-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: keymaster@town.hall.org Originator-Key-Asymmetric: MFkwCgYEVQgBAQICAgADSwAwSAJBALeWW4xDV4i7+b6+UyPn5RtObb1cJ7VkACDq pKb9/DClgTKIm08lCfoilvi9Wl4SODbR1+1waHhiGmeZO8OdgLUCAwEAAQ== MIC-Info: RSA-MD5,RSA, jOMrQZOXexpPkpwJa+eFRDEamn0BWw4MKjjIdOrVh6XWlUJ+oApGu6LnWs9M7iFg QvJW/zPuP+8VKPhId5rjAw== 0000950150-94-000717.txt : 19941117 0000950150-94-000717.hdr.sgml : 19941117 ACCESSION NUMBER: 0000950150-94-000717 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19940930 FILED AS OF DATE: 19941114 SROS: NYSE SROS: PSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: NEWHALL LAND & FARMING CO /CA/ CENTRAL INDEX KEY: 0000751976 STANDARD INDUSTRIAL CLASSIFICATION: 1531 IRS NUMBER: 953931727 STATE OF INCORPORATION: CA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-08885 FILM NUMBER: 94559454 BUSINESS ADDRESS: STREET 1: 23823 VALENCIA BLVD CITY: VALENCIA STATE: CA ZIP: 91355 BUSINESS PHONE: 8052554000 MAIL ADDRESS: STREET 2: 23823 VALENCIA BLVD CITY: VALENCIA STATE: CA ZIP: 91355 10-Q 1 FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 1994 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 September 30, 1994 or [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to For Quarter Ended September 30, 1994 Commission file number 1-7585 THE NEWHALL LAND AND FARMING COMPANY (a California Limited Partnership) (Exact name of Registrant as specified in its charter) California 95-3931727 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 23823 Valencia Boulevard, Valencia, CA 91355 (Address of principal executive offices) (Zip Code) (805) 255-4000 (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 --- --- 2 Part I. Financial Information 2. Item 1 - Financial Statements THE NEWHALL LAND AND FARMING COMPANY (a California Limited Partnership) CONSOLIDATED STATEMENTS OF INCOME
Unaudited Three months ended Nine months ended September 30, September 30, ------------------ ----------------- In thousands, except per unit 1994 1993 1994 1993 ------ ------ ------ ------ REVENUES Real estate Residential sales $ 3,742 $ 4,315 $25,277 $10,829 Industrial and other sales 5,368 2,989 6,430 6,107 Commercial operations 9,374 8,913 26,071 24,174 ------- ------- ------- ------- 18,484 16,217 57,778 41,110 ------- ------- ------- ------- Agriculture Operations 4,916 3,829 9,073 6,793 Ranch sales - - 11,800 8,557 ------- ------- ------- ------- 4,916 3,829 20,873 15,350 ------- ------- ------- ------- TOTAL REVENUES $23,400 $20,046 $78,651 $56,460 ======= ======= ======= ======= CONTRIBUTION TO INCOME Real estate Residential sales $ (571) $ 1,050 $ 2,494 $ 1,289 Industrial and other sales 2,650 1,712 2,444 1,052 Community development (1,766) (1,678) (4,737) (4,352) Commercial operations 4,139 3,762 11,924 11,289 ------- ------- ------- ------- 4,452 4,846 12,125 9,278 ------- ------- ------- ------- Agriculture Operations 1,349 735 3,054 1,290 Ranch sales - - 9,227 3,984 ------- ------- ------- ------- 1,349 735 12,281 5,274 ------- ------- ------- ------- Earthquake damage - - (3,700) - ------- ------- ------- ------- OPERATING INCOME 5,801 5,581 20,706 14,552 General and administrative expense (2,233) (1,853) (6,202) (5,557) Interest and other, net (2,662) (1,894) (7,835) (5,793) ------- ------- ------- ------- NET INCOME $ 906 $ 1,834 $ 6,669 $ 3,202 ======= ======= ======= ======= NET INCOME PER UNIT $ 0.02 $ 0.05 $ 0.18 $ 0.09 ======= ======= ======= ======= Number of units used in computing per unit amounts 36,781 36,774 36,793 36,781 Cash distributions per unit $ .10 $ .10 $ 0.30 $ 0.30
See Notes to Consolidated Financial Statements 3 THE NEWHALL LAND AND FARMING COMPANY (a California Limited Partnership) Part I. Financial Information 3. Item 1 - Financial Statements CONSOLIDATED BALANCE SHEETS
September 30, December 31, In thousands, except units 1994 1993 ------------- ------------ Unaudited ASSETS Cash and cash equivalents $ 37,092 $ 39,636 Accounts and notes receivable 20,326 19,508 Land under development 94,594 73,078 Land held for future development 34,103 34,563 Property and equipment, net 185,449 182,332 Other assets and deferred charges 11,008 10,781 -------- -------- $382,572 $359,898 ======== ======== LIABILITIES AND PARTNERS' CAPITAL Accounts payable $ 15,162 $ 12,419 Accrued expenses 28,822 26,794 Deferred revenues 4,956 1,835 Mortgage and other debt 192,493 174,157 Advances and contributions from developers for utility construction 13,050 12,067 Other liabilities 21,004 21,347 -------- -------- Total liabilities 275,487 248,619 Partners' capital 36,758,624 units outstanding at September 30, 1994 and 36,756,530 units outstanding at December 31, 1993 107,085 111,279 -------- -------- $382,572 $359,898 ======== ========
