10-K/A
1
10-K FOR YEAR ENDED DECEMBER 31, 1994
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM 10-K
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934 For the Fiscal Year Ended December 31, 1995
COMMISSION FILE NUMBER: 0-497
NEW MEXICO AND ARIZONA LAND COMPANY
(Exact name of registrant as specified in its charter)
ARIZONA
(State or other jurisdiction of incorporation or organization)
43-0433090
(I.R.S. Employer Identification No.)
2810 NORTH THIRD STREET, SUITE 203, PHOENIX, ARIZONA 85004
(Address of principal executive offices) (Zip Code)
602/266-5455
(Registrant's telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act: NONE
Securities registered pursuant to Section 12(g) of the Act:
Title of class: COMMON STOCK, NO PAR VALUE
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 twelve
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 by check mark if disclosure of delinquent filers
pursuant to Item 405 of Regulation S-K is not contained herein,
and will not be contained, to the best of registrants's
knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. [ ]
State the aggregate market value of voting stock held by
non-affiliates of the registrant. The aggregate market value
shall be computed by reference to the price at which the stock
was sold, or the average bid and asked prices of such stock, as
of a specified date within 60 days prior to the date of filing:
AGGREGATE MARKET VALUE $11,161,120. CLOSING PRICE on the
American Stock Exchange on February 21, 1995: $9.875 PER SHARE.
Indicate the number of shares outstanding of each of the
Registrant's classes of common stock, as of the latest
practicable date. Class: Common stock, no par value. Outstanding
at February 21, 1995: 2,479,853 shares.
DOCUMENTS INCORPORATED BY REFERENCE
Part III of the Form 10-K incorporates by reference certain
portions of the registrant's definitive proxy statement to be
filed with the Commission.
2
New Mexico and Arizona Land Company and Subsidiaries FORM 10-K
INDEX
Item 1: Business............................................... 3
Item 2: Properties............................................. 4
Item 3: Legal Proceedings...................................... 6
Item 4: Submission of Matters to a Vote of Security Holders.... 6
Item 5: Market for the Registrant's Common Equity and Related
Stockholder Matters.................................... 7
Item 6: Selected Financial Data................................ 8
Item 7: Management's Discussion and Analysis of Financial
Condition and Results of Operations.................... 9
Item 8: Financial Statements and Supplementary Data............12
Item 9: Changes in and disagreements with Accountants on
Accounting and Financial Disclosure....................29
Item 10:Directors and Executive Officers of the Registrant.....29
Item 11:Executive Compensation.................................29
Item 12:Security Ownership of Certain Beneficial Owners and
Management.............................................29
Item 13:Certain Relationships and Related Transactions.........29
Item 14:Exhibits, Financial Statement Schedules,
and Reports on Form 8-K................................29
3
ITEM 1: BUSINESS
-----------------
New Mexico and Arizona Land Company ("the Company") was
organized in 1908 as an Arizona Corporation. It now has 19 full
time employees. The Company's principal business is real estate
which is currently conducted principally in Arizona and New
Mexico.
The Company also owns over one million acres of fee mineral
rights in these two states. Financial information about industry
segments appears in Note 10 to the consolidated financial
statements. The Company's real estate and mineral holdings are
listed and described under Item 2.
The primary objective is to always maintain financial
integrity, maximize the value of existing assets, and capitalize
on new business opportunities as they may arise in the ever
changing real estate and mineral markets. Presently, the Company
is considering the acquisition of one, or more, new businesses,
possibly unrelated to real estate, with the objective of creating
more reliable base income and cash flows.
The Company owns a 75% partnership interest in three real
estate joint ventures. In 1994 these joint ventures sold
approximately 60 acres of multi-family property, 30 acres of
residential land, and a total of 269 residential lots that were
developed by the joint ventures. $13,700,000 of revenue was
generated by these joint ventures. We expect that lot sales in
1995 will be comparable to 1994.
In northeastern Arizona, the Company still owns over 160,000
acres of rural grazing land originating from railroad grants. In
the past fifteen years, over 65,000 acres have been sold through
40-acre recreational subdivision programs. Typically the land is
sold in 40-acre parcels, with a small down payment, on 15 year
contracts. Cash flow, principal and interest, from the
installment contracts was over $1,500,000 in 1994. The Company is
looking to continue these type of programs by purchasing
additional subdividable properties.
The Company continues to own and profitably operate four
apartment complexes in New Mexico. These units have federally-
subsidized rent contracts designed for the elderly or handicapped
and enjoy essentially no vacancies. 1994 operating profit from
these rental units exceeded $1,600,000 before depreciation and
debt service. In 1994, these units were refinanced at a lower
interest rate, with an extended term.
With the resurgence of the commercial real estate market,
the Company is looking for the highest and best use of its small
parcels. It is expected that some activity, on these parcels,
will occur in 1995.
The Company's fee mineral acreage contains known deposits of
uranium, limestone, coal and other minerals. One relatively
large deposit of uranium on Company mineral lands is currently
leased, as is the limestone deposit. In 1994, the Company
purchased 60% of the uranium rights to a 140 acre parcel of land,
which is known to contain uranium mineralization contiguous to
the Company's mineral rights containing uranium. The Company also
owns certain small working interests and royalty interests in a
number of oil wells in New Mexico and Oklahoma. Current revenue
from mineral activities, which consist of royalties, petroleum
production, and leasing and sales of mineral rights, do not
constitute a significant portion of the Company's consolidated
revenue.
4
ITEM 2: PROPERTIES
-------------------
The following are schedules of properties owned by the Company at
December 31, 1994:
-----------------------------------------------------------------
Year Encumbrance
Acquired/ (Dollars in
Location Description Developed thousands)
-----------------------------------------------------------------
RENTAL PROPERTIES
ARIZONA
Scottsdale I.C.E. Buildings
13,020-square feet
of buildings 1983 $ 844
Tempe 12th Place Building
37,908-square foot building 1983 844
Tucson 8 acres leased to
Parking Company of America;
Park and fly facility 1984-1988 0
NEW MEXICO
Albuquerque Brentwood Gardens Apartments
122-unit complex on 7.5 acres 1985 3,248
Airpark Building
40,000-square foot office
building on 2.5 acres 1985-1986 0
Farmington Apple Ridge Apartments
80-unit complex on 5.7 acre 1985 2,148
Las Cruces Montana Meadows Apartments
80-unit complex on 6.1 acre 1985 2,039
Roswell Wildewood Apartments
60-unit complex on 4.3 acre 1985 1,470
5
ITEM 2: PROPERTIES (Continued)
-------------------------------
LAND HELD FOR SALE
---------------------------------------------------------------
NEW MEXICO
Albuquerque Manzano Mesa Ltd Partnership
Residential lot development 1992-2006 419
planned for 500 lots in five
phases of which 262 lots were
sold as of mid-February, 1995.
Brown/NZD Development
Joint Venture
Residential lot development 1993-1995 299
SEVEN BAR SOUTH, 174 lots in
three phases of which 104
were sold as of mid-
February, 1995.
SEVEN BAR NORTH, 587 lots 1995-1999 0
planned in nine phases, with
103 lots in phase I under
contract for sale as of
mid-February, 1995.
The property is owned by a general partnership of which the
Company owns 50%.
The property is owned by a limited partnership of which the
Company owns 75%.
The property is owned by a general partnership of which the
Company owns 75%.
6
ITEM 2: PROPERTIES (Continued)
-------------------------------
RURAL, MINERAL AND UNIMPROVED URBAN PROPERTIES
-----------------------------------------------------------------
Encumbrance
Acres (Dollars in
County State Surface Mineral thousands)
-----------------------------------------------------------------
Apache Arizona 79,081 146,640 0
Coconino Arizona 10 21,191 0
Maricopa Arizona 83 83 $ 513
Mohave Arizona 46,602 0
Navajo Arizona 85,312 474,932 0
Pima Arizona 1,387 1,387 0
Bernalillo New Mexico 145 145 1,508
Catron New Mexico 11,346 0
Cibola New Mexico 5,068 225,185 0
Dona Ana New Mexico 305 305 0
McKinley New Mexico 160 117,238 0
San Juan New Mexico 5,040 0
Socorro New Mexico 2,399 0
Valencia New Mexico 43,925 0
Various Oklahoma 337 0
-----------------------------------------------------------------
171,551 1,096,755
=================================================================
The Company is lessor on grazing and mineral leases covering
approximately 160,000 and 6,800 acres, respectively, and owns
working interests in various oil and gas joint ventures located
in New Mexico, acquired from 1986 through 1988.
106 acres are owned by a general partnership of which the
Company owns 75%.
ITEM 3: LEGAL PROCEEDINGS
-------------------------
As of December 31, 1994 there existed no litigation which
posed a significant threat to New Mexico and Arizona Land Company
or its assets.
ITEM 4: SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
-----------------------------------------------------------
On November 18, 1994, a special meeting of shareholders of
New Mexico and Arizona Land Company was held in Phoenix, Arizona
to consider whether to amend the company's articles of
incorporation to grant authority to the Board of Directors to
issue preferred stock. No other matters were considered. The
number of votes cast were: 1,569,648 for; 272,007 against; and
2,908 abstain.
7
ITEM 5: MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED
STOCKHOLDER MATTERS
---------------------------------------------------------
At December 31, 1994, there were 2,490,679 shares of no par
common stock issued, which when restated for the 10% stock
dividend payable on May 1, 1995, will increase to 2,739,746.
These restated shares consist of 2,727,838 shares outstanding
and 11,908 shares of treasury stock. The stock is admitted to
unlisted trading privileges on the American Stock Exchange under
the symbol "NZ".
On April 28, 1994, Burlington Resources Inc. sold 1,246,175
(1,370,792 restated) shares, which is approximately 50.25% of the
outstanding shares of Company, to Sun NZ, LLC.
Shareholders of record at December 31, 1994, totaled 925.
On March 4, 1995, the Board of Directors declared a 10%
stock dividend, payable May 1, 1995. No dividends were declared
in 1994, 1993 or 1992.
