-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, WnM7TIluY6XHGGV/0/y82/LSFhWLmddAqirZ48IJx+9twnDHT5sZCGi5VZ5rtx3P ydjoH5x7JUNSdYHRs0wFLQ== 0000950153-00-000737.txt : 20000515 0000950153-00-000737.hdr.sgml : 20000515 ACCESSION NUMBER: 0000950153-00-000737 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20000331 FILED AS OF DATE: 20000512 FILER: COMPANY DATA: COMPANY CONFORMED NAME: NEW MEXICO & ARIZONA LAND CO CENTRAL INDEX KEY: 0000071478 STANDARD INDUSTRIAL CLASSIFICATION: LAND SUBDIVIDERS & DEVELOPERS (NO CEMETERIES) [6552] IRS NUMBER: 430433090 STATE OF INCORPORATION: AZ FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 000-00497 FILM NUMBER: 628457 BUSINESS ADDRESS: STREET 1: 3033 N 44TH ST STREET 2: STE 270 CITY: PHOENIX STATE: AZ ZIP: 85018-7228 BUSINESS PHONE: 6029528836 MAIL ADDRESS: STREET 1: 3033 NORTH 44TH STREET STREET 2: SUITE 270 CITY: PHOENIX STATE: AZ ZIP: 85018-7228 10-Q 1 10-Q 1 FORM 10-Q UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 (mark one) [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 2000. [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from N/A to N/A. Commission File Number: 0-497 NEW MEXICO AND ARIZONA LAND COMPANY (Exact name of registrant as specified in its charter) ARIZONA 43-0433090 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 3033 N. 44TH STREET, SUITE 270, PHOENIX, ARIZONA 85018-7228 (Address of principal executive offices) (Zip Code) 602/952-8836 (Registrant's telephone number, including area code) Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes [X] No [ ] Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date. COMMON STOCK, NO PAR VALUE 6,885,436 Class Outstanding at May 5, 2000 2 New Mexico and Arizona Land Company and Subsidiaries FORM 10-Q
UNAUDITED CONSOLIDATED BALANCE SHEETS MARCH 31, December 31, (in thousands, except share data) 2000 1999 - ----------------------------------------------------------------------------------------------------------------------------------- Assets Properties, net $ 44,942 $ 46,324 Commercial real estate loans, net 30,620 26,773 Receivables 6,164 6,237 Investments in joint ventures 3,634 3,134 Cash and cash equivalents 5,229 3,661 Other 1,054 1,089 - ----------------------------------------------------------------------------------------------------------------------------------- Total assets $ 91,643 $ 87,218 - ----------------------------------------------------------------------------------------------------------------------------------- Liabilities and Shareholders' Equity Notes payable and lines of credit $ 23,069 $ 20,983 Accounts payable and accrued liabilities 3,521 2,014 Deferred income taxes 4,204 4,834 Deferred revenue 7,221 6,951 - ----------------------------------------------------------------------------------------------------------------------------------- Total liabilities 38,015 34,782 - ----------------------------------------------------------------------------------------------------------------------------------- Non-controlling interests 578 560 - ----------------------------------------------------------------------------------------------------------------------------------- Commitments and contingencies - ----------------------------------------------------------------------------------------------------------------------------------- Shareholders' equity: Preferred stock, no par value; 10,000,000 shares authorized; none issued Common stock, no par value; 30,000,000 shares authorized; 6,925,636 shares issued; 6,899,336 and 6,925,636 shares outstanding at March 31, 2000 and December 31, 1999, respectively 35,341 35,341 Treasury stock, at cost, 26,300 and no shares at March 31, 2000 and December 31, 1999, respectively (144) -- Retained earnings 17,853 16,535 - ----------------------------------------------------------------------------------------------------------------------------------- Total shareholders' equity 53,050 51,876 - ----------------------------------------------------------------------------------------------------------------------------------- Total liabilities and shareholders' equity $ 91,643 $ 87,218 ===================================================================================================================================
See accompanying Notes to Condensed Consolidated Financial Statements. 2 3 New Mexico and Arizona Land Company and Subsidiaries FORM 10-Q
CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED) THREE MONTHS ENDED MARCH 31, (in thousands, except per share data) 2000 1999 - ----------------------------------------------------------------------------------------------------------------------------------- Revenue: Property sales $ 3,368 $ 9,027 Property rentals 876 498 Commercial real estate lending 1,469 959 Investment income 129 130 Other 208 100 - ----------------------------------------------------------------------------------------------------------------------------------- 6,050 10,714 - ----------------------------------------------------------------------------------------------------------------------------------- Expenses: Cost of property sales 1,850 6,291 Rental property 530 209 General and administrative 659 1,238 Interest 623 341 Depreciation, depletion and amortization 212 128 - ----------------------------------------------------------------------------------------------------------------------------------- 3,874 8,207 - ----------------------------------------------------------------------------------------------------------------------------------- Income Before Joint Ventures, Non-controlling Interests and Income Taxes 2,176 2,507 Non-controlling interests (18) (486) - ----------------------------------------------------------------------------------------------------------------------------------- Income Before Income Taxes 2,158 2,021 Income taxes 840 795 - ----------------------------------------------------------------------------------------------------------------------------------- Net Income $ 1,318 $ 1,226 ==================================================================================================================================== Net income per Share of Common Stock Basic $ 0.19 $ 0.18 Diluted $ 0.19 $ 0.18 ==================================================================================================================================== Weighted Average Number of Common Shares Basic 6,912 6,926 Diluted 6,915 6,934 ====================================================================================================================================
See accompanying Notes to Condensed Consolidated Financial Statements. 3 4 New Mexico and Arizona Land Company and Subsidiaries FORM 10-Q
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) Three Months Ended March 31, (in thousands) 2000 1999 - ----------------------------------------------------------------------------------------------------------------------------------- CASH FLOWS PROVIDED BY (USED IN) OPERATING ACTIVITIES: Net income $ 1,318 $ 1,226 Non-cash items included above: Depreciation, depletion and amortization 212 128 Deferred revenue 193 1,526 Deferred income taxes (630) 909 Allowance for bad debts -- 100 Non-controlling interests 18 486 Net change in: Receivables 73 (1,875) Properties under development (307) 2,038 Other properties 1,483 1,985 Other assets 35 1 Accounts payable and accrued liabilities 1,507 (645) - ----------------------------------------------------------------------------------------------------------------------------------- Net cash provided by operating activities 3,902 5,879 - ----------------------------------------------------------------------------------------------------------------------------------- CASH FLOWS PROVIDED BY (USED IN) INVESTING ACTIVITIES: Additions to properties (6) (254) Contributions to joint ventures (500) -- Collections of principal on commercial real estate loans 9,081 1,961 Additions to commercial real estate loans (12,851) (2,256) - ----------------------------------------------------------------------------------------------------------------------------------- Net cash (used in) investing activities (4,276) (549) - ----------------------------------------------------------------------------------------------------------------------------------- CASH FLOWS PROVIDED BY (USED IN) FINANCING ACTIVITIES: Proceeds from debt 10,990 192 Payments of debt (8,904) (5,379) Distribution to non-controlling partners -- (842) Purchase of treasury stock (144) -- - ----------------------------------------------------------------------------------------------------------------------------------- Net cash provided by (used in) financing activities 1,942 (6,029) - ----------------------------------------------------------------------------------------------------------------------------------- Net increase (decrease) in cash and cash equivalents 1,568 (699) - ----------------------------------------------------------------------------------------------------------------------------------- Cash and cash equivalents at beginning of period 3,661 4,669 - ----------------------------------------------------------------------------------------------------------------------------------- Cash and cash equivalents at end of period $ 5,229 $ 3,970 ===================================================================================================================================