See Notes to Consolidated Financial Statements 4 THE NEWHALL LAND AND FARMING COMPANY (a California Limited Partnership) CONSOLIDATED STATEMENTS OF CASH FLOWS 4.
Unaudited Nine months ended September 30, ----------------------- In thousands 1994 1993 -------- -------- CASH FLOWS FROM OPERATING ACTIVITIES: Net income $ 6,669 $ 3,202 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 5,525 5,573 Increase in land under development (21,516) (15,100) Increase in accounts and notes receivable (818) (3,059) Increase (decrease) in accounts payable, accrued expenses and deferred revenues 7,892 (7,544) Cost of property sold 1,466 3,829 Other adjustments, net 330 (1,673) -------- ------- Net cash used by operating activities (452) (14,772) -------- -------- CASH FLOWS FROM INVESTING ACTIVITIES: Purchase of property and equipment (10,108) (6,673) Investment in joint venture (97) 96 -------- -------- Net cash used by investing activities (10,205) (6,577) -------- -------- CASH FLOWS FROM FINANCING ACTIVITIES: Distributions paid (11,027) (11,027) Increase in mortgage and other debt 18,336 12,247 Increase in bank loans - 8,900 Other, net 804 2,936 -------- --------- Net cash provided by financing activities 8,113 13,056 -------- -------- NET DECREASE IN CASH AND CASH EQUIVALENTS (2,544) (8,293) CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 39,636 10,792 -------- -------- CASH AND CASH EQUIVALENTS, END OF PERIOD $ 37,092 $ 2,499 ======== ========
See Notes to Consolidated Financial Statements 5 THE NEWHALL LAND AND FARMING COMPANY (a California Limited Partnership) Part I. Financial Information 5. Item 1 - Financial Statements NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Note 1. Accounting Policies The consolidated financial statements include the accounts of The Newhall Land and Farming Company and its subsidiaries, all of which are wholly-owned or controlled, (collectively, "the Company"). All significant intercompany transactions have been eliminated. The Company's income from Residential Sales comes from two sources, sales of entitled lots to merchant builders and sales of completed homes to homebuyers through joint ventures. The Company recognizes income from sales of entitled lots upon close of escrow to merchant builders or on the percentage of completion basis if the Company has an obligation to complete certain future development. The Company does not receive any income from subsequent sale of completed homes by merchant builders to homebuyers. In the case of joint ventures, the Company increases its inventories of homes completed or under construction with joint-venture partners as it funds its portion of the joint-venture obligation and records its portion of revenues and income as the joint venture closes escrow on sales to homebuyers. The Company's unaudited interim financial statements have been prepared substantially in conformity with generally accepted accounting principles used in the preparation of the Company's annual financial statements. In the opinion of the Company, all adjustments necessary for a fair statement of the results of operations for the three months ended September 30, 1994 and 1993 have been made. Certain reclassification have been made to prior periods' amounts to conform to the current year presentation. The interim statements are condensed and do not include some of the information necessary for a more complete understanding of the financial data. Accordingly, your attention is directed to the footnote disclosures found on pages 20 through 26 of the December 31, 1993 Annual Report to Partners and particularly to Note 2 which includes a summary of significant accounting policies. Interim financial information for the Company has substantial limitations as an indicator for the calendar year because: . Land sales occur irregularly and are recognized at the close of escrow or on the percentage of completion basis if the Company has an obligation to complete certain future improvements and provided profit recognition criteria are met. . Agricultural crops are on an annual cycle and income is recognized upon harvest. Most major crops are harvested during the fall and winter. . Sales of non-developable farm land occur irregularly and are recognized upon close of escrow provided profit recognition criteria are met. 6 Part I. Financial Information 6. Item 1 - Financial Statements Note 2. Details of Land Under Development (In $000)
