-----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, BRHZp9wCt37Y1qVFZ7rzPlJXziv3tDQgwj3ERybc+k179mMSRZBRO7lvwv8NBd/Z yee0fKGmAlHAe1lQbIuSmw== 0000950153-98-000605.txt : 19980521 0000950153-98-000605.hdr.sgml : 19980521 ACCESSION NUMBER: 0000950153-98-000605 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19980331 FILED AS OF DATE: 19980520 SROS: AMEX 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: 98628407 BUSINESS ADDRESS: STREET 1: 3033 N 44TH ST STREET 2: STE 270 CITY: PHOENIX STATE: AZ ZIP: 85018-7228 BUSINESS PHONE: 6029528769 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 UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q [X] Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the quarterly period ended March 31, 1998. [ ] 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 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 3,847,982 Class Outstanding at April 30, 1998 2 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) 1998 1997 - -------------------------------------------------------------------------------- Revenue: Property sales $ 5,287 $ 1,973 Property rentals 740 778 Commercial real estate lending 627 253 Investment income 79 40 Other 74 80 - -------------------------------------------------------------------------------- 6,807 3,124 - -------------------------------------------------------------------------------- Expenses: Cost of property sales 3,378 1,110 Property rentals 238 304 Commercial real estate lending 116 -- General and administrative 555 400 Interest 268 254 Depreciation, depletion and amortization 164 119 - -------------------------------------------------------------------------------- 4,719 2,187 Income Before Joint Ventures, Non-controlling Interests and Income Taxes 2,088 937 Gain from joint ventures 5 16 Non-controlling interests (110) (143) - -------------------------------------------------------------------------------- Income Before Income Taxes 1,983 810 Income taxes 793 326 - -------------------------------------------------------------------------------- Net Income $ 1,190 $ 484 ================================================================================ Net Income per Share of Common Stock(1)(2) BASIC $ 0.26 $ 0.12 DILUTED $ 0.26 $ 0.12 ================================================================================ Weighted Average Number of Common Shares(1)(2) BASIC 4,618 4,083 DILUTED 4,618 4,083 ================================================================================
See accompanying Notes to Consolidated Financial Statements. (1) Prior year restated to include the effects of a 10% stock dividend paid July 18, 1997 and a 20% stock dividend payable July 10, 1998. (2) Current year includes the effect of a 20% stock dividend payable July 10, 1998. 2 3 New Mexico and Arizona Land Company and Subsidiaries FORM 10-Q CONSOLIDATED BALANCE SHEETS
UNAUDITED MARCH 31, December 31, (in thousands) 1998 1997 - --------------------------------------------------------------------------------------------- Assets Properties, net $45,912 $46,853 Commercial real estate loans, net 19,973 15,287 Receivables, net 2,810 93 Investments in joint ventures 401 411 Cash and cash equivalents 4,485 6,016 Other 884 851 - --------------------------------------------------------------------------------------------- Total assets $74,465 $69,511 ============================================================================================= Liabilities and Shareholders' Equity Notes payable and lines of credit $15,679 $12,503 Accounts payable and accrued liabilities 3,438 1,646 Deferred revenue 4,400 4,742 Deferred income taxes 4,435 5,361 - --------------------------------------------------------------------------------------------- Total liabilities 27,952 24,252 - --------------------------------------------------------------------------------------------- Non-controlling interests 1,857 1,793 - --------------------------------------------------------------------------------------------- Shareholders' equity: Preferred stock, no par value; 10,000,000 shares authorized; none issued -- -- Common stock, no par value; 30,000,000 shares authorized; 3,847,982 and 3,847,982 shares issued and outstanding at March 31, 1998 and December 31, 1997, respectively 24,572 24,572 Retained earnings 20,084 18,894 - --------------------------------------------------------------------------------------------- Total shareholders' equity 44,656 43,466 - --------------------------------------------------------------------------------------------- Total liabilities and shareholders' equity $74,465 $69,511 =============================================================================================
