-----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, CBYKo5+Bs2ifur+zMofkpR+na4HLZlnDgmlnyrziNBOzGyYJXChQXg6pOwG6iZYL 9rXB0aA2UvI0YP3gTIgLNQ== 0000950150-96-000388.txt : 19960513 0000950150-96-000388.hdr.sgml : 19960513 ACCESSION NUMBER: 0000950150-96-000388 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19960331 FILED AS OF DATE: 19960510 SROS: NYSE SROS: PSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: NEWHALL LAND & FARMING CO /CA/ CENTRAL INDEX KEY: 0000751976 STANDARD INDUSTRIAL CLASSIFICATION: OPERATIVE BUILDERS [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: 96558919 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 FORM 10-Q FOR THE PERIOD ENDED 3/31/96 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, 1996 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 March 31, 1996 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 CONSOLIDATED STATEMENTS OF INCOME Unaudited
Three Months Ended In thousands, except per unit March 31 - ----------------------------- ----------------------------- 1996 1995 --------- --------- REVENUES Real estate Residential home and land sales Valencia $9,898 $7,944 McDowell Mountain Ranch 5,531 2,201 Industrial and other sales 2,136 5,411 Commercial operations 8,309 8,833 --------- --------- 25,874 24,389 --------- --------- Agriculture Operations 707 653 Ranch sales 6,145 - - --------- --------- 6,852 653 --------- --------- Total revenues $32,726 $25,042 ========= ========= Contribution to income Real estate Residential home and land sales Valencia $520 $140 McDowell Mountain Ranch 1,602 284 Industrial and other sales 399 1,712 Community development (2,427) (1,817) Commercial operations 4,083 4,306 --------- --------- 4,177 4,625 --------- --------- Agriculture Operations 762 408 Ranch sales 5,872 - - --------- --------- 6,634 408 --------- --------- Operating income 10,811 5,033 General and administrative expense (2,200) (2,050) Interest and other, net (2,380) (2,597) --------- --------- Net income $6,231 $386 ========= ========= Net income per unit $0.17 $0.01 ========= ========= Number of units used in computing per unit amounts 35,908 36,514 Cash distributions per unit $0.10 $0.10
3 Part I. Financial Information 3. Item 1 - Financial Statements CONSOLIDATED BALANCE SHEETS
March 31, December 31, In thousands, except units 1996 1995 - -------------------------- ------------ ------------ Unaudited ASSETS Cash and cash equivalents $4,364 $4,285 Accounts and notes receivable 22,611 25,156 Land under development 93,637 88,457 Land held for future development 32,371 32,459 Property and equipment, net 197,759 186,697 Other assets and deferred charges 13,618 12,699 ------------ ------------ $364,360 $349,753 ============ ============ LIABILITIES AND PARTNERS' CAPITAL Accounts payable $14,367 $11,285 Accrued expenses 32,778 32,999 Deferred revenues 3,843 4,041 Mortgage and other debt 163,618 152,302 Advances and contributions from developers for utility construction 17,771 17,811 Other liabilities 18,801 18,459 ------------ ------------ Total liabilities 251,178 236,897 Partners' capital 35,466,394 units outstanding, excluding 1,305,749 units in treasury, at March 31, 1996 and 35,910,243 units outstanding, excluding 861,900 units in treasury, at December 31, 1995 113,182 112,856 ------------ ------------ $364,360 $349,753 ============ ============
4 Part I. Financial Information 4. Item 1 - Financial Statements CONSOLIDATED STATEMENTS OF CASH FLOWS Unaudited
Three Months Ended In thousands March 31 - ----------------------------------------------------------- -------------------------- 1996 1995 --------- --------- CASH FLOWS FROM OPERATING ACTIVITIES Net income $6,231 $386 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 1,891 1,937 Increase in land development inventories (5,180) (4,566) Decrease in accounts and notes receivable 2,545 2,443 Increase (decrease) in accounts payable, accrued expenses and deferred revenues 2,663 (1,085) Cost of property sold 264 10 Other adjustments, net (425) (848) --------- --------- Net cash provided (used) by operating activities 7,989 (1,723) --------- --------- CASH FLOWS FROM INVESTING ACTIVITIES Purchase of property and equipment (13,129) (1,519) --------- --------- CASH FLOWS FROM FINANCING ACTIVITIES Distributions paid (3,589) (3,676) Increase in mortgage and other debt 11,316 12,687 (Decrease) increase in advances and contributions from developers for utility construction (40) 1,722 Purchase of partnership units (2,468) (8,547) --------- --------- Net cash provided by financing activities 5,219 2,186 --------- --------- NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 79 (1,056) CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 4,285 7,656 --------- --------- CASH AND CASH EQUIVALENTS, END OF PERIOD $4,364 $6,600 ========= ==========