September 30, December 31, 1994 1993 ------------ ----------- (Unaudited) Residential $39,367 $34,164 Industrial and commercial 43,526 35,092 Homes completed or under construction 8,888 3,381 with joint-venture partners Other 2,813 441 ------- ------- Total land under development $94,594 $73,078 ======= =======
Note 3. Details for Earnings per Unit Calculation (Unaudited)
Three months ended Nine months ended ------------------------- -------------------------- Sept. 30, Sept. 30, Sept. 30, Sept. 30, 1994 1993 1994 1993 ---------- ---------- ---------- ---------- Average number of units outstanding during the period 36,756,713 36,756,530 36,756,592 36,756,530 Net units issuable in connection with dilutive options based upon use of the treasury stock method 23,994 17,162 36,195 24,212 ---------- ---------- ---------- ---------- Average number of primary units 36,780,707 36,773,692 36,792,787 36,780,742 ========== ========== ========== ==========
7 Part I. Financial Information 7. Item 2 - Management's Discussion and Analysis of Financial Condition and Results of Operations Financial Condition Liquidity and Capital Resources The Company had cash and cash equivalents totaling $37.1 million at September 30, 1994. The Company's strong cash position is primarily due to a $30 million seven-year unsecured loan obtained in December, 1993 and an $11 million long-term financing obtained by the Company's wholly-owned public water utility in July, 1994. For further information on financing, see the Financing Activities discussion in this Liquidity and Capital Resources section. At September 30, 1994, there were no borrowings outstanding against available lines of credit totaling $79 million. Letters of credit outstanding against lines of credit totaled $5.5 million at the end of the period. The Company believes its operations and available credit are sufficient to provide the cash required to finance future operations and enable it to take advantage of new development opportunities. There are no material commitments for capital expenditures other than in the ordinary course of business. The following discussion relates to principal items shown on the Consolidated Statement of Cash Flows: Operating Activities Inventory expenditures for land development and infrastructure to support pending and future land sales, residential construction costs for two joint-venture projects and agricultural crop costs totaled $49.5 million for the nine months ended September 30, 1994. Of these expenditures, approximately $10.3 million relates to McDowell Mountain Ranch, the majority of which has been funded by improvement district bonds. Please refer to the Financing Activities section for information on public financings for this project. Inventory expenditures were also partially offset during this period by sales of 178 residential lots and 25 joint-venture home closings in Valencia, sale of a 79-acre bulk parcel just outside the McDowell Mountain Ranch planned community in Scottsdale and sales of 6.7 commercial acres in the Valencia area. At September 30, 1994, $5.0 million of deferred revenues from current and prior year land sales remain to be recognized in future periods as the Company completes required site development, landscape and amenity work. Recognition of deferred revenues has no impact on the Company's cash position. However, more than $8 million in land sale notes receivable are scheduled for collection in the fourth quarter of 1994. 8 Part I. Financial Information 8. Item 2 - Management's Discussion and Analysis of Financial Condition and Results of Operations (continued) The Meridian Ranch, consisting of 5,370 acres of farm land not suitable for real estate development, was sold in June, 1994 for $11.8 million cash and contributed $9.2 million to income. Investing Activities Capital expenditures during the nine-month period ended September 30, 1994 totaling $10.1 million includes construction costs for a 199,000-square-foot build-to-suit for ITT Corporation in Valencia Commerce Center and a 7,000-square-foot build-to-suit for Trader Joe's, a specialty food retailer, which opened in September. Also included are expenditures for various commercial tenant improvements and water utility construction costs. Financing Activities Three quarterly distributions totaling $11.0 million, or $.30 per unit have been paid year-to-date. The declaration of distributions is reviewed by the Board of Directors on a quarterly basis. The