THE MARKET PRICE RANGE BY QUARTER:
-------------------------------------------------------
1994 1993
High Low High Low
-------------------------------------------------------
1st quarter 10 1/4 8 5/8 8 7/8 7 3/8
2nd quarter 10 1/8 8 1/8 10 8 1/8
3rd quarter 9 3/8 8 1/4 10 1/4 8 3/4
4th quarter 9 3/8 7 3/4 10 1/4 8 5/8
8
ITEM 6: SELECTED FINANCIAL DATA
--------------------------------
Years ended December 31, 1994 1993 1992 1991 1990
-----------------------------------------------------------------
SUMMARY OF OPERATIONS ($ in thousands):
Gross revenues
from operations $21,440 $10,337 $10,494 $9,507 $25,164
Income (loss) before
cumulative effect of
an accounting change 3,936 1,282 (1,472) 287 49
Net income (loss) 3,936 1,282 (892) 287 49
Income (loss) per share
before cumulative effect
of an accounting change 1.59 0.52 (0.59) 0.12 0.02
Net income (loss)
per share 1.59 0.52 (0.36) 0.12 0.02
SUMMARY OF FINANCIAL POSITION:
Total assets $52,307 $46,622 $45,772 $53,457 $59,316
Notes payable and
lines of credit 14,546 15,268 17,392 22,001 26,063
Shareholders' equity 25,127 21,153 19,871 20,696 20,353
OTHER SUPPLEMENTAL INFORMATION:
Weighted average number of
shares outstanding 2,480 2,481 2,484 2,476 2,470
Number of shareholders 925 970 1,035 1,070 1,060
Number of full time
employees 19 19 19 19 19
EARNINGS (LOSS) PER SHARE AND WEIGHTED AVERAGE SHARES OUTSTANDING
RESTATED FOR 10% STOCK DIVIDEND, PAYABLE MAY 1, 1995:
Income (loss) per share
before cumulative effect
of an accounting change 1.44 0.47 (0.54) 0.11 0.02
Net income (loss)
per share 1.44 0.47 (0.33) 0.11 0.02
Weighted average number of
shares outstanding 2,728 2,729 2,732 2,724 2,718
9
ITEM 7: MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
---------------------------------------------------------
LIQUIDITY AND CAPITAL RESOURCES
Cash flow from sales of land, single-family and recreational
lots, distributions from its joint ventures and other ongoing
operations, along with unused borrowing capacity, should be
adequate for continuing operations and considerable future
investments during the next year.
The Company invested approximately $2,848,000, in 1993, to
purchase the 383-acre Seven Bar Ranch property. As of December
31, 1994, the Company recouped all its initial investment as well
as the majority of its preferred return from the Seven Bar joint
ventures. As development of this property continues, additional
development loans and corporate guarantees may be required by the
Company and/or its partner. The Company and a partner have
guaranteed a $2 million and $2.8 million development loan. At
February 22, 1995, the $299,000 balance on the $2 million, that
was owed at December 31, 1994, had been paid off and $350,000 had
been borrowed on the $2.8 million development loan.
In 1994, the Company reduced its outstanding debt by
$722,000. The Company s line of credit converted to a reducing
revolving term loan on January 1, 1994. The loan, with a
commitment base of $1,250,000, matures on June 30, 1995. At
February 22, 1995, there were no borrowings against this line.
Negotiations are in progress for the extension of this line of
credit.
Also in 1994, the Company refinanced its four apartment
complexes, the interest rate was decreased by 1.5 points and the
maturity date was extended from 1996 to 2009. Cash flow from
these properties after debt service was $650,000 in 1994 and we
are expecting a similar amount for 1995.
INFLATION, DEFLATION, AND CHANGING PRICES
The results of operations and capital expenditures will
continue to be affected by inflation, deflation and changing
prices. Price changes in real estate, rental rates, oil, gas and
uranium could have significant effects on Company operations.
RESULTS OF OPERATIONS - 1994 COMPARED TO 1993
Results for 1994 were the best in eight years, with net
income of $3,936,000 compared to $1,282,000 in 1993. On
March 4, 1995, the Board of Directors declared a 10% stock
dividend payable May 1, 1995. Earnings per share were $1.59
and $.052 before restatement for the 10% dividend and $1.44
and $.047 after the restatement in 1994 and 1993, respectively.
Revenue from the sale of residential lots doubled over last
year, $8,700,000 compared to $4,300,000 in 1993. The two
multi-family parcels in our Seven Bar property were also sold in
1994, which generated revenue of $4,400,000. The total gain on
sales of properties increased by $5,600,000 in 1994 over 1993.
Rental properties continue to produce a steady cash flow
and income from year to year. One of the industrial/office
buildings located in Phoenix was sold in 1994, for a gain of over
620,000.
10
ITEM 7: MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
---------------------------------------------------------
The increase of $325,000 in interest income resulted from
the recognition of interest received from a note receivable.
Interest expense decreased by $488,000. The principal
contributing factors were (a) the ability to capitalize interest
as a result of the on-going lot development programs in our Seven
Bar and WillowWood projects, (b) the refinancing of the four
apartment complexes at a lower interest rate and (c) the
repayment of the outstanding balance on the credit line. General
and administrative expenses increased by $512,000 in 1994. The
major factor in the increase was due to a one time charge of
$398,000. This represented the amount due under an employment
agreement with Richard E. Leonard, who resigned as Chairman,
President and Chief Executive Officer of the Company on June 27,
1994. Also in 1994, the majority of the shares of the Company
changed ownership. With the change in ownership, certain costs
such as insurance, legal fees and board of director fees
increased.
The increase in cash flow from operating activities and
investing activities in 1994 compared to 1993, was the result of
sales of property, single and multi-family residential lots in
Albuquerque and an industrial property in Phoenix.
RESULTS OF OPERATIONS - 1993 COMPARED TO 1992
Net income for 1993 was $1,282,000 ($.47 per share) compared
to a loss of $892,000 ($.33 per share) in 1992. The loss in 1992
resulted principally from the establishment of a valuation
allowance in the amount of $3,596,000 for several of the
Company's real estate properties and losses from its joint
venture holdings offset by the one-time credit associated with
the cumulative effect of adopting the new accounting
pronouncement for income taxes. The Company continually updates
its analysis of the estimated realizable values of its real
estate properties and concluded that no further writedowns of its
properties was necessary .
The results of operations before income taxes in 1993 was
$2,167,000 as compared to pre-tax income of $1,186,000 before the
above mentioned valuation allowance. The increase in pre-tax
income in 1993 was due to the absence of losses from the
Company's joint venture holdings. Losses from these joint
ventures in 1992 consisted of a $220,000 loss on the sale of one
of the buildings and a $527,000 loss from the writedown of
another building to its estimated realizable value.
11
ITEM 7: MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
---------------------------------------------------------
PROPOSED ACCOUNTING STANDARD
The Financial Accounting Standards Board has issued an
exposure draft of a proposed accounting standard entitled
"Accounting for the Impairment of Long Lived Assets". The Company
believes that the final standard may be different from the
exposure draft. Accordingly, the Company cannot predict the
impact, if any, that such a final standard might have on the
Company's financial position or results of operations.
OUTLOOK TO THE FUTURE
Single-family lot sales are expected to continue at a good
pace generating positive cash flows and earnings. Land sales and
rental revenue from the apartment complexes and commercial
buildings also continue to generate positive cash flows and
earnings. A 12-acre parcel of the Seven Bar property was sold in
January 1995, for a gain of $358,000.
The Company is focusing on the acquisition of one or more
new business, possibly unrelated to real estate or minerals.
Along with any new ventures, the Company will continue with
residential and recreational lot sales and investment in various
real estate properties. The Company also continues to monitor
the various minerals' markets in a effort to capitalize on its
expertise and sizeable holdings.
The Company's current businesses, real estate and minerals,
tend to be cyclical, so investors should expect results in
earnings, cash flow and other performance indicators to vary from
year-to-year.
12
ITEM 8: FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
INDEPENDENT AUDITORS' REPORT
----------------------------
The Board of Directors and Shareholders
New Mexico and Arizona Land Company:
We have audited the accompanying consolidated balance sheets
of New Mexico and Arizona Land Company and subsidiaries as of
December 31, 1994 and 1993, and the related consolidated
statements of operations, changes in shareholders' equity and
cash flows for each of the years in the three year period ended
December 31, 1994. In connection with our audits of the
consolidated financial statements, we also have audited the
financial statement schedules for each of the years in the three
year period ended December 31, 1994. These consolidated
financial statements and financial statement schedules are the
responsibility of the Company's management. Our responsibility
is to express an opinion on these consolidated financial
statements and financial statement schedules based on our audits.
We conducted our audits in accordance with generally
accepted auditing standards. Those standards require that we
plan and perform the audit to obtain reasonable assurance about
whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting
principles used and significant estimates made by management, as
well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the consolidated financial statements
referred to above present fairly, in all material respects, the
financial position of New Mexico and Arizona Land Company and
subsidiaries as of December 31, 1994 and 1993, and the results of
their operations and their cash flows for each of the years in
the three year period ended December 31, 1994, in conformity with
generally accepted accounting principles. Also, in our opinion,
the related financial statement schedules when considered in
relation to the basic consolidated financial statements taken as
a whole, present fairly, in all material respects, the
information set forth therein.
As discussed in Notes 1 and 5 to the consolidated financial
statements, the Company changed its method of accounting for
income taxes in 1992.
Phoenix, Arizona
KPMG Peat Marwick LLP
Date: February 17, 1995, except as to note 11,
which is as of March 4, 1995
13
ITEM 8: FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA (CONTINUED)
New Mexico and Arizona Land Company and Subsidiaries
CONSOLIDATED STATEMENTS OF OPERATIONS
Years Ended December 31,
($in thousands, except per share data) 1994 1993 1992
-----------------------------------------------------------------
Revenues:
Property sales........................... $16,868 $5,999 $6,291
Property rentals......................... 3,094 3,121 2,996
Investment income........................ 1,221 896 930
Other.................................... 257 321 277
----------------------
21,440 10,337 10,494
Expenses:
Cost of property sales................... 8,949 3,716 3,509
Rental property.......................... 1,173 1,130 1,072
General and administrative............... 1,639 1,127 1,081
Interest................................. 1,053 1,541 1,918
Writedown of properties.................. 0 0 3,596
Depreciation, depletion and amortization. 528 592 550
Other.................................... 8 14 232
----------------------
13,350 8,120 11,958
Income (Loss) Before Joint Ventures,
Minority Interests and Income Taxes.... 8,090 2,217 (1,464)
Loss from joint ventures................. (234) (88) (946)
Minority interests....................... (1,309) 38 0
----------------------
Income (Loss) Before Income Taxes and
Cumulative Effect of an Accounting Change 6,547 2,167 (2,410)
Provision (benefit) for income taxes..... 2,611 885 (938)
----------------------
Income (Loss) Before Cumulative Effect
of an Accounting Change................. 3,936 1,282 (1,472)
Cumulative effect of an accounting change 0 0 580
----------------------
NET INCOME (LOSS) $3,936 $1,282 $ (892)
======================
Income (Loss) per Share of Common Stock:
Income (loss) before cumulative effect
of an accounting change............ $ 1.44 $ 0.47 $(0.54)
Cumulative effect of an accounting change
related to income taxes............ 0 0 $ 0.21
NET INCOME (LOSS) PER SHARE $ 1.44 $ 0.47 $(0.33)
======================
WEIGHTED AVERAGE NUMBER OF
COMMON SHARES 2,728 2,729 2,732
======================
See Accompanying Notes to Consolidated Financial Statements.
