-----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, R2guQa2I7b352U3LXfVdj8OLr2o6FP7TRC6XZtY9rzS5K3MwFGuycKAKQj41Gv2I s9Fyu0XjUjfaMSEWRK/B3A== 0000950153-99-000482.txt : 19990416 0000950153-99-000482.hdr.sgml : 19990416 ACCESSION NUMBER: 0000950153-99-000482 CONFORMED SUBMISSION TYPE: 10-Q/A PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19980630 FILED AS OF DATE: 19990415 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/A SEC ACT: SEC FILE NUMBER: 000-00497 FILM NUMBER: 99594642 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/A 1 10-Q/A 1 UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D. C. 20549 FORM 10-Q/A [X] Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the quarterly period ended June 30, 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 4,617,211 Class Outstanding at July 24, 1998 2 New Mexico and Arizona Land Company and Subsidiaries FORM 10-Q/A CONSOLIDATED BALANCE SHEETS
UNAUDITED JUNE 30, December 31, 1998 1997 (As restated. (in thousands, except share data) See Note 8.) - ----------------------------------------------------------------------------------------- Assets Properties, net $44,528 $46,853 Commercial real estate loans, net 23,364 15,287 Notes receivable, net 4,165 93 Investments in joint ventures 11 411 Cash and cash equivalents 2,611 6,016 Other 1,224 851 - ----------------------------------------------------------------------------------------- Total assets $75,903 $69,511 ========================================================================================= Liabilities and Shareholders' Equity Notes payable and lines of credit $16,632 $12,503 Accounts payable and accrued liabilities 2,714 1,646 Deferred revenue 5,353 4,742 Deferred income taxes 4,161 5,361 - ----------------------------------------------------------------------------------------- Total liabilities 28,860 24,252 - ----------------------------------------------------------------------------------------- Non-controlling interests 1,849 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; 6,925,636(1) and 3,847,982 shares (pre-split) issued and outstanding at June 30, 1998 and December 31, 1997, respectively 35,341 24,572 Retained earnings 9,853 18,894 - ----------------------------------------------------------------------------------------- Total shareholders' equity 45,194 43,466 - ----------------------------------------------------------------------------------------- Total liabilities and shareholders' equity $75,903 $69,511 =========================================================================================
See accompanying Notes to Consolidated Financial Statements. (1) Includes the effect of a 20% stock dividend paid July 10, 1998 to shareholders of record June 10, 1998 and a 3 for 2 stock split payable January 15, 1999 to shareholders of record December 31, 1998. 2 3 New Mexico and Arizona Land Company and Subsidiaries FORM 10-Q/A CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
Three months ended June 30, Six months ended June 30, 1998 1997 1998 1997 (As restated. (in thousands, except per share data) See note 8.) - ---------------------------------------------------------------------------------------------------------- Revenue: Property sales $ 3,884 $ 2,277 $ 8,051 $ 4,250 Property rentals 745 784 1,485 1,562 Commercial real estate lending 991 234 1,618 487 Investment income 79 76 158 116 Other 94 57 168 137 - ---------------------------------------------------------------------------------------------------------- 5,793 3,428 11,480 6,552 - ---------------------------------------------------------------------------------------------------------- Expenses: Cost of property sales 2,570 1,318 5,948 2,428 Property rentals 251 310 489 614 Commercial real estate lending 145 -- 261 -- General and administrative 673 460 1,228 860 Interest 311 262 579 516 Depreciation, depletion and amortization 152 122 316 241 - ---------------------------------------------------------------------------------------------------------- 4,102 2,472 8,821 4,659 - ---------------------------------------------------------------------------------------------------------- Income Before Joint Ventures, Non-controlling Interests and Income Taxes 1,691 956 2,659 1,893 Gain from joint ventures 447 15 452 31 Non-controlling interests (146) (177) (256) (320) - ---------------------------------------------------------------------------------------------------------- Income Before Income Taxes 1,992 794 2,855 1,604 Income taxes 781 318 1,127 644 - ---------------------------------------------------------------------------------------------------------- Net Income $ 1,211 $ 476 $ 1,728 $ 960 ========================================================================================================== Net income per Share of Common Stock(1) Basic $ 0.17 $ 0.07 $ 0.24 $ 0.15 Diluted $ 0.17 $ 0.07 $ 0.24 $ 0.15 ========================================================================================================== Weighted Average Number of Common Shares(1) Basic 6,926 6,391 6,926 6,391 Diluted 6,934 6,391 6,934 6,591 ==========================================================================================================
See accompanying Notes to Consolidated Financial Statements. (1) Includes the effect of a 10% stock dividend paid July 18, 1997 and a 20% stock dividend paid July 10, 1998 to shareholders of record June 10, 1998, and a 3 for 2 stock split payable January 15, 1999 to shareholders of record December 31, 1998. 3 4 New Mexico and Arizona Land Company and Subsidiaries FORM 10-Q/A CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) Six Months Ended June 30,
