realized, rather than reflected in the income statement.
Federal statutes place significant restrictions on
the utilization of net operating loss deductions. Under present tax law, there
is substantial risk that net operating loss carryforwards will be reduced if
certain conditions are present in connection with an acquisition, merger or
reorganization.
As of December 31, 1995, the deferred tax assets
related to the net operating loss carryforwards totaling approximately
$2,000,000 have been fully offset by valuation allowances, since the utilization
of such amounts is uncertain.
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Due to the Plan of Complete Liquidation and
Dissolution, it is anticipated that the Company will not fully utilize these net
operating loss carryforwards.
Liquidity and Capital Resources
Cash and cash equivalents increased to $5,221,000 as
of March 31, 1996, compared with $5,086,000 as of December 31, 1995. The
increase is attributable to receipt of interest income and the collection of
notes and interest receivable which was partially offset by expenditures for
various liabilities.
As of March 31, 1996, the Company's principal source
of funds consisted of $5,221,000 in cash and cash equivalents. Near-term capital
requirements for the payment of liabilities and liquidating dividends are
expected to be financed through cash flow from interest income, existing cash
balances and the sale of the Company's remaining assets.
The Company, as part of the Plan of Complete
Liquidation and Dissolution discussed in the Proxy Statement dated April 14,
1995, made a payment of $3.50 per share of common stock outstanding on April 30,
1996, to shareholders of record as of April 16, 1996.
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PART II. Other Information
Item 1. Legal Proceedings
None.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits: None.
(b) Report on Form 8-K: None.
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SIGNATURE
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.
BEVERLY HILLS BANCORP
(Registrant)
By: /s/ Albert M. Zlotnick
--------------------------------
Albert M. Zlotnick
Chairman of the Board, President
and Chief Executive, Financial
Dated: May 10, 1996 and Accounting Officer
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