Restated to reflect a 10% stock dividend payable May 1, 1995.
14
ITEM 8: FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA (CONTINUED)
New Mexico and Arizona Land Company and Subsidiaries
CONSOLIDATED BALANCE SHEETS
December 31,
(Dollars in thousands) 1994 1993
---------------------------------------------------------------
ASSETS
Properties, net........................... $35,432 $35,899
Receivables, net.......................... 10,224 8,842
Investments in joint ventures............. 454 666
Cash and cash equivalents................. 5,111 534
Other..................................... 1,086 681
------------------
Total Assets $52,307 $46,622
LIABILITIES AND SHAREHOLDERS' EQUITY
Notes payable and lines of credit......... $14,546 $15,268
Accounts payable and accrued liabilities.. 2,165 1,306
Deferred revenue and commissions.......... 5,494 5,566
Deferred income taxes..................... 3,723 3,070
------------------
Total liabilities 25,928 25,210
Minority interests........................... 1,252 259
Shareholders' equity:
Common stock, no par value; 30,000,000
shares authorized; 2,739,746 shares issued;
2,727,838 shares outstanding ......... 7,812 7,812
Additional paid-in capital................. 929 891
Retained earnings.......................... 16,478 12,542
Treasury stock, at cost, 11,908 shares (92) (92)
------------------
Total shareholders' equity 25,127 21,153
------------------
Total liabilities and shareholders' equity $52,307 $46,622
==================
See Accompanying Notes to Consolidated Financial Statements.
Restated to reflect a 10% stock dividend payable May 1,1995
15
ITEM 8: FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA (CONTINUED)
New Mexico and Arizona Land Company and Subsidiaries
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
(Amounts in thousands)
Additional
Balances at Common stock paid-in Retained Treasury stock
December 31: Shares Amount capital earnings Shares Amount
-----------------------------------------------------------------
1991 2,740 $7,812 $866 $12,152 14 $134
=================================================================
Net income.... 0 0 0 (892) 0 0
Employee
restricted
stock plan... (26) (8) (93)
-----------------------------------------------------------------
1992 2,740 $7,812 $840 $11,260 6 $ 41
=================================================================
Net income.... 0 0 0 1,282 0 0
Employee
restricted
stock plan... 0 0 51 0 0 0
Purchase of
treasury
stock........ 0 0 0 0 6 51
-----------------------------------------------------------------
1993 2,740 $7,812 $891 $12,542 12 $ 92
=================================================================
Net income.... 0 0 0 3,936 0 0
Employee
restricted
stock plan... 0 0 38 0 0 0
-----------------------------------------------------------------
1994 2,740 $7,812 $929 $16,478 12 $ 92
=================================================================
See Accompanying Notes to Consolidated Financial Statements.
Restated to reflect a 10% stock dividend payable May 1,1995.
16
ITEM 8: FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA (CONTINUED)
New Mexico and Arizona Land Company and Subsidiaries
CONSOLIDATED STATEMENTS OF CASH FLOWS
December 31,
(Dollars in thousands) 1994 1993 1992
-------------------------------------------------------------------------
CASH FLOW FROM OPERATING ACTIVITIES:
Net income................................. $3,936 $1,282 $ (892)
Non-cash items included above:
Depreciation, depletion and amortization 528 592 550
Deferred revenue........................ (1,091) (782) 174
Deferred income taxes................... 653 (430) (1,694)
Cumulative effect of an accounting change 0 0 (580)
Loss from joint ventures................ 234 88 946
Minority interests...................... 1,309 (38) 0
Valuation allowance..................... 0 0 3,796
Amortization of notes receivable discount 0 0 (24)
Employee restricted stock plan.......... 38 51 67
Net change in:
Receivables............................. (1,438) 28 311
Land held for sale...................... (1,095) (231) 2,390
Other assets............................ (155) 215 (288)
Accounts payable and accrued liabilities 859 867 (151)
-------- ------- -------
Net cash flow from operating activities 3,778 1,642 4,605
CASH FLOW FROM INVESTING ACTIVITIES:
Additions to properties................. (814) (2,043) 0
Proceeds from sale of properties........ 1,849 1,938 235
Proceeds from notes receivable.......... 1,074 1,265 189
Distribution to minority interest partners (316) 0 0
Contribution to joint ventures.......... (22) (20) (90)
Distributions from joint ventures....... 0 43 25
-------- ------ --------
Net cash flow from investing activities 1,771 1,183 359
CASH FLOW FROM FINANCING ACTIVITIES:
Proceeds from debt...................... 3,808 3,122 3,635
Payment of debt......................... (4,780) (5,875) (8,667)
Capital contribution from minority interests 0 297 0
Purchase treasury shares................ 0 (51) 0
-------- ------- -------
Net cash flow from financing activities (972) (2,507) (5,032)
-------- ------- -------
Net increase in cash and cash equivalents 4,577 318 (68)
-------- ------- -------
Cash and cash equivalents at beginning of year 534 216 284
-------- ------- -------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 5,111 $ 534 $ 216
======== ======= =======
See Accompanying Notes to Consolidated Financial Statements.
17
ITEM 8: FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA (CONTINUED)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1 - SUMMARY OF ACCOUNTING POLICIES
---------------------------------------
PRINCIPLES OF CONSOLIDATION
The consolidated financial statements include the accounts
of New Mexico and Arizona Land Company, its wholly-owned
subsidiaries and majority-owned partnerships ("the Company"). All
material intercompany transactions have been eliminated in
consolidation. Certain financial statement items from prior
years have been reclassified to be consistent with the current
year financial statement presentation.
PROPERTIES
Properties are recorded at cost net of valuation
allowances. Depreciation on rental properties is provided over
the estimated useful lives of the assets using the straight-line
method. Maintenance and repairs are charged to income as incurred
and renewals or betterments are capitalized.
INVESTMENTS IN JOINT VENTURES
The Company's investments in joint ventures are accounted
for using the equity method.
PROPERTY SALES AND DEFERRED REVENUE
Profits on property sales are recognized, subject to the
assessment of collectibility of the related receivables, when the
buyer's investment amounts to at least 25% of the sales price and
the buyer remains obligated to increase this investment by a
minimum amount annually. Profits on sales that do not meet these
requirements are recognized on the installment basis provided
minimum down payments are received.
Deferred revenue consists of land sales being accounted
for on the installment basis, rents collected in advance and
deferred commissions. Rents collected in advance represent
annual rental payments made in advance of the lease year and are
considered earned ratably over the lease year for financial
statement purposes.
INCOME TAXES
In February 1992, the Financial Accounting Standards Board
issued Statement of Financial Accounting Standards No.109,
"Accounting for Income Taxes" ("Statement 109"). Statement 109
requires the accounting for income taxes to be changed from the
deferred method of APB Opinion 11 to the asset and liability
method. Under the asset and liability method of Statement 109,
deferred tax assets and liabilities are recognized for the future
tax consequences attributable to differences between the
financial statement carrying amounts of existing assets and
liabilities and their respective tax bases and operating loss and
tax credit carryforwards. Deferred tax assets and liabilities
are measured using enacted tax rates expected to apply to taxable
18
NOTE 1 - SUMMARY OF ACCOUNTING POLICIES (Continued)
---------------------------------------------------
income in the years in which those temporary differences are
expected to be recovered or settled. Under Statement 109, the
effect on deferred tax assets and liabilities of a change in tax
rates is recognized in income in the period that includes the
enactment date.
Effective January 1, 1992, the Company adopted Statement
109 and it has reported the cumulative effect of the change in
the method of accounting for income taxes in the 1992
consolidated statement of operations.
EARNINGS PER SHARE
Earnings per share computations are based on the weighted
average number of common shares outstanding during the year of
2,727,838 in 1994, 2,728,626 in 1993 and 2,732,038 in 1992,
which have been restated to reflect a 10% stock dividend payable
May 1, 1995.
CASH AND CASH EQUIVALENTS
For purposes of reporting cash flows, cash and cash
equivalents include cash on hand, money market accounts and
temporary investments, with an original maturity of three months
or less.
NOTE 2: - PROPERTIES
--------------------
Properties are comprised of the following at December 31:
(Dollars in thousands) 1994 1993
---------------------------------------------------------
Rural lands and unimproved
urban properties..................... $18,296 $18,247
Land held for sale.................... 4,738 3,641
Rental properties..................... 16,827 18,565
Other................................. 5,113 4,710
Accumulated depreciation,
depletion and amortization........... (4,442) (4,164)
Valuation Allowance................... (5,100) (5,100)
---------------------------------------------------------
$35,432 $35,899
=========================================================
The future rentals on non-cancelable operating leases related
to the Company's rental properties, but excluding its four
apartment complexes, are as follows: $598,000 in 1995; $511,000
in 1996; $367,000 in 1997; $94,000 in 1998; $94,000 in 1999; and
$676,000 in later years. The four apartment complexes, which are
Federally subsidized under the U.S.Department of Housing and
Urban Development Section 8 Housing-Assistance-Payments Program,
have contributed revenue of $2,377,000 in 1994, $2,337,000 in
1993 and $2,266,000 in 1992. Revenue should equal or exceed that
recorded in 1994 for each of the next four years.
19
NOTE 2: - PROPERTIES (Continued)
--------------------------------
During 1994 and 1993 the Company acquired residential real
estate parcels at a cost of $1,438,000 and 3,469,000, of which
$999,000 and $437,000 was financed, respectively.
In 1992, the Company assessed the carrying value of its
properties and concluded that the carrying value of certain of
the unimproved urban properties that it holds for investment
exceeded their estimated realizable value. In determining the
realizable value, the Company considered current selling prices
for comparable properties and projected future selling prices.
As a result, a non-cash charge to operations of $3,596,000 was
recorded.
On an annual basis the Company does a net realizable value
("NRV") determination of its properties. At December 31, 1994,
it was determined that the NRV was at or above the book carrying
value of its properties.