declaration of any distribution, and the amount declared, is determined by the Board of Directors, taking into account the Company's earnings, cash requirements, financial condition and prospects. The next quarterly distribution will be considered by the Board of Directors at its November meeting. In July, 1994, the Company's wholly-owned water utility subsidiary finalized an $11 million long-term financing with a major insurance company. Subsequently, the utility repaid $10.5 million to the Company which had been advanced in December, 1993 to retire the utility's outstanding advances against a revolving-to-term credit line. In 1994, the Company commenced infrastructure development activities at its McDowell Mountain Ranch to be partially funded by over $17 million of improvement district bonds. As of September 30, 1994, $8.1 million of the $17 million available has been expended to construct these improvements which is reflected as project debt. In addition, during the 1994 third quarter, the City of Scottsdale successfully placed $9.1 million in Community Facilities District Bonds to construct certain public improvements within McDowell Mountain Ranch. Although the Community Facilities District Bonds are not reflected as project debt, the Company is obligated to pay an ad valorem property tax for these improvements until parcels are sold. 9 Part I. Financial Information 9. Item 2 - Management's Discussion and Analysis of Financial Condition and Results of Operations (continued) Results of Operations Comparison of Third Quarter and Nine Months 1994 to Third Quarter and Nine Months 1993 (unaudited) The amounts of increase or decrease from the prior year periods are as follows (in $000, except per unit):
Increase/(Decrease) Increase/(Decrease) ------------------------ ------------------------ Three Months Nine Months ------------------------ ------------------------ Revenues Amount % Amount % ------- ---- ------- ----- Real Estate Residential sales $ (573) (13)% $14,448 133% Industrial and other sales 2,379 80 323 5 Commercial operations 461 5 1,897 8 Agriculture Operations 1,087 28 2,280 34 Ranch sales 0 -- 3,243 38 ------- ---- ------- ---- $ 3,354 17% $22,191 39% ======= ==== ======= ==== Contribution to income Real Estate Residential sales $(1,621) (154)% $ 1,205 93% Industrial and other sales 938 55 1,392 132 Community development (88) (5) (385) (9) Commercial operations 377 10 635 6 Agriculture Operations 614 84 1,764 137 Ranch sales -- -- 5,243 132 Earthquake damage -- -- (3,700) (100) ------- ---- ------- ---- Operating income 220 4 6,154 42 General and administrative expense (380) (21) (645) (12) Interest and other, net (768) (41) (2,042) (35) ------- ---- ------- ---- Net income $ (928) (51)% $ 3,467 108% ======= ==== ======= ==== Per unit: Net income per unit $ (0.03) (60)% $0.09 100% ======= ==== ====== ==== Number of units used in computing per unit amounts (in 000) 7 --% 12 --% ======= ==== ====== ====
10 Part I. Financial Information 10. Item 2 - Management's Discussion and Analysis of Financial Condition and Results of Operations (continued) The decrease in results for the current quarter, compared to last year, reflect the additional interest cost associated with the Company's $30 million private placement which was completed last December. In addition, the Company concluded its homebuilding operations in Valencia Northbridge in September, 1993. RESIDENTIAL SALES VALENCIA A loss was recorded for the 1994 third quarter due to no residential land sales being completed. However, the Company continues to benefit from its strategy of selling residential lots to merchant builders and through joint ventures. Results for the 1994 third quarter include deferred revenues of $295,000 and income of $87,000 under percentage of completion accounting from a residential land sale completed in the current year second quarter, and revenues of $3.4 million and income of $475,000 from 10 escrow closings in the Company's first joint venture with EPAC Communities, Inc. Of the 79 homes in this joint-venture project, there were 14 homes in escrow and 19 remaining to be sold at September 30, 1994. The 1994 nine-month period includes sales by the Company of 83 lots in Valencia NorthPark to Beazer Homes and 95 lots in Valencia Northbridge to Del Webb Homes which contributed an aggregate of $12.8 million to revenues and $2.4 million to income. Deferred revenues of $2.7 million remain to be recognized from these sales in future periods under percentage of completion accounting. The current year nine-month