See accompanying Notes to 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) 1998 1997 - ---------------------------------------------------------------------------------------- CASH FLOWS PROVIDED BY/(USED IN) OPERATING ACTIVITIES: Net income $ 1,190 $ 484 Gain from sales of investment properties (117) (2) Non-cash items included above: Depreciation, depletion and amortization 164 119 Deferred revenue (69) (375) Deferred income taxes (926) (138) Gain from joint ventures (5) (16) Non-controlling interests 110 143 Net change in: Receivables (2,717) (96) Properties under development 1,993 18 Other assets (33) (16) Accounts payable and accrued liabilities 1,792 391 - ---------------------------------------------------------------------------------------- Net cash flows provided by/(used in) operating activities 1,382 512 - ---------------------------------------------------------------------------------------- CASH FLOWS PROVIDED BY/(USED IN) INVESTING ACTIVITIES: Additions to properties (1,538) (679) Proceeds from sale of properties 439 2 Distributions from joint ventures 15 -- Proceeds from commercial real estate loans 1,419 407 Additions to commercial real estate loans (6,378) -- - ---------------------------------------------------------------------------------------- Net cash flows provided by/(used in) investing activities (6,043) (270) - ---------------------------------------------------------------------------------------- CASH FLOWS PROVIDED BY/(USED IN) FINANCING ACTIVITIES: Proceeds from debt 4,255 181 Payments of debt (1,079) (803) Distributions to non-controlling partners (46) -- - ---------------------------------------------------------------------------------------- Net cash flows provided by/(used in) financing activities 3,130 (622) - ---------------------------------------------------------------------------------------- Net (decrease) in cash and cash equivalents (1,531) (380) - ---------------------------------------------------------------------------------------- Cash and cash equivalents at beginning of period 6,016 7,142 - ---------------------------------------------------------------------------------------- Cash and cash equivalents at end of period $ 4,485 $ 6,762 ========================================================================================
See accompanying Notes to Consolidated Financial Statements. 4 5 New Mexico and Arizona Land Company and Subsidiaries FORM 10-Q NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 1. In the opinion of the Company, the accompanying unaudited consolidated financial statements contain all adjustments necessary to present fairly the financial position, the 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 1997 annual report on Form 10-K 2. The results of operations for the three months ended March 31, 1998 and 1997, 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, NZ Properties, Inc., NZ Development Corporation, NZU Inc. and Great Vacations International Inc., along with joint ventures in which the Company holds a majority ownership. 4. Certain amounts have been reclassified for comparative purposes. 5. Net income per share computations are based on the weighted average number of shares outstanding of 4,617,578 and 4,083,414 in 1998 and 1997 respectively. 6. On May 8, 1998 the Company declared a 20% stock dividend payable July 10, 1998 to shareholders of record as of June 10, 1998. The net income per share and weighted average shares outstanding reported in the Financial Statements include the effect of this dividend for all periods presented. 7. During the quarter, the Company sold a 108 acre parcel of land in Scottsdale, Arizona. The entire profit on the transaction is approximately $1 million. Even though the economic substance of the sale is completed and the buyer has no contractual right to rescind the transaction, the Company has deferred reporting approximately $870,000 of the profit due to certain technical provisions in the related accounting literature with respect to the buyer's initial investment in the property. 8. In connection with a January 1, 1998 modification to the historical contractual relationship the Company has had with the real estate broker retained to sell 40-acre parcels, the Company re-evaluated the portion of the sales price of those parcels which is carried in deferred revenue and determined that approximately $1,120,000 of such deferred revenue should be recognized in the current period. 5 6 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS LIQUIDITY AND CAPITAL RESOURCES The real estate lending business will require large amounts of capital in order for the Company to be an effective competitor in the market. Management estimates that during the 1998 fiscal year, approximately $80 million of principal will be required to fund anticipated loan volume. In addition, the Company will require cash for working capital, for continuing development work on existing real estate projects and for projects that may be acquired through tax-deferred exchanges. (See "New Business Activity and Change of Principal Business Emphasis" in Item 7 of the Company's 1997 Annual Report on Form 10-K.) The Company expects to generate a substantial amount of cash from the sale of real estate over the next 12 to 18 months. (See "Results of Operations" below.) This cash will be re-deployed into the lending or development business. 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. The Company currently has a $3 million unsecured 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 in December, 1998. At March 31, 1998 the line had an outstanding balance of $2 million. As of April 30, 1998 the line had an outstanding balance of $3 million. This loan contains financial covenants which require the Company to maintain a specified minimum ratio of current assets to current liabilities; a specified minimum excess of current assets over current liabilities; and a specified maximum ratio of total liabilities to tangible net worth. At March 31, 1998 the Company was in compliance with these financial covenants. The bank recently approved an increase in the size of the line to $10 million. As of May 12, 1998, the details of the new loan agreement were being negotiated. All or some portion of the loan balance will be secured by certain real estate and loan assets of the Company. The