5 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, (collectively, "the Company"). All significant intercompany transactions are eliminated. 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 March 31, 1996 and 1995 have been made. Certain reclassifications 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 25 through 31 of the December 31, 1995 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: o 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. o Agricultural crops are on an annual cycle and income is recognized upon harvest. Most major crops are harvested during the fall and winter. o Sales of non-developable farm land occur irregularly and are recognized upon close of escrow provided profit recognition criteria are met. - ------------------------------------------------------------------------------- Note 2. Details of Land Under Development
(In $000) March 31, December 31, 1996 1995 ------------ ----------- Valencia (Unaudited) Residential land development $ 5,307 $ 1,848 Industrial and commercial land development 43,562 43,256 Homes completed or under construction with venture partners 27,092 25,302 McDowell Mountain Ranch land development 15,830 17,824 Agriculture 1,846 227 -------- ------- Total land under development $ 93,637 $88,457 ======== =======
- ------------------------------------------------------------------------------- Note 3. Details for Earnings per Unit Calculation
Three months ended March 31, ---------------------------------------- (Unaudited) 1996 1995 ----------- -------------- --------------- Average number of units outstanding during the period 35,752,138 36,501,001 Net units issuable in connection with dilutive options based upon use of the treasury stock method 156,233 13,303 ---------- ---------- Average number of primary units 35,908,371 36,514,304 ========== ==========
6 6. Part I. Financial Information Item 2 - Management's Discussion and Analysis of Financial Condition and Results of Operations RESULTS OF OPERATIONS Comparison of First Quarter 1996 to First Quarter 1995 Unaudited The amounts of increase or decrease in revenues and income from the prior year first quarter are as follows (in 000s, except per unit):
Increase (Decrease) ----------- -------- Amount % REVENUES Real Estate Residential home and land sales Valencia $ 1,954 25% McDowell Mountain Ranch 3,330 151% Industrial and other sales (3,275) -61% Commercial operations (524) -6% ----------- -------- 1,485 6% Agriculture Operations 54 8% Ranch sales 6,145 N/A ----------- -------- Total revenues $ 7,684 31% =========== ======== CONTRIBUTION TO INCOME Real Estate Residential home and land sales Valencia $ 380 271% McDowell Mountain Ranch 1,318 464% Industrial and other sales (1,313) -77% Community development (610) -34% Commercial operations (223) -5% ----------- -------- (448) -10% Agriculture Operations 354 87% Ranch sales 5,872 N/A ----------- -------- Operating income 5,778 115% General and administrative expense (150) -7% Interest and other, net 217 8% ----------- -------- Net income $ 5,845 1514% =========== ======== Net income per unit $0.16 1600% =========== ======== Number of units used in computing per unit amounts (606) -2% =========== ========
7 Part I. Financial Information 7. Item 2 - Management's Discussion and Analysis of Financial Condition and Results of Operations The increases and decreases in revenues and income for the three months are attributable to the following: RESIDENTIAL HOME AND LAND SALES VALENCIA Merchant Builder Program There were no residential lot sales completed in the 1996 or 1995 first quarters. In the 1996 first quarter, deferred revenues totaling $1.0 million and income of $207,000 were recognized from prior residential lot sales under percentage of completion accounting. No deferred revenues or income were recognized in the prior year quarter. At March 31, 1996, two residential parcels totaling 143 lots were in escrow for approximately $10 million. In addition, 491 unimproved lots are in escrow in Castaic, a community north of Valencia. These escrows are expected to close later this year subject to market conditions. Joint Venture Program Escrow closings from joint ventures totaled 49 in the 1996 first quarter contributing $8.9 million to revenues and $983,000 to income. In the first quarter of 1995, 44 escrow closings contributed $7.9 million to revenues and $915,000 to income. Gross profit margins of 11% and product mix between single and multi-family homes were approximately the same as in the prior year quarter. At the end of the 1996 quarter, six joint-venture homebuilding projects in Valencia had 47 homes in escrow versus 31 homes in escrow at the end of the 1995 first quarter. A seventh joint-venture project consisting of executive single-family homes is scheduled to open in May. At March 31, 1996, the Company's homebuilding partnerships had 94 homes under construction and 58 completed, unsold homes available for sale which were included in residential land under development inventories. McDOWELL MOUNTAIN RANCH In the first quarter of 1996, escrow closed on 219 residential lots which contributed $5.5 million to revenues and $2.1 million to income. The sale of 40 lots in the 1995 first quarter combined with deferred revenues recognized on prior year lot sales, resulted in revenues of $2.2 million and contribution to income of $818,000. On April 17, 1996, the Company completed the sale of the McDowell Mountain Ranch project. The sale will contribute $44 million to revenues and $24 