period also includes 25 escrow closings from the joint venture with EPAC Communities, Inc. contributing $8.5 million to revenues and $1.2 million to income. There were no residential land sales completed in the prior year three and nine-month periods. Under percentage of completion accounting, revenues of $1.7 million and $3.8 million, and income of $211,000 and $828,000 were recognized in the prior year three and nine-month periods, respectively, from prior residential land sales. Also included in the 1993 nine-month period, is cash received from prior residential land sale profit participation agreements which contributed $100,000 to revenues and income. Transition from the Company's own home construction operation was completed in the third quarter of 1993 when revenues of $2.6 million and income of $558,000 were recorded from 10 residential escrow closings. Results for the prior year nine-month period included 29 home closings which contributed $6.9 million to revenues and $1.2 million to income. 11 Part I. Financial Information 11. Item 2 - Management's Discussion and Analysis of Financial Condition and Results of Operations (continued) Merchant Builder Program Six builders are now active in Valencia with eight different residential products that have prices appealing to a broad spectrum of buyers. Home sales continue to increase in Valencia as merchant builders closed escrow on 50 homes during the 1994 third quarter, compared with 48 homes in the second quarter and 31 homes in the first quarter. In the prior year, merchant builders closed escrow on 39 homes in the third quarter, 29 homes in the second quarter and 13 homes in the first quarter. At September 30, 1994, there were 71 homes in escrow by merchant builders. Although the Company does not directly participate in the profits generated from escrow closings by merchant builders, the absorption of these previously sold lots is key to the Company's success in selling additional lots to merchant builders in future periods. Beazer Homes opened models in August on lots purchased from the Company in the second quarter and already is selling its second phase of homes. As a result of this success, Beazer Homes has entered escrow with the Company to purchase an additional 66 entitled lots in Valencia NorthPark, with some of the lots scheduled to close during the fourth quarter of 1994. Joint-Venture Program In addition to the Company's first joint venture with EPAC described above, two additional joint ventures are scheduled to start generating revenue and income for the Company in the fourth quarter as escrows close to home buyers. Four models, priced from $130,000 to $160,000 opened in September at Montana Townhomes, a 138-unit project and the Company's second joint-venture with EPAC Communities, Inc. in Valencia Northbridge. Models opened in October for a 128-home project of the most affordable detached homes offered in Valencia in many years. The project is being developed in Valencia NorthPark by RGC, an award-winning Orange County-based builder, under a limited partnership agreement with the Company. These single-family homes, called the CourtHome Collection, are clustered around a common courtyard and range in price from $139,000 to $169,000. There were no homes in escrow from these new joint ventures at September 30, 1994. A second joint-venture project with RGC is for 102 townhomes in Valencia Northbridge starting in the low $100,000's. Models featuring three floorplans will open and escrow closings are expected to start contributing to revenue and income in 1995. 12 Part I. Financial Information 12. Item 2 - Management's Discussion and Analysis of Financial Condition and Results of Operations (continued) MCDOWELL MOUNTAIN RANCH Land development and infrastructure construction are well underway for this 4,000-home planned community in Scottsdale, Arizona. During the fourth quarter, construction will begin on the community recreation center, paseo system and information center. Initial models by merchant builders and the project's grand opening are scheduled for the spring of 1995. Results for the nine-month period include the sale of a 79-acre bulk parcel outside the planned community which contributed $3.6 million to revenues and $1.7 million to income. On November 5, 1994, escrow closed on 134 lots to Coventry Homes, a division of Del Webb Corporation of Phoenix, for $5.5 million. Currently, 358 lots are in escrow for sale to merchant builders for approximately $10 million with closings anticipated in the fourth