same commercial bank has made a construction loan to the Company to finance development of the Grove Commons project. The construction loan is for a one year term expiring December 31, 1998, and bears interest at the prime rate. As of March 31, 1998 the loan had an outstanding balance of $641,000. As of April 30, 1998 the loan had an outstanding balance of $645,000. From a different commercial bank, one of the Albuquerque joint ventures has loan facilities to be utilized for lot development. At March 31, 1998 the aggregate outstanding balance under these loan facilities was $492,000. As of April 30, 1998, there was $614,000 borrowed against these lines of credit. In addition to the bank lines, the Company is negotiating with a large non-bank commercial lender to provide a warehouse line of credit which would be available to finance the Company's real estate lending activities. Discussions are on-going and have proceeded to the term-letter stage for this secured revolving facility. At this time it is not possible to predict when or if this transaction will close, nor the amount of borrowings that may be available to the Company under the facility. 6 7 The Company expects to negotiate other credit facilities during the 1998 fiscal year. The proceeds of any such facilities would be used to fund the Company's real estate lending business and for general corporate purposes. The Company also intends to seek qualified joint venture partners to finance large real estate development projects. The use of joint venture partners provides a source of development 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. RESULTS OF OPERATIONS For the three months ended March 31, 1998, net income was $1,190,000 ($0.26 per share) compared to $484,000 ($0.12 per share) for the same period in 1997. Pre-tax earnings from property sales were up by approximately $1,046,000 for the three month period ended March 31, 1998 as compared to the same period in 1997. In connection with the closing of a sale of a 108-acre parcel in Scottsdale, Arizona in March, 1998 an additional $870,000 of pre-tax earnings from property sales has been deferred and is expected to be recognized in earnings during the year. In connection with a January 1, 1998 modification to the historical contractual relationship the Company has had with the real estate broker retained to sell 40-acre parcels, the Company re-evaluated the portion of the sales price of those parcels which is carried in deferred revenue and determined that approximately $1,120,000 of such deferred revenue should be recognized in the current period. General and administrative expenses are slightly higher primarily due to increased legal and accounting costs. The managed portfolio of Bridge Financial Corporation stood at $ 55.4 million as of March 31, 1998, of which $34.6 million was participated with other lenders and $20.0 million (net of an allowance for bad debts of $.3 million and undisbursed loan proceeds of $.5 million) was recorded in the Company's books. As of April 30, 1998 the managed portfolio is $ 62.1 million, of which $40.1 million is participated and $21.0 million (net of an allowance for bad debts of $.3 million and undisbursed loan proceeds of $.7 million) is recorded in the Company's books. This compares to a December 31, 1997 managed portfolio of $34.0 million, of which $17.8 million was participated and $15.3 million (net of an allowance for bad debts of $.3 million and undisbursed loan proceeds of $.6 million) was recorded in the Company's books. The material loan which was previously reported to be in default in the Company's 1997 Annual Report on Form 10-K was paid in full, including certain default charges, during March, 1998. The Company incurred no loss with respect to this loan. The Company's four apartment complexes in New Mexico are now in escrow. A contract for the sale of approximately 2800 acres in Fremont County, Colorado was finalized and that property is now in escrow. The property in Flagstaff, Arizona located at Zuni and Walapai Streets, previously reported to be in escrow, closed escrow on April 27, 1998. On May 11, 1998 the buyer on the Cottonwood property, which was previously reported to have been in escrow, exercised its rights under the sales contract to cancel the agreement. SUBSEQUENT EVENT - STOCK DIVIDEND On May 8, 1998 the Company declared a 20% stock dividend payable July 10, 1998 to shareholders of record on June 10, 1998. The net income per share and weighted average shares outstanding reported in the financial statements include the effect of this dividend for all periods presented. 7 8 PART II - OTHER INFORMATION There were no proceedings, changes, occurrences or other matters occurring during the three month period ended March 31, 1998, requiring a response to Items 1 through 5. Item 6. Exhibits and Reports on Form 8-K. (a) Exhibits Exhibit 27, Financial Data Schedule Exhibit 28, Revised Financial Data Schedule for 1997 (b) No reports on Form 8-K were filed during the reporting quarter. 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 18, 1998 8 EX-27.1 2 EX-27.1
5 1,000 3-MOS DEC-31-1998 MAR-31-1998 4,485 0 23,058 275 0 12,118 51,875 5,562 74,465 10,685 15,679 0 0 24,572 20,084 74,465 5,287 6,807 3,378 4,719 110 0 268 1,983 793 1,190 0 0 0 1,190 0.26 0.26
EX-27.2 3 EX-27.2
5 1,000 3-MOS DEC-31-1997 MAR-31-1997 6,308 0 9,661 0 0 0 48,006 5,410 66,335 0 0 0 0 13,738 22,374 66,335 1,973 3,124 1,110 1,414 519 0 254 810 326 484 0 0 0 484 .12 .12
-----END PRIVACY-ENHANCED MESSAGE-----