million to income in the second quarter. Revenues on the sale consist of a combination of cash, assumption of project debt and the recognition of previously deferred revenues on land sales. INDUSTRIAL AND OTHER SALES Escrow closed on a 2.7-acre commercial parcel in the 1996 first quarter which contributed $1.7 million to revenues and $861,000 to income. Deferred revenues of $449,000 and income of $234,000 also were recognized during the quarter from prior year sales. In the 1995 first quarter, escrow closings on 8.8 commercial acres and a 1.1-acre industrial parcel for $5.6 million contributed $2.2 million to income. At March 31, 1996, an industrial parcel totaling 5.7 acres was in escrow for $1.9 million. This parcel which entered escrow in March, 1995 is expected to close later this year subject to market conditions. COMMUNITY DEVELOPMENT The Company's community development activities are focused on securing necessary entitlements for its Valencia area and Newhall Ranch properties. Newhall Ranch, a new planned community, will be located on the Company's 12,000 acres west of Valencia and extend to the Ventura County line. A 34% increase in community development expenses from the comparable prior year period is primarily due to the Company's efforts to accelerate the entitlement process in Valencia to meet its growth goals. Future plans include an additional 14,000 homes and 8 Part I. Financial Information 8. Item 2 - Management s Discussion and Analysis of Financial Condition and Results of Operations 1,100 acres of commercial/industrial development. Development will be planned in distinct lifestyle villages offering a variety of living environments, such as golf courses and lake communities. COMMERCIAL OPERATIONS Commercial operations include the Company's portfolio of income-producing properties and Valencia Water Company, a wholly-owned public water utility. Revenues and income from the income property portfolio each decreased by 10% principally due to the 1995 sale of Bouquet Shopping Center and the ITT build-to-suit facility. At the end of the 1996 first quarter, occupancy rates at the Company's neighborhood shopping centers, River Oaks and Castaic Village, remained high at 99% and 94% respectively. Valencia Town Center shopping mall is experiencing some turnover in tenants with occupancy at 92%. However, based on current leasing activity, occupancy is expected to improve this fall. Vacancy rates at the Company's three apartment complexes averaged 2% at the end of the quarter. Commercial financial results for all of 1996 are expected to be slightly lower than 1995 as most of the new projects that started construction in 1995 will not begin to generate meaningful revenues and income until 1997. A general rate increase approved by the California Public Utilities Commission effective January, 1996 contributed to higher revenues and income from Valencia Water Company compared to the prior year. Operating expenses were approximately the same as the 1995 period. AGRICULTURAL OPERATIONS Revenues and income from agricultural operations, including the Company's energy division, were approximately the same as the prior year first quarter. Contributing to an increase in income from the prior year period is reversal of a $400,000 contingency associated with previously sold farm land. RANCH SALES In March, 1996, the Company completed the sale of 539 acres of valuable row crop land on its 38,800-acre Suey Ranch for $6.5 million. The sale contributed $5.9 million to 1996 first quarter income. No sale of farm land was completed in the prior year first quarter. GENERAL AND ADMINISTRATIVE EXPENSE A 7% increase in general and administrative expenses is due to timing of accrued incentive compensation based on the Company's increased earnings relative to the 1995 first quarter. INTEREST AND OTHER, NET A principal reduction on a mortgage financing in conjunction with the 1995 sale of Bouquet Shopping Center contributed to an 8% decrease from the comparable prior year period. Also contributing to the decrease is additional capitalized interest related to ten new income-producing projects under development in Valencia. FINANCIAL CONDITION Liquidity and Capital Resources At March 31, 1996, the Company had cash and cash equivalents of $4.4 million with borrowings totaling $27.9 million. Borrowings included $5.0 million against a $40 million revolving mortgage facility secured by Valencia Town Center and $22.9 million against unsecured lines of credit totaling $121 million. The $11.9 million increase in borrowings from December 31, 1995, principally is due to expenditures for ten commercial projects in Valencia which are in various stages of development. 