See accompanying Notes to Condensed Consolidated Financial Statements. 4 5 New Mexico and Arizona Land Company and Subsidiaries FORM 10-Q NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS 1. In the opinion of the Company, the accompanying unaudited condensed consolidated financial statements contain all normal, recurring adjustments necessary to present fairly the financial position, results of operations and cash flows for the periods presented. The accompanying statements do not include all disclosures considered necessary for a fair presentation in conformity with generally accepted accounting principles. Therefore, it is recommended that the accompanying statements be read in conjunction with the consolidated financial statements appearing in the Company's 1999 annual report on Form 10-K. 2. The results of operations for the three months ended March 31, 2000 and 1999, are not necessarily comparable and may not be indicative of the results which may be expected for future quarters or future years. 3. The Company's consolidated financial statements include those of its wholly-owned subsidiaries, Bridge Financial Corporation ("BFC"), NZ Properties, Inc., NZ Development Corporation, NZU, Inc. and Great Vacations International, Inc., together with joint ventures which the Company controls or in which the Company holds a majority ownership. 4. Certain prior period amounts have been reclassified for comparative purposes. 5. Net income per share computations are based on the weighted average number of shares outstanding for the period. For the three months ended March 31, the weighted average number of shares outstanding were 6,912,000 (basic) and 6,915,000 (diluted) in 2000 and 6,926,000 (basic) and 6,934,000 (diluted) in 1999. 6. On January 7, 2000, the Company made a commercial real estate loan to a partnership controlled by a director of the Company. At a meeting of the Board of Directors of the Company, the disinterested Directors evaluated and approved the loan. The amount of this loan was $5,175,000 at an interest rate of 13%. The loan was repaid in full with interest on January 28, 2000. 7. The Company is engaged in three operating segments; Real Estate, Short-term Commercial Real Estate Lending and Other Business. The Short-term Commercial Real Estate Lending segment is primarily conducted through BFC. 5 6 Reconciliation of Segment Information to Consolidated Amounts Management evaluates the performance of each segment based on income before income taxes and identifiable assets. Income before income taxes includes allocations of corporate overhead expenses. Identifiable assets include assets employed in the generation of income for each segment. The basis of measurement of segment income reported below differs from the measurement used in previous reports. Management previously evaluated segment performance based on income before joint ventures, non-controlling interests and income taxes. Beginning with reports for periods ending on or after March 31, 2000, management now evaluates performance of segments based on income after joint ventures and non-controlling interests, but before income taxes. Prior period amounts have been reclassified for comparative purposes. Information for the Company's reportable segments reconciles to the Company's consolidated totals as follows: REVENUES (UNAUDITED):
Three months ended March 31, (in thousands) 2000 1999 - -------------------------------------------------------------------------------- Real Estate $ 3,969 $ 9,718 Short-term Commercial Real Estate Lending 1,893 965 Other 188 31 - -------------------------------------------------------------------------------- Consolidated total $ 6,050 $10,714 ================================================================================
INCOME BEFORE INCOME TAXES (UNAUDITED):
Three months ended March 31, (in thousands) 2000 1999 - -------------------------------------------------------------------------------- Real Estate $1,391 $1,512 Short-term Commercial Real Estate Lending 593 479 Other 174 30 - -------------------------------------------------------------------------------- Income before income taxes $2,158 $2,021 ================================================================================
IDENTIFIABLE ASSETS:
UNAUDITED MARCH 31, December 31, (in thousands) 2000 1999 - -------------------------------------------------------------------------------- Real Estate $47,670 $46,914 Short-term Commercial Real Estate Lending 43,148 39,489 Other 825 815 - -------------------------------------------------------------------------------- Consolidated total $91,643 $87,218 ================================================================================
6 7 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS RESULTS OF OPERATIONS Consolidated discussions represent data of the Company as presented in the Consolidated Statements of Income. Segment discussions represent data as reported by segment in Note 7 of the Notes to Condensed Consolidated Financial Statements included elsewhere in this report. Consolidated For the three months ended March 31, 2000, net income was $1,318,000 ($0.19 per share) compared to $1,226,000 ($0.18 per share) for the same period in 1999. Pre-tax earnings from property sales declined 45% from $2,736,000 in 1999 to $1,518,000 in 2000. The decrease is primarily due to the sale in the 1999 period of two apartment complexes the Company owned in New Mexico and a bulk lot sale of 203 lots made