NOTE 3 - RECEIVABLES
--------------------
Receivables consist of the following at December 31:
(Dollars in thousands) 1994 1993
-------------------------------------------------
Mortgage notes receivable.......$ 8,832 $8,879
Other notes receivable.......... 38 0
Accounts receivable............. 1,429 38
Reserve for bad debts........... (75) (75)
--------------------------------------------------
$10,224 $8,842
==================================================
The Company sells recreational land, principally in 40-acre
parcels. Since 1980, over 65,000 acres have been sold in
Arizona. The mortgage notes receivable from these land sales, due
over ten to fifteen years, bear interest at rates ranging from
11% to 12%, and are secured by the properties sold. At December
31, 1994 and 1993 mortgage notes receivable relating to these
sales totalled $6,499,000 and $6,450,000, respectively. The
Company sold land for mortgage notes receivable in the amount of
$1,286,000, $2,167,000 and $1,470,000 during the years ended
December 31, 1994, 1993 and 1992, respectively.
The Company has a mortgage note receivable with a principal
balance remaining of $2,238,000, from a 1983 sale of an apartment
complex located in Flagstaff, Arizona. This note, which matured
in September 1992, was restructured under a bankruptcy
reorganization plan. Under the reorganization plan the maturity
of the note was extended to January 13, 2000, the interest rate
was reduced from 10% to 8.75% and the payments were changed from
quarterly interest-only payments to monthly payments of principal
and interest. Also in connection with the sale, the Company
20
NOTE 3 - RECEIVABLES (Continued)
--------------------------------
remained contingently liable under a mortgage note that was
assumed by the purchaser. The estimated fair value of the
property securing the Company's mortgage note receivable exceeds
the basis of the mortgage note receivable and the mortgage
assumed by the buyer. Consequently, should the buyer default
under the note, the Company would not recognize a loss on
foreclosure.
NOTE 4 - NOTES PAYABLE AND LINES OF CREDIT
------------------------------------------
On January 1, 1994 the Company's line of credit converted to
a reducing revolving term loan which has a commitment of
$1,250,000 and matures on June 30, 1995. The loan is secured by
various real estate holdings and notes receivable. Interest is at
the bank's prime rate (8.5% at December 31,1994) plus 1 1/2%. At
December 31, 1994 there were no borrowings on this line. The
Company is currently negotiating with the bank for an extension
of this facility.
The Company and a partner guaranteed development loans for
one of its majority-owned partnerships. The maximum amount of the
two loans is $2,000,000 and $2,800,000, respectively. The loans
are secured by the real property. At December 31, 1994 the
partnership has $299,000 borrowed on the $2,000,000 loan facility
and no borrowings on the $2,800,000 facility. The interest rate
is at prime plus 1% and prime plus 1/2%, respectively, paid
monthly.
At December 31, 1994, the Company had other notes payable
secured principally by real estate properties, aggregating
$14,247,000, with interest rates ranging from prime plus 1% to
10 3/4%, payable through 2009. Interest payments vary from
monthly to semiannually.
Principal payments on all notes payable and lines of credit
are as follows: $1,620,000 in 1995; $4,001,000 in 1996; $744,000
in 1997; $530,000 in 1998; $517,000 in 1999; and $7,134,000 in
later years. Interest paid in 1994, 1993 and 1992, respectively,
amounted to $1,449,000, $1,601,000 and $1,942,000. Interest cost
incurred in 1994 and 1993, respectively, was $1,434,000 and
$1,650,000 of which $381,000 and $141,000, respectively, was
capitalized. All interest incurred in previous years was
expensed.
21
NOTE 5 - INCOME TAXES
---------------------
The Company adopted Statement 109 as of January 1, 1992 and
the cumulative effect of this change in accounting for income
taxes is reported separately in the consolidated statement of
operations for the year ended December 31, 1992.
The provision (benefit) for income taxes is comprised of the
following:
(Dollars in thousands) 1994 1993 1992
--------------------------------------------------------
Current: Federal............. $1,566 $1,052 $ 596
State............... 392 263 160
Deferred: Federal............. 522 (340) (1,417)
State............... 131 (90) (277)
---------------------------------------------------------
$2,611 $ 885 $ (938)
=========================================================
The reconciliation of the computed statutory income tax expense
(benefit) to the effective income tax expense (benefit) follows:
(Dollars in thousands) 1994 1993 1992
---------------------------------------------------------
Statutory Federal
income tax expense (benefit). $2,226 $ 737 $(819)
Reconciling items:
State income taxes,
net of Federal benefit...... 345 114 (77)
Other........................ 40 34 (42)
----------------------------------------------------------
$2,611 $ 885 $(938)
==========================================================
22
NOTE 5 - INCOME TAXES (Continued)
---------------------------------
The effects of temporary differences that give rise to
significant portions of the deferred tax assets and deferred tax
liabilities at December 31, 1994 and 1993 are presented below:
(Dollars in thousands) 1994 1993
------------------------------------------------
DEFERRED TAX ASSETS:
Properties, principally
due to valuation
allowances,depreciation
and amortization of costs.. $ 3,365 $ 3,383
Investments in joint
ventures, principally
due to valuation allowances 149 476
Other....................... 138 0
------------------------------------------------
Total gross deferred
tax assets 3,652 3,859
------------------------------------------------
DEFERRED TAX LIABILITIES:
Properties, principally
due to basis differences
upon acquisition........... (5,446) (5,556)
Receivables/deferred
revenue, principally
due to installment sales... (1,788) (1,190)
Other....................... (141) (183)
------------------------------------------------
Total gross deferred
tax liabilities (7,375) (6,929)
------------------------------------------------
Net deferred tax liability $(3,723) $(3,070)
=================================================
Income taxes paid in 1994, 1993 and 1992 amounted to
$2,164,000, $1,004,000 and $569,000, respectively.
The Internal Revenue Service is currently conducting
examinations of the Company's Federal income tax returns for the
years 1990 and 1992. The Company believes that any adjustments
that might arise from their examination have been adequately
provided for.
23
NOTE 6 - INVESTMENTS IN JOINT VENTURES
--------------------------------------
The Company is involved in a joint venture that developed an
office building. Revenues, costs and profits or losses are shared
equally. During 1992, the Company concluded that the book value
of its interest in this joint venture exceeded the estimated
realizable value and recorded a loss of $527,000, reducing its
investment to its share of estimated realizable value of the
building. Operations of this joint venture continue.
In 1993 an office building that was owned by a joint venture
of which the Company had a 50% interest, was sold. The loss on
the sale of this office building was provided for by this joint
venture in 1992. The joint venture was dissolved in 1993.
The following is a summary of the condensed combined balance
sheets and results of operations of these joint ventures:
December 31,
(Dollars in thousands) 1994 1993
------------------------------------------------
Assets, primarily real estate.. $1,908 $1,931
================================================
Liabilities.................... $ 20 $ 16
Capital........................ 1,888 1,915
------------------------------------------------
$1,908 $1,931
================================================
Years ended December 31,
(Dollars in thousands) 1994 1993 1992
--------------------------------------------------------
Revenue......................... $223 $ 183 $ 425
Loss from sale of building...... 0 0 (440)
Operating and interest expense.. 177 219 541
Depreciation and amortization... 70 69 239
--------------------------------------------------------
Net loss $(24) $(105) $(795)
========================================================
In addition to the above real estate joint ventures, the
Company has invested in various working-interest petroleum
properties principally located in the San Juan Basin of New
Mexico. The Company's interest ranges from 5% to 50%. The
net assets and results of operations applicable to the Company
are as follows:
December 31,
(Dollars in thousands) 1994 1993 1992
--------------------------------------------------------
Net assets..................... $ 37 $255 $312
========================================================
Revenue........................ 54 $ 59 $132
Expenses....................... 276 95 154
--------------------------------------------------------
Net Loss....................... $(222) $(36) $(22)
========================================================
24
NOTE 7 - RESTRICTED STOCK PLAN
------------------------------
In 1988 the Company adopted a Restricted Stock Plan ("the
Plan") to distribute shares of stock to senior executives at no
cost. 100,000 shares of common stock are authorized for awards
during the Plan's ten year term. No shares were awarded in 1994
and 1993. 9,000 shares were awarded in 1992. A total of 31,400
shares have been awarded since inception of the plan. Forfeiture
restrictions lapse on the third, fourth and fifth anniversary
after award. In 1994 a special dispensation was given due to the
change of control of the Company and restrictions were lifted on
15,334 shares. Restrictions will be lifted on the remaining
shares as follows: 3,265 in 1995; 2,273 in 1996; 1,282 in 1997,
which have been restated to reflect a 10% stock dividend payable
on May 1, 1995.
Compensation expense is accrued for the awards of stock in
each period in which services are performed. The Company
recognized compensation expense of $38,000, $51,000 and $67,000
related to these awards for the years ended December 31, 1994,
1993 and 1992, respectively.
NOTE 8 - RETIREMENT PLANS
-------------------------
PENSION PLAN:
The Company's defined benefit retirement plan covers
substantially all full-time employees. The benefits are based on
employment commencement date, years of service and compensation.
No additional post-employment benefits are provided and plan assets
are invested in various mutual funds.
The 1994, 1993 and 1992 net periodic pension benefit is
computed as follows:
(Dollars in thousands) 1994 1993 1992
-------------------------------------------------------
Service cost................... $ 41 $ 50 $ 42
Interest cost.................. 41 38 35
Return on assets
Actual........................ 32 (128) (93)
Deferred gain (loss).......... (115) 42 0
Amortization of unrecognized
net transition asset.......... (25) (25) (25)
-------------------------------------------------------
Net periodic pension benefit... $ (26) $ (23) $(41)
=======================================================
25
NOTE 7 - RESTRICTED STOCK PLAN (Continued)
------------------------------------------
The Company accrues retirement benefits based on an
independent actuarial valuation for the plan. The discount rate
and the rate of increase in future compensation levels used in
determining the actuarial present value of the projected benefit
obligations were 7% and 0% at December 31, 1994 and 1993 and 8%
and 0% at December 31, 1992. The expected long-term rate of
return on plan assets was 7% for 1994 and 1993 and 8% for 1992.