quarter of 1994, subject to market conditions and completion of necessary infrastructure improvements. INDUSTRIAL AND OTHER SALES Three commercial parcels totaling 5.6 acres closed escrow in the 1994 third quarter for approximately $5.4 million in revenues contributing $3.3 million to income. Also included in the 1994 nine-month period is the sale of a 1.25-acre parcel in Valencia Auto Center which contributed $925,000 to revenues and $624,000 to income, and a $393,000 non-refundable deposit which was taken into income from a proposed prior year sale. The prior year three and nine-month period results included the sale of a 1.9-acre parcel in Valencia Auto Center contributing $1.5 million to revenues and $1.1 million to income. Also included in the prior year are revenues and income recognized from prior land sales under percentage of completion accounting totaling $1.5 million and $1.2 million respectively in the third quarter and $3.9 million and $2.1 million respectively in the nine-month period. At September 30, 1994, three parcels totaling 6.2 acres were in escrow for $5.6 million with closings scheduled for later this year. The ability to close these sales will depend on market conditions. Negotiations are continuing with other companies for both land sales and build-to-suit opportunities. 13 Part I. Financial Information 13. Item 2 - Management's Discussion and Analysis of Financial Condition and Results of Operations (continued) COMMUNITY DEVELOPMENT Increases in Community Development expenses from the prior year periods are primarily attributable to planning and entitlement expenses in connection with the Company's new 12,000-acre planned community to be called Newhall Ranch. A general plan application was submitted to Los Angeles County in June, 1994 and technical environmental studies are being prepared for the Environmental Impact Report. Management is presenting to various civic and community groups the plans for this 24,000-home new community which will be located just west of Valencia along Highway 126 and extend from Interstate 5 to the Ventura County line. COMMERCIAL OPERATIONS Commercial operations include the Company's portfolio of income-producing properties and the Natural Resources division, consisting of Valencia Water Company, a wholly-owned public water utility, and the Company's energy operations. Revenues and income from the Company's income-producing portfolio continued to show increases for the third quarter and nine-month periods. All properties in the portfolio are contributing to this regular source of income and cash flow. At Valencia Town Center, the Company's regional shopping mall, The Disney Store and two other retail shops opened during the third quarter. River Oaks neighborhood shopping center is 100% leased and Bouquet Center is 99% leased while constructed space at Castaic Village, the newest neighborhood shopping center, is 93% leased. In addition, the Company's three apartment complexes are at full occupancy. Valencia Hilton Garden Inn continues to operate ahead of projections, increasing its contribution to the portfolio's income. Through September, occupancy was over 93% compared with 81% last year. Trader Joe's, a popular specialty food retailer, opened in September 1994. The 7,000-square-foot facility in Valencia is a build-to-suit under a long-term lease agreement with the Company. In early October, ITT Corporation began the consolidation of two divisions into the Company's first build-to-suit in Valencia Commerce Center. Over 400 employees will be relocated into the 199,000-square-foot facility. A third-party offer for purchase of the building is under consideration by the Company. 14 Part I. Financial Information 14. Item 2 - Management's Discussion and Analysis of Financial Condition and Results of Operations (continued) Valencia Marketplace, a high-volume retail complex was approved by the Los Angeles County Board of Supervisors in July, 1994. Subsequently, local environmental groups filed a lawsuit challenging the County's approval. As a result, construction is likely to be delayed on this 760,000-square-foot project. Expiration of a 12-month drought recovery surcharge approved by the California Public Utilities Commission for Valencia Water Company beginning in May, 1993, contributed to decreases in revenues and income from the comparable prior year third quarter. For the nine-month period, revenues and income from Valencia Water Company are approximately the same as the prior year period while results from the energy operations were