1998 1997 (As restated. (in thousands) See Note 8.) - --------------------------------------------------------------------------------------- CASH FLOWS PROVIDED BY/(USED IN) OPERATING ACTIVITIES: Net income $ 1,728 $ 960 Gain from sales of investment properties (670) (1,102) Non-cash items included above: Depreciation, depletion and amortization 316 241 Deferred revenue (384) (666) Deferred income taxes (1,200) (142) Gain from joint ventures (452) (31) Non-controlling interests 256 320 Net change in: Receivables (148) (85) Properties under development 589 (15) Other assets (373) (172) Accounts payable and accrued liabilities 1,068 266 - --------------------------------------------------------------------------------------- Net cash flows provided by/(used in) operating activities 730 (426) - --------------------------------------------------------------------------------------- CASH FLOWS PROVIDED BY/(USED IN) INVESTING ACTIVITIES: Additions to properties (2,095) (4,003) Proceeds from sale of properties 1,541 1,101 Distributions from joint ventures 852 22 Proceeds from commercial real estate loans 3,476 862 Additions to commercial real estate loans (11,838) -- - --------------------------------------------------------------------------------------- Net cash flows provided by/(used in) investing activities (8,064) (2,018) - --------------------------------------------------------------------------------------- CASH FLOWS PROVIDED BY/(USED IN) FINANCING ACTIVITIES: Proceeds from debt 6,083 637 Payments of debt (1,954) (1,801) Distributions to non-controlling partners (200) (50) - --------------------------------------------------------------------------------------- Net cash flows provided by/(used in) financing activities 3,929 (1,214) - --------------------------------------------------------------------------------------- Net (decrease) in cash and cash equivalents (3,405) (3,658) - --------------------------------------------------------------------------------------- Cash and cash equivalents at beginning of period 6,016 7,142 - --------------------------------------------------------------------------------------- Cash and cash equivalents at end of period $ 2,611 $ 3,484 =======================================================================================
See accompanying Notes to Consolidated Financial Statements. 4 5 New Mexico and Arizona Land Company and Subsidiaries FORM 10-Q/A 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 and six months ended June 30, 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. The receivables of Bridge Financial Corporation are shown on the consolidated balance sheets as Commercial real estate loans, net. The category Notes receivable, net on the consolidated balance sheets consists primarily of receivables created in connection with the sale of land. Such notes receivable bear interest at various rates and are secured by the property sold. 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 of 6,926,000 (basic) and 6,934,000 (diluted) in 1998 and 6,391,000 (basic and diluted) in 1997. 6. On May 8, 1998 the Company declared a 20% stock dividend, which was paid July 10, 1998 to shareholders of record as of June 10, 1998. On November 23, 1998 the Company declared a 3-for-2 stock split payable January 15, 1999 to shareholders of record as of December 31, 1998. The net income per share and weighted average shares outstanding reported in the financial statements include the effect of the dividend and the split for all periods presented. 7. During the six months ended June 30, 1998 the Company sold land in exchange for cash and $3,924,000 in notes receivable. Approximately $1,280,000 of the profit on these sales has been deferred. 8. As previously reported in the Company's Form 10-Q for the quarter ended March 31, 1998, the Company changed its historical contractual relationship with the brokerage firm which sells 40-acre parcels of land for the Company. The Company originally 5 6 determined that such change resulted in the recognition of revenue in such period. The Company has subsequently determined that such change did not result in the culmination of an earnings process and the Company has corrected this accounting by deferring the revenue previously recognized in the first quarter of 1998. The deferred revenue will be recognized in future periods. As a result of the restatement of the first quarter 1998 results, net income and earnings per share (basic and diluted) for the six months ended June 30, 1998 have been reduced from $2,401,000 and $0.34, respectively, to $1,728,000 and $0.24, respectively. 6 7 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS As previously reported in the Company's Form 10-Q for the quarter ended March 31, 1998, the Company changed its historical contractual relationship with the brokerage firm which sells 40-acre parcels of land for the Company. The Company originally determined that such change resulted in the recognition of revenue in such period. The Company has subsequently determined that such change did not result in the culmination of an earnings process and the Company has corrected this accounting by deferring the revenue previously recognized in the first quarter of 1998. The deferred revenue will be recognized in future periods. As a result of the restatement of the first quarter 1998 results, net income and earnings per share (basic and diluted) for the six months ended June 30, 1998 have been reduced from $2,401,000 and $0.34, respectively, to $1,728,000 and $0.24, respectively. RESULTS OF OPERATIONS For the six months ended June 30, 1998, net income was $1,728,000 ($0.24 per share) compared to $960,000 ($0.15 per share) for the same period in 1997. Pre-tax earnings from property sales were up approximately $281,000 for the six month period ended June 30, 1998 as compared to the same period in 1997. For the same periods, pre-tax earnings from commercial real estate lending were up approximately $870,000. For 1997, pre-tax earnings from commercial real estate lending were generated primarily from the Company's portfolio of receivables created in connection with the 40-acre parcel sales program. 