The funded status of the Company's defined benefit
retirement plan at December 31, 1994 and 1993 is as follows:
December 31,
(Dollars in thousands) 1994 1993
-----------------------------------------------
Actuarial present value of benefit obligations:
Vested benefits................$ 674 $ 590
Nonvested benefits............. 3 16
-----------------------------------------------
Accumulated benefit obligation.. 677 606
===============================================
Projected benefit obligation.... 677 606
Fair value of plan assets....... 1,271 1,334
-----------------------------------------------
Excess of assets over
projected benefit obligation... (594) (728)
Unrecognized net gain (loss).... (38) 97
Unrecognized net transition asset 409 434
-----------------------------------------------
Prepaid pension asset (223) (197)
===============================================
401(K) SAVINGS PLAN:
In 1992, the Company established a 401(k) Savings Plan for
all of its employees. The Company matches up to 3% of the
employee's salary contributed. Total expense for the Company
under this plan was $23,600, $21,500 and $11,900 for 1994, 1993
and 1992, respectively.
26
NOTE 9 - UNAUDITED QUARTERLY FINANCIAL INFORMATION
---------------------------------------------------
Certain unaudited quarterly financial information for the
years ended December 31, 1994 and 1992 is presented below:
($in thousands, except First Second Third Fourth
per share data) quarter quarter quarter quarter
-----------------------------------------------------------------
1994 3/31/94 6/30/94 9/30/94 12/31/94
-----------------------------------------------------------------
Revenues.................... $3,406 $4,100 $3,453 $10,481
Net income.................. $595 $394 $625 $2,322
Net income per share.... $0.22 $0.14 $0.23 $0.85
-----------------------------------------------------------------
1993 3/31/93 6/30/93 9/30/93 12/31/93
-----------------------------------------------------------------
Revenues.................... $2,198 $3,084 $2,442 $2,613
Net income.................. $271 $398 $194 $419
Net income per share.... $0.10 $0.15 $0.07 $0.15
Restated to reflect a 10% stock dividend payable May 1,1995.
NOTE 10 - INDUSTRY SEGMENTS:
---------------------------
The following information summarizes information about the
Company's industry segments for the years ended December 31,1994,
1993 and 1992:
(Dollars in thousands) 1994 1993 1992
----------------------------------------------------------------
TOTAL REVENUE
Real estate....................
21,216 $9,989 $10,203
Minerals......................... 224 348 291
OPERATING PROFIT (LOSS)
Real estate...................... $6,420 $2,064 ($2,412)
Minerals......................... 127 103 2
IDENTIFIABLE ASSETS
Real estate...................... $51,558 $45,849 $44,856
Minerals......................... 749 773 916
NOTE 11 - SUBSEQUENT EVENT:
On March 4, 1995, the Board of Directors declared a 10%
stock dividend, payable May 1, 1995. Shares and earnings per
share for 1994 and all prior years have been retroactively
restated to reflect the additional shares.
27
SCHEDULE XI - REAL ESTATE AND ACCUMULATED DEPRECIATION
------------------------------------------------------
Undeveloped
Property
: ...Rental Properties....
Arizona Land Commer- Apart-
and Held cial Land ments,
New for Sale: Bldgs, Leases, New
Mexico Albq,NM Phx,AZ Tucson,AZ Mexico Total
-----------------------------------------------------------------
Encumbrances..$ 2,021 $ 718 $1,688 $ 0 $ 8,905 $13,332
Initial cost to Company:
Land.......... 17,286 2,457 947 2,130 1,187 24,007
Buildings and
improvements. 0 0 1,354 0 10,665 12,019
Cost capitalized subsequent to acquisition:
Improvements.. 1,010 2,281 152 0 392 3,835
Gross amount at which carried at close of Period :
Land.......... 17,359 2,457 947 2,130 1,187 24,080
Buildings and
Improvements. 937 2,281 1,506 0 11,057 15,781
------- ------- ------- ------- ------- -------
Total (a) 18,296 4,738 2,453 2,130 12,244 39,861
======= ======= ======= ======= ======= =======
Accumulated
depreciation
(b) .... 217 0 522 0 3,025 3,764
======= ======= ======= ======= ======= =======
Tax basis is $24,800,000
A valuation allowance in the amount of $5,100,000 was
established in prior years to reflect the Company's
estimated value upon ultimate disposition of certain of
its properties, principally unimproved urban real estate.
Certain properties are owned by partnerships of which the
Company has a 75% ownership.
Life on which depreciation in the latest income statements
is computed: 5 to 35 years.
(a) NOTE TO SCHEDULE XI-REAL ESTATE AND ACCUMULATED DEPRECIATION
-----------------------------------------------------------------
Years ended December 31,
(Dollars in thousands) 1994 1993 1992
-----------------------------------------------------------
Balance at beginning of year.... $40,453 $39,510 $41,651
Additions during year:
Acquisitions................. 1,438 3,469 529
Improvements................. 7,123 2,199 587
Deductions during year:
Cost of real estate sold..... (9,153) (4,725) (3,257)
-------- -------- --------
Balance at close of year $39,861 $40,453 $39,510
======== ======== ========
28
SCHEDULE XI - REAL ESTATE AND ACCUMULATED DEPRECIATION (Cont.)
--------------------------------------------------------------
(b) NOTE TO SCHEDULE XI-REAL ESTATE AND ACCUMULATED DEPRECIATION
-----------------------------------------------------------------
Years ended December 31,
(Dollars in thousands) 1994 1993 1992
-----------------------------------------------------------
Balance of accumulated depreciation
at beginning of year........... $3,526 $3,044 $2,575
Additions during year:
Current year's depreciation.... 476 482 469
Deductions during year:
Real estate sold............... (238) 0 0
------- ------- -------
Balance at close of year $3,764 $3,526 $3,044
======= ======= =======
SCHEDULE XII - MORTGAGE LOANS ON REAL ESTATE
--------------------------------------------
December 31, 1994:
(Dollars in thousands) Principal
amount of
loans
subject
Carrying to
Final Periodic Face amount of delinquent
Interest maturity payment amount of mortgages principal
rate date terms mortgages (a) or interest
-----------------------------------------------------------------
CONVENTIONAL FIRST
MORTGAGES ON UNIMPROVED
LAND SALES IN ARIZONA
AND NEW MEXICO
(predominately 40-acre
parcel sales):
6% - 12% 1995-2010 monthly $10,995 $6,519 $395
MORTGAGES ON THE
SALE OF COMMERCIAL
PROPERTIES:
(Apartment complex)
8.75% 2000 monthly $ 2,852 $2,238 0
------- ------ ----
$13,847 $8,757 $395
======= ====== ====
Level payments of principal and interest.
Net of reserve for bad debt of $75,000
Tax basis is $8,338,000
29
SCHEDULE XII - MORTGAGE LOANS ON REAL ESTATE (Continued)
--------------------------------------------------------
(a) NOTE TO SCHEDULE XII - MORTGAGE LOANS ON REAL ESTATE
--------------------------------------------------------
Year ended December 31, 1994 1993 1992
-----------------------------------------------------------
Balance at beginning of period..... $8,804 $8,187 $12,460
Additions during period:
New mortgage loans................ 1,285 2,167 1,470
Discount amortization............. 0 0 24
Deduction during period:
Collections of principal.......... (1,061) (1,103) (1,248)
In-substance foreclosure.......... 0 0 (3,855)
Valuation allowance............... 0 0 (200)
Forfeitures on installment contracts (271) (447) (464)
------------------------------------------------------------
Balance at close of year $8,757 $8,804 $8,187
============================================================
ITEM 9: CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURE
---------------------------------------------------------
The Company changed independent accounting firms as reported
on Form 8-K, dated March 6, 1992. There were no disagreements
with the independent accountants over the past 24 months.
ITEM 10 - DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT;
ITEM 11 - EXECUTIVE COMPENSATION;
ITEM 12 - SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT; and
ITEM 13 - CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
---------------------------------------------------------
Information required under these items is contained in New
Mexico and Arizona Land Company's 1995 Proxy Statement, pursuant
to Regulation 14A, and is incorporated herein by reference.
ITEM 14: EXHIBITS, FINANCIAL STATEMENT SCHEDULES,
AND REPORTS ON FORM 8-K
--------------------------------------------------
The following consolidated financial statements and
schedules are included in Item 8:
Independent Auditors' Report
Balance Sheets
Statements of Operations
Statements of Changes in Shareholders' Equity
Statements of Cash Flows
Notes to Consolidated Financial Statements
Real Estate and Accumulated Depreciation
Mortgage Loans on Real Estate
Exhibit 3. Articles of Incorporation of Registrant amended
November 18, 1994. By-laws of Registrant and wholly-owned
subsidiaries, revised March 30, 1994.
All other exhibits are omitted because they are
inapplicable, contained elsewhere in the report or have been
previously filed with the Securities and Exchange Commission.
A report on Form 8-K was filed on April 28, 1994.
30
SIGNATURES
----------
Pursuant to the requirements of Section 13 or 15(d) 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:
NEW MEXICO AND ARIZONA LAND COMPANY
(Registrant)
s/Willam A Pope s/Elizabeth M. Bedewi
------------------------ ------------------------
William A. Pope Elizabeth M. Bedewi
President and Principal Sr. Vice President, and
Executive Officer Principal Financial Officer
Pursuant to the requirements of the Securities Exchange Act
of 1934, this report has been signed below by the following
persons in behalf of the Registrant and in the capacities and on
the date indicated:
s/Stephen E. Renneckar s/Mari P. Berry
------------------------ ----------------------
Stephen E. Renneckar Mari P.Berry
Chairman Director
s/Sherman O. Kasper s/Richard E. Leonard
------------------------ ----------------------
Sherman O. Kasper Richard E. Leonard
Director Director
s/John C. Lucking s/Arnold L. Putterman
------------------------ ----------------------
John C. Lucking Arnold L. Putterman
Director Director
s/Ronald E. Strasburger s/Robert Wertheim
------------------------ ----------------------
Ronald E. Strasburger Robert Wertheim
Director Director
s/Richard A. Wessman
------------------------
Richard A. Wessman
Director Dated: March 4, 1995
EX-27
2
ART. 5 FDS FOR DECEMBER 31, 1994 FORM 10-K
5
1,000
DEC-31-1994
DEC-31-1994
YEAR
5,111
0
10,224
0
0
0
39,874
4,442
52,307
0
0
7,812
0
0
17,315
52,307
16,868
21,440
8,949
2,820
0
0
1,053
6,547
2,611
3,936
0
0
0
3,936
1.44
1.44
EX-3
3
ARTICLES OF INCORPORATION
ARTICLES OF INCORPORATION OF
NEW MEXICO AND ARIZONA LAND COMPANY
as amended November 18, 1994
KNOW ALL MEN BY THESE PRESENTS that we, whose hands are hereunto affixed,
do hereby associate ourselves together for the purpose of forming a
corporation under the laws of the State of Arizona and, to that end,
do adopt the following articles of incorporation:
FIRST: The name of the corporation shall be New Mexico and Arizona Land
Company.