by one of the Albuquerque joint ventures in which the Company owns a 75% interest, as compared to one bulk sale in the first quarter of 2000. Operating income from property rentals increased 20% from $289,000 in 1999 to $346,000 in 2000. The first quarter of 2000 is the first quarter that includes an entire quarter of operating income from all five industrial buildings which the Company owns. The increase in operating income from property rentals is partially offset by an operating loss of approximately $143,000 with respect to real estate owned and operated due to a foreclosure. The operating loss associated with this property is included in the Commercial real estate lending segment. General and administrative expense declined 47% from $1,238,000 in 1999 to $659,000 in 2000. Approximately 94% of the decline is due primarily to four items. Approximately $307,000 of the decrease is due to decreased legal expense since the settlement of the Sedona litigation during the last quarter of 1999. Approximately $65,000 of the decrease is due to decreased accounting costs, approximately $75,000 of the decrease is due to a reduction in office space and staff related to the sale of the Company's apartment complexes in New Mexico, and $100,000 of the decrease is due to not recording any additions to the allowance for bad debts in 2000. The managed loan portfolio of Bridge Financial Corporation ("BFC"), a wholly-owned subsidiary of the Company, stood at $64.5 million as of March 31, 2000, of which $28.5 million was participated with other lenders and $30.6 million (net of an allowance for bad debts of $.6 million and undisbursed loan proceeds of $1.2 million) was recorded in the Company's books in "Commercial real estate loans, net" and $3.6 million was recorded in "Investments in joint ventures". This compares to a March 31, 1999 managed portfolio of $62.6 million of which $40.7 million was participated and $21.0 million (net of an allowance for bad debts of $.4 million and undisbursed loan proceeds of $.5 million) was recorded in the Company's books in "Commercial real estate loans, net". As of April 30, 2000 the managed portfolio was $66.6 million of which $28.5 million was participated and 7 8 $32.7 million (net of an allowance for bad debts of $.6 million and undisbursed loan proceeds of $1.2 million) was recorded in the Company's books in "Commercial real estate loans, net" and $3.6 million was recorded in "Investments in joint ventures". Real Estate Segment Income before income taxes decreased 8% from $1,512,000 in the first quarter of 1999 to $1,391,000 in the first quarter of 2000. The decrease is primarily attributable to a decline in property sales, partially offset by an increase in operating income from property rentals and a decrease in general and administrative expenses. The increase in identifiable assets from $46,914,000 at December 31, 1999 to $47,660,000 at March 31, 2000 is due to an increase in cash, offset by a decrease in assets from the disposition of real estate. Short-term Commercial Real Estate Lending Segment Revenues increased 96% from $965,000 in the first quarter of 1999 to $1,893,000 in the first quarter of 2000. The increase is primarily attributable to increased revenues as a result of a larger loan portfolio, with a reduced principal amount of participated loans in 2000 than in 1999. Income after allocations increased 24% from $479,000 in the first quarter of 1999 to $593,000 in the first quarter of 2000. The increase is due to increased revenues of $928,000, which are offset by an increase of $814,000 in expenses. The increase in expenses is primarily attributable to an increase in expenses incurred from real estate owned and an increase in interest expense. The increase in identifiable assets is primarily attributable to the growth of the loan portfolio. LIQUIDITY AND CAPITAL RESOURCES The real estate lending business requires large amounts of capital to be an effective competitor in the market. In addition, the Company requires cash for working capital. The Company expects to generate a substantial amount of cash from the sale of real estate this year. Cash will also be generated from principal repayments on maturing loans in the Company's existing loan portfolio. In addition, the Company now uses and intends to continue to use participants or other joint funding sources on certain real estate loans. Further, the Company has lines of credit with non-bank commercial lenders and a commercial bank from which it can fund loans. The Company intends to negotiate additional or expanded lines of credit, as business circumstances require. A principal outcome of the Company's discussions with potential lenders will be to determine how rapidly the Company will be able to grow its commercial real estate lending business. The terms of any new financing arrangement will likely have a material effect upon the Company's margins in its lending business. If the Company is not successful in negotiating such financing, the principal effect will be a slower growth in the Company's lending business, with the pace of growth in the near term being determined at least in significant part by the timing of the Company's sales of existing real estate assets. 