impacted by reductions in oil production and market price. AGRICULTURAL OPERATIONS Increases in revenues and income from agricultural operations from the prior year third quarter are due to the early harvest of lemons and an excellent crop of tomatoes. Also contributing to increases from the comparative prior year nine-month period are expense reductions from streamlined administrative functions and transition to leasing grazing land to livestock operators. RANCH SALES There were no sales of farm land in the current or prior year third quarters. The sale of the 5,370-acre Meridian Ranch in the current year second quarter for $11.8 million contributed $9.2 million to income. Prior year nine-month results include sale of the Capay and Wheatland Ranches for $7.3 million contributing $3.0 million to income and sale of 1,990 acres on the Merced and Meridian Ranches for $1.2 million contributing $972,000 to income. The Company plans to market for sale its remaining 9,440 acres of non-strategic farm land. At September 30, 1994, no agricultural parcels were in escrow. 15 Part I. Financial Information 15. Item 2 - Management's Discussion and Analysis of Financial Condition and Results of Operations (continued) EARTHQUAKE DAMAGE As a result of the earthquake which struck the San Fernando Valley on January 17, 1994, a $3.7 million charge was taken in the first quarter for damages to the Company's properties not covered by insurance. This does not include estimated damages of $5 million incurred by Valencia Water Company, the Company's wholly-owned public water utility. While Valencia Water Company is liable for deductible amounts on three storage tanks which were lost and damages to underground water facilities, which are not insurable, the California Public Utilities Commission has approved a $785,000 disaster recovery surcharge over 22 months commencing in October, 1994. The Company anticipates recovering additional earthquake damage for Valencia Water Company through future rate adjustments, subject to approval by the California Public Utilities Commission. GENERAL AND ADMINISTRATIVE EXPENSE The primary contributors to increases of 21% and 12% from the prior year three and nine-month periods, respectively, are professional fees in connection with employee benefit programs, reduced expense recoveries for tax accounting fees billed to outside partnerships and an additional board meeting due to the January 17, 1994 earthquake. INTEREST AND OTHER, NET Increases in interest expense from the prior year periods are attributable to a $30 million unsecured loan obtained from a major insurance company in December, 1993 and rate increases on variable rate project financing. Also, contributing to the increase in Interest and Other, net is a reduction in interest income due to collection of notes receivable partially offset by income from additional cash available for investment. 16 Part II. Other Information 16. Item 6 - Exhibits and Reports on Form 8-K (a) Exhibits (listed by numbers corresponding to the Exhibit Table of Item 601 in Regulation S-K): 10 The Newhall Land and Farming Company Employee Unit Purchase Plan incorporated by reference to the Company's Registration Statement on Form S-8 dated May 24, 1994 27 Financial Data Schedule (b) No report was filed on Form 8-K in the third quarter ended September 30, 1994. 17 SIGNATURES 17. 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. THE NEWHALL LAND AND FARMING COMPANY (a California Limited Partnership) ----------------------------------- Registrant By Newhall Management Limited Partnership, Managing General Partner By Newhall Management Corporation, Managing General Partner Date: November 7, 1994 By / S / THOMAS L. LEE ----------------------------------- Thomas L. Lee, Chairman and Chief Executive Officer of Newhall Management Corporation (Principal Executive Officer) Date: November 7, 1994 By / S / ROBERT D. WILKE ----------------------------------- Robert D. Wilke, Vice Chairman and Chief Financial Officer of Newhall Management Corporation (Principal Financial Officer) Date: November 7, 1994 By / S / DONALD L. KIMBALL ----------------------------------- Donald L. Kimball, Vice President - Controller of Newhall Management Corporation (Principal Accounting Officer) EX-27 2 FINANCIAL DATA SCHEDULE
5 1,000 9-MOS DEC-31-1994 SEP-30-1994 37,092 0 20,326 0 94,594 0 275,171 55,619 382,572 0 192,493 0 0 0 107,085 382,572 78,651 78,651 54,245 54,245 3,700 0 7,835 6,669 0 6,669 0 0 0 6,669 0.18 0.18
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