SECOND: This corporation is organized for the purpose of transacting
any or all lawful business for which corporations may be incorporated
under the laws of the State of Arizona, as amended from time to time.
The corporation is presently engaged in the business of holding and
managing land for investment purposes, leasing real property and
interests therein, and developing mineral resources.
THIRD: The Corporation shall have authority to issue a total of forty
million (40,000,000) shares of capital stock, consisting of: (1) Thirty
million (30,000,000) shares of common stock, no par value per share; and
(2) Ten million (10,000,000) shares of serial preferred stock, no par
value per share.
Each issued and outstanding share of common stock will entitle the holder
thereof to one (1) vote on any matter submitted to a vote of or for consent
of shareholders. Issued and outstanding shares of serial preferred stock
will entitle the holders thereof only to those votes, if any, which may
expressly be fixed as hereinafter provided for the respective series thereof
and to voting rights on certain matters, and in certain circumstances, as set
forth in this Article.
The Board of Directors is authorized to provide from time to time for the
issuance of shares of serial preferred stock in series and to fix from time
to time before issuance the designation, preferences, privileges and voting
powers of the shares of each series of serial preferred stock and the
restrictions or qualifications thereof, including, without limiting the
generality of the foregoing, the following: a) The serial designation and
authorized number of shares; b) The dividend rate, the date or dates on
which such dividends will be payable, and the extent to which such
dividends may be cumulative; c) The amount or amounts to be received by
the holders in the event of voluntary or involuntary dissolution or
liquidation of the Corporation; d) The price or prices at which shares
may be redeemed and any terms, conditions and limitations upon such
redemption; e) Any sinking fund provisions for redemption or purchase of
shares of such series; and f) The terms and conditions, if any, on which
shares may be converted into shares of other capital stock, or of other
series of serial preferred stock of the Corporation.
Each series of serial preferred stock, in preference to the common stock,
may be entitled to dividends, from funds or other assets legally available
therefor, at such rates, payable at such times and cumulative to such
extent as may be fixed by the Board of Directors pursuant to the authority
herein conferred upon it. In the event of dissolution or liquidation of
the Corporation, voluntary or involuntary, the holders of the serial
preferred stock, in preference to the common stock, may be entitled to
receive such amount or amounts as may be fixed by the Board of Directors
pursuant to the authority herein conferred upon it.
Preference stock of any series redeemed, converted, exchanged, purchased or
otherwise acquired by the Corporation shall be cancelled by the Corporation
and returned to the status of authorized but unissued preference stock.
All shares of any series of serial preferred stock, as between themselves,
shall rank equally and be identical; and all series of serial preferred
stock, as between themselves shall rank equally and be identical except
asset forth in resolutions of the board of directors authorizing the
issuance of the series.
FOURTH: All directors of the corporation must be shareholders of the
corporation. The number of directors of the corporation shall be set
by the Board of Directors from time to time; provided, however,
that the number of directors so designated shall be no less than five
(5) nor more than nine (9). The Board of Directors shall consist of
Class A directors and Class B directors. The Class A directors shall be
elected for a term of two (2) years at the annual meeting of shareholders
of the corporation held in every odd numbered year. The Class B directors
shall be elected for a term of two (2) years at the annual meeting of
shareholders of the corporation held in every even numbered year. When
an even number of directors has been set by the Board of Directors,
there shall be an even number of Class A and Class B directors. When
an odd number of directors has been set by the Board of Directors,
there shall be one more Class B director than there are Class A directors.
All directors and officers who now are, or hereafter may become,
directors or officers, shall be indemnified by the corporation against
expenses incurred by them, including legal fees, judgments, or penalties
rendered or levied against any such person in a legal action, paid with
the approval of the Board of Directors in settlement of a legal action,
or brought against any such person for actions or omissions alleged to
have been committed by any such person while acting within the scope of
his employment as a director or officer of the corporation, provided that
the Board of Directors shall determine in good faith that such person did
not act, fail to act, or refuse to act wilfully, with gross negligence, or
with fraudulent or criminal intent in regard to the matter involved in the
action.
FIFTH: The Board of Directors may, from time to time, cause the corporation
to purchase its own shares to the extent of the unreserved and unrestricted
capital surplus of the corporation.
SIXTH: W. Michael Kelley, Vice President-Law and Secretary of New Mexico
and Arizona Land Company, 2810 North Third Street, Phoenix, Arizona 85004,
is hereby appointed statutory agent for the corporation for the State of
Arizona.
SEVENTH: A director of this corporation shall not be personally liable to
the corporation or its shareholders for monetary damages for breach of
fiduciary duty as a director. This article shall not eliminate or limit
the liability of a director for any conduct described in clauses (a) through
(e) of Section 10-054.A.9, Arizona Revised Statutes. If Arizona corporation
law is amended to authorize further elimination or limitation of director
liability, then the liability of directors of this corporation shall be
eliminated or limited to the extent permitted by the amended law.
Executed this 18th day of November, 1994.
s/William A. Pope s/W. M. Kelley
President Secretary
EX-3
4
BY-LAWS
BYLAWS
OF
NEW MEXICO AND ARIZONA LAND COMPANY
adopted October 16, 1978
last amended March 30, 1994
ARTICLE I
GENERAL
SECTION 1.01. PRINCIPAL OFFICE. The corporation shall maintain a
principal office in Maricopa County, Arizona, but it may have other
offices at such places throughout the world as the business of the
corporation may require and as the Board of Directors shall designate.
SECTION 1.02. SEAL. The corporate seal of the corporation shall be a
circular disc with the name of the corporation and the year of its
organization thereon.
SECTION 1.03. FISCAL YEAR. The fiscal year of the corporation shall be
fixed, and shall be subject to change, by the Board of Directors.
SECTION 1.04. EXEMPTION FROM THE ARIZONA CORPORATE TAKEOVER ACT. The
corporation,pursuant to the provisions of ARS 10-1211(A)(2) and
10-1223(A)(2), and pursuant to the approval of the shareholders on May
10, 1991, has chosen to exempt itself from the provisions of ARS 10-1211
through 10-1223, concerning Control Share Acquisitions and Business
Combinations. This amendment does not apply to any "control share
acquisition" as defined in ARS 10-1201(9) made on or before May 10, 1991,
or to any"business combination" as defined in ARS 10-1201(10) whose
"share acquisition date" as defined in ARS 10-1201(14) is on or before
May 10, 1991.
ARTICLE 2
SHARES
SECTION 2.01. ISSUANCE OF SHARES. The Board of Directors may issue
shares for such consideration,expressed in dollars, as the Board shall
fix from time to time, except that shares having a par value may not be
issued for less than the par value. The consideration for the issuance
of shares may be paid to the corporation, in whole or in part, in cash,
in other property, tangible or intangible, or in labor or services
actually performed for the corporation. Shares shall be deemed to be
fully paid and non-assessable when payment of the consideration has been
received by the corporation. Neither promissory notes nor future
services shall constitute payment or part payment for the issuance of
shares. In the absence of bad faith in the valuation of the
consideration, the judgment of the Board of Directors as to the value of
the consideration received for the shares shall be conclusive. No
certificate shall be issued for any share until the share is fully paid.
SECTION 2.02. STOCK CERTIFICATES. Subject to the provisions of the
articles of incorporation,certificates representing shares shall be in
such form as may from time to time be prescribed by the Board of
Directors, shall be numbered and entered in the books in the order
issued, and shall be signed by the Chairman of the Board, or the
President or a Vice President and the Secretary or an Assistant Secretary
and sealed with the corporate seal. To the extent permitted by law, the
signatures or the seal may be facsimile. In the event that any officer or
officers who shall have signed or whose facsimile signature or signatures
shall have been used on any such certificate or certificates shall cease
to be such officer or officers of the corporation before such certificate
or certificates shall have been delivered by the corporation, such
certificate or certificates may, nevertheless, be adopted by the
corporation and be issued and delivered as if the person or persons who
signed such certificate or certificates or whose facsimile signature or
signatures shall have been used thereon had not ceased to be such officer
or officers of the corporation. The transfer agent of the corporation
shall record the number of each certificate, the name and address of the
person or entity owning the shares represented thereby, and the number of
shares and the date thereof. Every certificate surrendered to the
corporation for transfer or otherwise in exchange for a new certificate
shall be marked "cancelled" with the date of cancellation.
SECTION 2.03. TRANSFERS OF SHARES. No transfer of shares shall affect
the right of the corporation to pay any dividend due upon the shares or
to treat the holder of records as the holder-in-fact until the transfer
has been recorded on the books of the corporation. Upon compliance with
provisions restricting the transferor registration of transfers of shares
shall be made only on the books of the corporation by the registered
holder thereof, or by his or her attorney thereunto authorized by power
of attorney duly executed and filed with the corporation's transfer agent
and on surrender of the certificate or certificates for such shares,
properly endorsed.
SECTION 2.04. LOST, STOLEN, DESTROYED OR MUTILATED CERTIFICATES. The
holder of any shares of the corporation shall immediately notify the
corporation of any loss, theft, destruction or mutilation of the
certificate or certificates therefor, and the Board of Directors may, in
its discretion, cause a new certificate or certificates to be issued to
the holder, upon the surrender of the mutilated certificate, or in case
of loss, theft,or destruction of the certificate, upon satisfactory proof
of such loss, theft or destruction, and the deposit of a bond in such
form and amount and with such sureties as the Board of Directors may
require.
ARTICLE 3
MEETINGS OF SHAREHOLDERS
SECTION 3.01. GENERAL. All meetings of the shareholders shall be held
at the principal office of the corporation in the State of Arizona or at
such other place as stated in the notice or waiver of notice of the
meeting.
SECTION 3.02. VOTING OF SHARES. At all meetings a shareholder may vote
in person, or may be represented by a duly authorized attorney-in-fact or
by a proxy in writing filed with the Secretary before voting,with each
voted share being entitled to one vote.
SECTION 3.03. ANNUAL MEETING. An annual meeting of the shareholders
shall be on held on or before June 30 of each year.
SECTION 3.04. SPECIAL MEETINGS. Special meetings of the shareholders
may be called by the Chairman of the Board, by vote of the Board of
Directors, or by one or more shareholders who hold, in the aggregate,at
least one-tenth of all shares entitled to vote at the meeting.