8 9 For the three months ended March 31, 2000, the Company's operating activities provided $3,902,000 of net cash flows, its investing activities used $4,276,000 of net cash flows and financing activities provided $1,942,000 of net cash flows. As of March 31, 2000, the Company has a $15 million partially secured revolving line of credit from a commercial bank, which can be used for general corporate purposes. The line bears interest at the prime rate and expires July 3, 2000. At March 31, 2000 there was an outstanding balance of $5,925,000. As of April 30, 2000 the line had an outstanding balance of $4,525,000. This loan contains financial covenants which require the Company to maintain a specified minimum ratio of net notes receivable (as defined) to the outstanding loan balance; a specified minimum excess of current assets over current liabilities (as defined); and a specified minimum tangible net worth. At March 31, 2000 the Company was in compliance with these financial covenants. From a different commercial bank, one of the Albuquerque joint ventures, in which the Company owns a 75% interest, has a $925,000 loan facility to be utilized for lot development. The loan bears interest at the prime rate plus 1/4%. At March 31, 2000 the loan had an outstanding balance of $586,469. This loan was repaid in full on April 20, 2000. The loan was replaced with two loans, one in the amount of $54,034.53, maturing on July 16, 2001, and another in the amount of $635,872, maturing on July 16, 2000. Each of these loans bears interest at the prime rate plus 1/4%. The loans are in place to fulfill certain regulatory requirements with respect to the development of the property. The Company does not expect the joint venture to draw against these lines. These loans are guaranteed by the Company. BFC has a $25,000,000 warehouse line of credit with a large non-bank commercial lender to finance certain portions of BFC's real estate lending activities. The line bears interest at rates ranging from 30-day LIBOR plus 250 basis points to 30-day LIBOR plus 300 basis points and expires August 31, 2000. As amounts are drawn, the line will be secured by certain loan assets of the Company. At March 31, 2000 and April 30, 2000 the line had an outstanding balance of $1,020,000. This loan contains financial covenants which require BFC to maintain a minimum tangible net worth; a specified maximum ratio of debt to tangible net worth; and a specified minimum ratio of liquid assets to tangible net worth. At March 31, 2000 BFC was in compliance with these financial covenants. The line of credit is guaranteed by the Company. Additionally, BFC has a revolving $20,000,000 warehouse line of credit with a different large non-bank commercial lender to finance certain portions of BFC's real estate lending activities. As amounts are drawn, the line will be secured by certain loan assets of the Company. The line bears interest at 30-day LIBOR plus 475 basis points and expires October 1, 2001. At March 31, 2000 and April 30, 2000 there was no outstanding balance. This loan contains financial covenants that require BFC to maintain a minimum tangible net worth and a minimum interest coverage ratio. At March 31, 2000 BFC was in compliance with these financial covenants. The line of credit is guaranteed by the Company. 9 10 In addition to bank lines, the Company may seek qualified joint venture partners to finance large real estate development projects or loans to the extent that the Company actually engages in such projects or makes such loans in the future. The use of joint venture partners provides a source of capital, mitigates the Company's risk by sharing it with another party, and gives the Company access to expertise that it might not otherwise have for particular projects. 10 11 PART II - OTHER INFORMATION Item 6. Exhibits and Reports on Form 8-K. (a) Exhibits Exhibit 27.1, Financial Data Schedule (b) No reports on Form 8-K were filed during the quarter ended March 31, 2000. SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. New Mexico and Arizona Land Company /s/Jerome L. Joseph - ------------------- Controller and Treasurer (Principal Financial Officer) /s/R. Randy Stolworthy - ---------------------- President and Chief Executive Officer (Principal Executive Officer) Date: May 9, 2000 ----------- 11 12 EXHIBIT INDEX EXHIBIT NUMBER DESCRIPTION OF EXHIBITS - -------- --------------------------- 27 Financial Data Schedule EX-27.1 2 EX-27.1
5 1,000 3-MOS DEC-31-2000 MAR-31-2000 5,229 0 37,339 555 0 24,499 47,157 2,222 91,643 11,356 23,069 0 0 35,341 17,853 91,643 3,368 6,050 1,850 3,874 18 0 623 2,158 840 1,318 0 0 0 1,318 .19 .19
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