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 was deferred and is expected to be recognized in earnings during the year and during next year. General and administrative expenses are higher primarily due to increased legal and accounting costs. The managed portfolio of Bridge Financial Corporation stood at $ 65.5 million as of June 30, 1998, of which $41.5 million was participated with other lenders and $23.4 million (net of an allowance for bad debts of $.3 million and undisbursed loan proceeds of $.3 million) was recorded in the Company's books. As of July 27, 1998 the managed portfolio is $53.4 million, of which $32.2 million is participated and $20.6 million (net of an allowance for bad debts of $.3 million and undisbursed loan proceeds of $.3 million) is recorded in the Company's books. The decrease from June 30 to July 27 is due to temporary timing differences between the pay-off of certain loans and the finalization of documents and conditions prior to funding new loans which are approved and pending. 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 Company's four apartment complexes in New Mexico are in escrow and are expected to close during the third and fourth quarters of 1998. In addition, the Company has recently opened escrows to sell its properties at Menaul and Broadway, Spain and Juan Tabo, Ray and McClintock, and Continental and Frontage. Approximately 3,500 acres of land in Fremont County, Colorado are also in escrow to be sold. The sales are scheduled to close at various times through the first quarter of 1999. The buyers of certain of these properties may still have exercisable rights under the sales contracts to cancel without penalty. Those cancellation rights expire at various times prior to the close of escrow. On June 30, 1998 the Company closed escrow on the sale of two separate parcels totaling approximately 4,200 acres in Fremont County, Colorado. On June 30, 1998 Airpark Associates, a joint venture in which the Company has a 50% interest, closed escrow on the sale of the office building it owns. The property in Flagstaff, Arizona located at Zuni and Walapai Streets, 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. The borrower under one of the Company's commercial real estate loans has defaulted on various of its obligations, including the obligation to make certain monthly payments 7 8 and the obligation to pay the principal amount at maturity. The Company has had a receiver appointed by the court to operate the property, and has filed a notice of trustee's sale in order to foreclose on the property in accordance with the loan documents. The fair market value of the property is in excess of the loan amount, and the Company does not expect to incur any losses with respect to this loan. 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 capital will be required to fund anticipated volume in the Company's managed portfolio. The sources of this capital include internally generated cash flow, borrowing on lines of credit and warehouse lines, and participants or other joint funding sources. 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 months. (See "Results of Operations" above.) 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. As of June 30, 1998, the Company had a $3 million unsecured revolving line of credit from a commercial bank, to be used for general corporate purposes. On July 2, 1998, the Company signed a new loan agreement with the bank which increased the $3 million line to a new maximum availability of $10 million. The line bears interest at the prime rate and expires in July, 1999. At June 30, 1998 and July 27, 1998, the line had an outstanding balance of $3 million. The line is secured by certain real estate and loan assets of the Company. The line is guaranteed by the Company's three major subsidiaries. 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 June 30, 1998 the Company was in compliance with these financial covenants. 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 June 30, 1998 the loan had an outstanding balance of $1,108,000. As of July 27, 1998 the loan had an outstanding balance of $1,114,000. From a different commercial bank, one of the Albuquerque joint ventures has loan facilities to be utilized for lot development. At June 30, 1998 the aggregate outstanding balance under these loan facilities was $93,000. As of July 27, 1998, there was $74,000 borrowed against these lines of credit. In addition to the bank lines, the Company has negotiated with a large non-bank commercial lender to provide a warehouse line of credit to finance the Company's real estate lending activities. This secured revolving facility has been approved by the lender and 8 9 is currently being documented. The line of credit permits outstanding borrowings of up to $25 million at one time. The line bears interest at rates ranging from LIBOR plus 250 basis points to LIBOR plus 300 basis points, will expire one year from the date the loan documents are signed, and will be secured by certain loan assets of the Company. 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. 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. On November 23, 1998 the Company declared a 3-for-2 stock split payable January 15, 1999 to shareholders of record as of December 31, 1998. The net income per share and weighted average shares outstanding reported in the financial statements include the effect of the dividend and the split for all periods presented. 9 10 PART II - OTHER INFORMATION There were no proceedings, changes, occurrences or other matters occurring during the three month period ended June 30, 1998, requiring a response to Items 1 through 5. Item 6. Exhibits and Reports on Form 8-K. (a) Exhibits Exhibit 27.1, Financial Data Schedule Exhibit 27.2, Restated 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: April 12, 1999 ------------------- 10 EX-27.1 2 FINANCIAL DATA SCHEDULE
5 1,000 6-MOS DEC-31-1998 JUN-30-1998 2,611 0 27,804 275 0 20,151 50,253 5,714 75,903 6,913 16,632 0 0 35,341 9,853 75,903 8,051 11,480 5,948 8,821 256 0 579 2,855 1,127 1,728 0 0 0 1,728 .24 .24
EX-27.2 3 REVISED FINANCIAL DATA SCHEDULE
5 1,000 6-MOS DEC-31-1997 JUN-30-1997 3,484 0 9,412 0 0 0 56,645 5,389 66,193 0 0 0 0 18,102 18,481 66,193 4,250 6,552 2,428 3,042 1,101 0 516 1,604 644 960 0 0 0 960 .15 .15
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