SECTION 3.05. NOTICE OF MEETINGS. Written notice stating the place, day
and hour of the meeting and,in case of a special meeting, the specific
purpose or specific purposes for which the meeting is called, shall be
delivered not less than ten nor more than fifty days before the date of
the meeting, either personally or by mail, by an officer of the
corporation at the direction of the person or persons calling the
meeting, to each shareholder of record entitled to vote at the meeting.
If mailed, the notice shall be deemed to be delivered
when deposited in the United States mail, postage prepaid, addressed to
the shareholder at his address as it appears on the share transfer
records of the corporation. When a meeting is adjourned to another time
or place notice need not be given of the adjourned meeting if the time
and place thereof are announced at the meeting at which the adjournment
is taken. At the adjourned meeting the corporation may transact any
business which might have been transacted at the original meeting. If
the adjournment is for more than ninety days, or if after the adjournment
a new record date is fixed for the adjourned meeting, a notice of the
adjourned meeting shall be given to each shareholder of record entitled
to vote at the meeting.
SECTION 3.06. WAIVER OF NOTICE. Whenever notice of a meeting is
required to be given to any shareholder of the corporation under these
bylaws, a waiver thereof in writing signed by the shareholder entitled to
the notice, whether before or after the time stated therein, shall be
equivalent to the giving of notice. Attendance at a meeting by a
shareholder in person or by a duly authorized attorney-in-fact or voting
by a shareholder at a meeting by a proxy shall constitute a waiver of
notice of the meeting, except when the shareholder or attorney-in-fact
attends the meeting for the express purpose of objecting to the
transaction or any business because the meeting is not lawfully called or
convened.
SECTION 3.07. ACTION BY SHAREHOLDERS WITHOUT A MEETING. Any action
required to be taken at a meeting of the shareholders of the corporation,
or any action which may be taken at a meeting of the shareholders, may be
taken without a meeting if a consent in writing, setting forth the
actions so taken, if signed by all of the shareholders entitled to vote
on the subject. Such consent may be executed in counterparts and shall
have the same effect as a unanimous vote of shareholders at a duly
convened meeting.
SECTION 3.08. QUORUM. At any meeting of the shareholders the presence,
in accordance with Section 3.02 of these bylaws, of a majority of the
shares entitled to vote shall constitute a quorum. All shares
represented and entitled to vote on any single subject matter which may
be brought before the meeting shall be counted for the purposes of a
quorum. Only those shares entitled to vote on a particular subject
matter shall be counted for the purposes of voting on that subject
matter. Business may be conducted once a quorum is present and may
continue until adjournment of the meeting notwithstanding the withdrawal
or temporary absence of sufficient shares to reduce the number present to
less than a quorum. The affirmative vote of the majority of the shares
then represented at the meeting and entitled to vote on the subject
matter shall be the act of the shareholders; provided, however, that if
the shares then represented are less than required to constitute a
quorum, the affirmative vote of a majority of the shares then present is
sufficient in all cases to adjourn a meeting.
SECTION 3.09. RECORD DATE AND CLOSING TRANSFER BOOKS. The company's
transfer books shall not be closed. A record date not less than 10 nor
more than 70 days preceding any meeting of the shareholders shall be
fixed, and shareholders of record on or before that date shall be
entitled to vote at such meeting.
ARTICLE IV
BOARD OF DIRECTORS
SECTION 4.01. GENERAL. The business and affairs of the corporation
shall be managed by a Board of Directors. All directors of the
corporation must be shareholders of the corporation. The number of
directors of the corporation shall be set by the Board of Directors from
time to time; provided, however, that the number of directors so
designated shall be no less than five nor more than nine. No person who
has attained the age of seventy years shall be eligible for election or
appointment to the Board of Directors. The Board of Directors shall
consist of Class A directors and Class B directors. The Class A
directors shall be elected for a term of two years at the annual meeting
of shareholders of the corporation held in every odd numbered year. The
Class B directors shall be elected for a term of two years at the annual
meeting of shareholders of the corporation held in every even numbered
year. When an even number of directors has been set by the Board of
Directors, there shall be an even number of Class A directors and Class B
directors. When an uneven number of directors has been set by the Board
of Directors, there shall be one more Class B director than there are
Class A directors.
SECTION 4.02. ELECTION OF DIRECTORS. Directors shall be elected by
ballot at the annual meeting of the shareholders. Every shareholder
entitled to vote in accordance with Section 3.02 of these bylaws shall
have the right to vote the number of shares owned by him for as many
persons as there are directors to be elected or to cumulate his votes by
giving one candidate as many votes as the number of directors to be
elected multiplied by the number of his shares, or by distributing such
votes on the same principle among any number of such candidates. A
director shall serve until his successor is elected and qualified or
until removed. The Board of Directors may fill any vacancy occurring on
the Board of Directors from whatever cause in the interval between the
annual meetings of the shareholders.
SECTION 4.03. VACANCIES. Any vacancy occurring in the Board of
Directors may be filled by the affirmative vote of a majority of the
remaining directors though not less than a quorum, and any director so
chosen shall hold office until the next election of directors when his or
her successor is elected and qualified. Any newly created directorship
shall be deemed a vacancy. When one or more directors shall resign from
the Board, effective at a future time, a majority of the directors then
in office, excluding those who have so resigned, shall have power to fill
such vacancy or vacancies, the vote thereon to take effect when such
resignation or resignations shall become effective, and each director so
chosen shall hold office as herein provided in the filling of other
vacancies.
SECTION 4.04. GENERAL POWERS. The Board of Directors shall have the
power to control and manage all of the affairs and property of the
corporation and to exercise, in addition to the powers and authorities
expressly conferred upon it by these bylaws or by the articles of
incorporation, all powers as may be exercised, and to do all things that
may be done by the corporation which are not expressly reserved to the
shareholders as permitted by the laws of the State of Arizona. It may
restrict, enlarge or otherwise modify the powers and duties of any or all
of the officers of the corporation. Without limiting the generality of
the foregoing, the Board of Directors may fix record dates for
determining shareholders having the right to notice of and to vote at
meeting and adjournments thereof, or the right to receive dividends or
other distributions, or the right to give consents to or to dissent from
certain actions or for any other purpose for which record dates are or
might be relevant and to determine whether or not transfer books should
be closed in connection therewith.
SECTION 4.05. QUORUM. A majority of the number of directors serving
from time to time shall constitute a quorum for the transaction of
business. In the absence of a quorum, a majority of the directors
present may adjourn the meeting from time to time until a quorum is
obtained. Notice of any adjourned meeting need not be given.
SECTION 4.06. REGULAR MEETING. A regular meeting of the Board of
Directors shall be held without notice following adjournment of the
annual meeting of the shareholders or any special meeting held in lieu
thereof on the same day as such annual or special meeting.
SECTION 4.07. SPECIAL MEETING. Special meetings of the Board of
Directors may be called by the Chairman of the Board or, at the request
of three members of the Board of Directors, by the Secretary. Notice of
any special meeting shall be given to each director stating the time,
place, and in general terms the purpose of the meeting in one of the
following ways: (a) by communicating actual notice to the director, or
by written notice left at or telegraphed to a usual place of business of
the director or his or her residence, at least forty-eight hours before
the time of the meeting, or (b) by placing a written notice in the mail,
postage prepaid,ninety-six hours before the time of such meeting. Any
person who has given notice hereunder may make an affidavit that the
notice was given, which, as to the facts stated, shall be conclusive.
SECTION 4.08. WAIVER OF NOTICE. Notice of any meeting of the Board of
Directors and of the business to be transacted may be waived in writing
or by telegram before or after the meeting by any director, and the
presence of any director at any meeting of the Board of Directors shall
be deemed a waiver of notice by him or her of the meeting and of the
business to be transacted unless objection is made by him or her at the
time and noted on the records of the meeting of the Board of Directors.
SECTION 4.09. PLACE OF DIRECTORS' MEETINGS. Meetings of the Board of
Directors and meetings of committees thereof, regular or special, may be
held either within or without the State of Arizona and may beheld by
means of conference telephone or similar communications equipment by
means of which all persons participating in the meeting can hear each
other, and participation in a meeting pursuant to this section shall
constitute presence in person at the meeting.
SECTION 4.10. ACTION BY DIRECTORS WITHOUT A MEETING. Any action
required or permitted to betaken at a meeting of the directors or of a
committee may be taken without a meeting if all directors or committee
members, as the case may be, consent thereto in writing. Such consent
shall have the same effect as a unanimous vote at a duly convened meeting
of the Board of Directors or a committee.
SECTION 4.11. POWER TO ACT NOTWITHSTANDING VACANCY. Pending the filling
of vacancies in the Board of Directors, a majority of a full Board of
Directors may exercise the powers of the Board of Directors.
SECTION 4.12. COMPENSATION. All directors of the corporation shall be
entitled to receive such compensation as shall be fixed from time to time
by resolution of the Board of Directors, and all directors shall be
entitled to reimbursement for transportation and other expenses incurred
incident to their attendance at meetings of the Board of Directors and
committees thereof.
ARTICLE V
COMMITTEES
SECTION 5.01. GENERAL. The Board of Directors, by resolution adopted by
a majority of all of the members of the Board of Directors, any designate
from among its members one or more committees, in addition to the
committees described in Sections 5.02, 5.03, 5.04, and 5.05, each of
which, to the extent provided in such resolution, shall have and may
exercise all the authority of the Board of Directors in reference to the
following
matters:
a) The submission to shareholders of any action that require
shareholders' authority or approval.
b) The filling of vacancies on the Board of Directors or on any
committee of the Board of Directors.
c) The amendment or repeal of the bylaws, or the adoption of new
bylaws.
d) The fixing of compensation of directors for serving on the Board
or on any committee of the Board.
The Board of Directors, with or without cause, may dissolve any
committee, subject to the requirements of applicable law. The Board of
Directors may remove members from, add members to, or fill any vacancies
on any committee.
SECTION 5.02. EXECUTIVE COMMITTEE. The Board of Directors shall appoint
an executive committee,consisting of at least three directors, including
the Chairman of the Board, who shall be the chairman of the Committee.
The committee shall have and exercise all lawfully delegable powers of
the Board of Directors while the Board is not in session, except as such
delegation of powers may be limited from time to time by resolution of
the Board of Directors.
SECTION 5.03. AUDIT COMMITTEE. The Board of Directors shall appoint an
audit committee, consisting of at least two directors, provided, however,
that directors who are also officers of the corporation shall not be
eligible for membership on the committee. The audit committee shall:
a) recommend the auditors;
b) review the overall scope of the audit and the final opinion of
the external auditors;
c) review the financial and accounting policies and procedures used
by the corporation;
d) approve the organization and procedures of the internal
accounting and auditing departments;
e) prepare a report of the Board of Directors;
f) assure compliance with ethical standards.
SECTION 5.04. COMPENSATION AND NOMINATING COMMITTEE. The Board of
Directors shall appoint a compensation and benefits committee, consisting
of at least two non-officer directors. The committee shall recommend to
the Board candidates for membership on the Board of Directors, and shall
be empowered to administer and make final decisions concerning:
a) employees' salaries and bonuses;
b) the company's Restricted Stock Plan;
c) the company's Incentive Bonus Plan;
d) all other company compensation and benefit plans.
SECTION 5.05. RETIREMENT PLAN ADMINISTRATIVE COMMITTEE. The Board of
Directors shall appoint an administrative committee consisting of three
individuals to establish and maintain the corporation's funding policy
for its Retirement Plan and Trust for Salaried Employees and to act as
fiduciary thereunder. Individuals may be eligible for membership on the
administrative committee without being directors of the corporation.
SECTION 5.06. TENURE. Each member of any committee established under
this Article V shall hold office until the next regular annual meeting of
the Board of Directors following his or her designation and until his or
her successor is elected and qualified.
SECTION 5.07. MEETINGS. Regular meetings of committees established
under this Article V shall be held without notice at such times and
places as the committees may fix from time to time by resolution.
Special meetings of a committee may be called by any member thereof upon
giving notice to other members of the committee in the manner provided in
Section 4.07 for special meetings of the Board of Directors.
SECTION 5.08. QUORUM. A majority of the members of a committee shall
constitute a quorum for the transaction of business at any meeting
thereof, and action of any committee must be authorized by the
affirmative vote of a majority of the members present at a meeting at
which a quorum is present.
ARTICLE VI
OFFICERS
SECTION 6.01. GENERAL. The officers of the corporation shall be a
Chairman of the Board, a President,one or more Vice Presidents, a
Secretary, a Treasurer, one or more Assistant Treasurers, and such other
officers as the Board of Directors may from time to time determine. One
person may hold the offices and perform the duties of any two of said
officers, except those of President and Secretary, President and Vice
President, Secretary and Assistant Secretary, or Treasurer and Assistant
Treasurer. Such officers shall be appointed by the Board of Directors
and shall hold their respective offices at the pleasure of the Board;
provided, however, that any subordinate officer may be appointed by the
Chairman of the Board subject to ratification by the Board in the event
a vacancy occurs for any reason.
SECTION 6.02. CHAIRMAN OF THE BOARD. The Chairman shall be appointed by
the Board of Directors and shall preside at all meetings of the
shareholders and of the Board of Directors. He shall have such other
powers and perform such other duties as may be assigned to him by the
Board of Directors. Unless he also serves as the Chief Executive
Officer, the Chairman shall not be considered an employee of the
corporation.
SECTION 6.03. CHIEF EXECUTIVE OFFICER. The Chief Executive Officer
shall be appointed by the Board of Directors and shall be responsible for
the general supervision of the business and property of the corporation.
He shall possess the same power as the President to sign all documents
authorized by the Board of Directors, unless restricted by law. In the
absence of the Chairman, the Chief Executive Officer shall preside at
meetings of the shareholders and of the Board. He shall have the power,
subject to the authority of the Board of Directors, to appoint and
discharge all officers (except those required by these bylaws to be
appointed by the Board), employees, and agents; to define their duties;
and to fix their compensation, provided that any compensation over
$50,000 per year must first be approved by the Board. In the absence of
the Chairman, or the President, or both, the Chief Executive Officer
shall undertake those duties and responsibilities, if so directed by the
Board. The Chief Executive Officer shall have such other powers and
responsibilities as may be assigned to him by the Board.
SECTION 6.04. PRESIDENT. The President shall be appointed by the Board
of Directors and shall be the corporation's Chief Operating Officer. He
shall manage the day-to-day operations of the corporation, subject to the
supervision of the Chief Executive Officer. In the absence of both the
Chairman and the Chief Executive Officer, the President shall preside at
meetings of the shareholders and of the Board and, if so directed by the
Board, shall undertake the duties and responsibilities of the Chairman
and the Chief Executive Officer. The President shall have such other
powers and shall perform such other duties as may be assigned to him by
the Board of Directors.
SECTION 6.05. VICE PRESIDENT. Any Vice President may perform the duties
of the President in the absence of the latter, subject to Section 6.02
hereof, and shall perform such other duties as may be assigned to him or
her by the Board of Directors or by the Chairman of the Board.
SECTION 6.06. SECRETARY. The Secretary shall give notices of all
meetings of the shareholders and directors and shall act as Secretary at
all such meetings. He or she shall be the custodian of the records,
documents, papers and corporate seal of the corporation, and shall keep a
record of the shareholders of the corporation.
SECTION 6.07. TREASURER. The Treasurer shall keep the fiscal records of
the corporation and shall be the custodian of all funds and securities of
the corporation, and shall make such reports and perform such duties
incident to his or her office as may be directed by the Chairman of the
Board, the President or Board of Directors. All funds of the corporation
shall be kept in such depositary or depositaries as shall be determined
by resolution of the Board of Directors. The Treasurer shall supervise
the collection of all moneys,checks, notes and other obligations due the
corporation and shall deposit the same, or cause the same to be deposited
in the name of the corporation in such depositary or depositaries.
Disbursements from such funds shall be made only by checks or drafts of
the corporation signed by the Treasurer or an Assistant Treasurer and
countersigned by such other officer or officers of the corporation as may
be designated from time to time by the Board of Directors.
SECTION 6.08. ASSISTANT SECRETARY AND ASSISTANT TREASURER. Any
assistant Secretary may perform the duties of the Secretary in his or her
absence, and any Assistant Treasurer may perform the duties of the
Treasurer in his or her absence, and each such Assistant shall perform
such other duties as may be assigned to him or her by the Board of
Directors or by the Chairman of the Board.
SECTION 6.09. BONDS. The Board of Directors may require the Treasurer
or any other officer to give a bond to the corporation with good and
sufficient surety for the faithful performance of his or her duties.
ARTICLE VII
EXECUTION OF DOCUMENTS
SECTION 7.01. CONTRACTS, ETC. All contracts, conveyances, leases or
other corporate instruments shall be executed on behalf of the
corporation by the Chairman of the Board, by the President or by such
other officer or officers of the corporation to whom the Chairman of the
Board, the President or the Board of Directors may delegate such
authority, subject to the following:
1. No loan greater than $1,000,000 shall be contracted on behalf
of the corporation unless authorized by the Board of Directors.
2. No real property of the corporation may be sold for more than
$1,000,000, nor exchanged for other property valued at more than
$1,000,000 unless authorized by the Board of Directors.
3. A capital expenditure in excess of $1,000,000 for any one
purpose or project shall be authorized by the Board of Directors.
4. In matters of auction bidding for property or property rights,
no bids totaling over $1,000,000 per auction shall be made without
the authorization of the Board of Directors. The Chairman or
President shall report to the Board the total capital expenditures,
the total dollar amount of sales or exchanges, and the total dollar
amount of auction bids made which did not require Board approval.
SECTION 7.02. PROXIES. Unless otherwise provided by resolution of the
Board of Directors, the Chairman of the Board may in the name and on
behalf of the corporation appoint an attorney or attorneys, agent or
agents of the corporation (who may be or include himself or herself), in
the name and on behalf of the corporation to cast the votes which the
corporation may be entitled to cast as a shareholder or otherwise in any
other corporation any of whose shares or other securities may be held by
the corporation, at meetings of the holders of the shares or other
securities of such other corporation, or to consent in writing to any
action by such other corporation, may instruct the person or persons so
appointed as to the manner of casting such votes or giving such consent,
and may execute or cause to be executed in the name of, on behalf of, and
under the corporate seal of, the corporation all written proxies or other
instruments as may be necessary or proper to evidence the appointment of
such attorneys and agents.
ARTICLE VIII
INDEMNIFICATION OF DIRECTORS AND OFFICERS
SECTION 8.01. INDEMNIFICATION. Unless otherwise provided by these
bylaws, the corporation shall hold harmless and indemnify each of its
directors and officers ("indemnitees") against all liability and expense
incurred concerning any threatened or actual proceeding or legal action
resulting from an indemnitee's service to the corporation or to another
entity at the corporation's request. The corporation shall not provide
indemnification for acts listed in ARS 10-005.H.
SECTION 8.02. PROCEDURE. Indemnitee shall notify the corporation
promptly of the threat or the commencement of a proceeding or legal
action for which indemnitee intends to seek indemnification. The
corporation shall be entitled to assume indemnitee's defense, using
counsel satisfactory to indemnitee, unless such counsel demonstrates a
conflict of interest between his defense of the indemnitee and of the
corporation. If the corporation assumes the defense, it shall not be
liable to indemnitee for legal or other expenses incurred by indemnitee
thereafter.
SECTION 8.03. EXPENSE ADVANCES. Upon notice, the corporation shall
automatically advance expenses, including attorney's fees, incurred by
indemnitee in defending a proceeding or legal action. If required by
law, the corporation shall also require the written promise of the
indemnitee to repay all amounts advanced, if it is ultimately determined
by final judicial decree that indemnitee is not entitled to
indemnification.
SECTION 8.04. SETTLEMENT OF CLAIMS. The corporation shall not be
obligated to indemnify indemnitee for any amounts incurred in settling
the matter, if settlement is made without the corporation's prior written
consent. The corporation shall not agree to any settlement that would
impose any penalty or limitation upon indemnitee without indemnitee's
prior written consent. Neither the corporation nor the indemnitee shall
unreasonably withhold such consent.
SECTION 8.05. EFFECT OF REPEAL. No repeal or amendment of this Article
shall diminish indemnitee's right to indemnification for acts taken
before the date of repeal or amendment.
ARTICLE IX
AMENDMENT OF BYLAWS
SECTION 9.01. AMENDMENTS. Upon five days prior notice, these bylaws may
be amended at any meeting of the Board of Directors by vote of a majority
of all of the members of the Board.
I certify that the foregoing is a true and correct copy of the bylaws of
New Mexico and Arizona Land Company as last amended.
DATED this 30th day of March, 1995.
s/W.M.Kelley
Secretary