9 Part I. Financial Information 9. Item 2 - Management's Discussion and Analysis of Financial Condition and Results of Operations In December, 1995, the Board of Directors approved a repurchase program of up to 1.5 million of the Company's partnership units. In the first quarter of 1996, a total of 452,500 units were purchased or committed for $7.7 million of which 307,500 units for $5.2 million remained to be paid at the end of the quarter. The Company expects to repurchase additional units with a portion of the proceeds from the sale of McDowell Mountain Ranch which closed escrow on April 17, 1996 for $26 million cash plus assumption of debt. As of May 3, 1996, a total of 1,024,600 units for $17.0 million, or an average price of $16.59 per unit, had been purchased or committed under the program. There are no material commitments for capital expenditures other than the Company's plans in the ordinary course of business to expand its portfolio of income-producing properties. At March 31, 1996, ten new commercial projects were in various stages of development and several new projects are planned to be started in 1996. Approximately $90 million is expected to be invested in these projects in 1996. A portion of the estimated construction costs for these projects is expected to be provided from a combination of available lines of credit and project financings. The following discussion relates to principal items on the Consolidated Statement of Cash Flows: Operating Activities Net cash provided by operating activities in the first quarter of 1996 totaled $8.0 million and included sales of 49 homes in Valencia under the Company's joint venture homebuilding program, 219 lots in McDowell Mountain Ranch, sale of a 2.7-acre commercial parcel in Valencia and 539 acres of row crop land at the Suey Ranch. Combined, these sales provided the Company with $21.0 million in cash and $1.8 million in notes. In addition, notes totaling $2.5 million from land sales in prior years were collected during the quarter. Land under development inventory expenditures totaled $17.9 million and were offset by real estate sales activity in Valencia and McDowell Mountain Ranch, bringing the Company's net inventory investment to $5.2 million for the quarter. In Valencia, inventory expenditures were primarily related to land development and infrastructure for expansion of Valencia NorthPark and home construction advances for the Company's joint-venture homebuilding program. The Company's net homebuilding investment increased by $2 million during the first quarter of 1996 to a total of $27 million in seven joint venture projects. Investing Activities Expenditures for property and equipment totaled $13.1 million and were primarily related to ten income-producing projects under development in Valencia and water utility construction costs. The properties under development consist of Valencia Marketplace, a 750,000-square-foot retail complex which was 71% preleased at the end of the 1996 first quarter; a build-to-lease and two build-to-suit industrial buildings in Valencia Commerce Center totaling 344,000 square feet; a 57,000-square-foot office building and the 50,000-square-foot Spectrum health club facility in Valencia Town Center; a 264-unit apartment complex and a neighborhood shopping center in Valencia NorthPark; a 51,000-square-foot retail/light industrial complex in Valencia Industrial Center; and an automotive service center which opened in April. The Company plans to start several additional income-producing projects in 1996 including land development for a 203-room full service hotel with a 20,000-square-foot conference center and an entertainment-related mixed use project both in Valencia Town Center. Financing Activities A 10-cent per unit quarterly distribution totaling $3.6 million was paid on March 11, 1996. 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, financial condition and prospects. The next quarterly distribution will be considered by the Board of Directors on May 15, 1996. At March 31, 1996, borrowings against a revolving mortgage facility and unsecured lines of credit totaled $27.9 million. This represents an $11.9 million increase from December 31,1995 primarily for costs associated with ten income-producing projects under development. 10 Part I. Financial Information 10. Item 2 - Management's Discussion and Analysis of Financial Condition and Results of Operations A total of 452,500 units were purchased or committed for $7.7 million during the first quarter of 1996 under a repurchase program of up to 1.5 million units which was approved by the Board of Directors in December, 1995. At March 31, 1996, a total of 145,000 of these units for $2.5 million had been paid and 307,500 units for $5.2 million remained to be paid. Part II. Other Information 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): 27 Financial Data Schedule (b) No report was filed on Form 8-K in the first quarter ended March 31, 1996 11 11. 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. 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: May 3, 1996 By / S / THOMAS L. LEE -------------------------------------------------------- Thomas L. Lee, Chairman and Chief Executive Officer of Newhall Management Corporation (Principal Executive Officer) Date: May 3, 1996 By / S / STUART R. MORK -------------------------------------------------------- Stuart R. Mork, Senior Vice President and Chief Financial Officer of Newhall Management Corporation (Principal Financial Officer) Date: May 3, 1996 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 3-MOS DEC-31-1996 MAR-31-1996 4,364 0 22,611 724 93,637 0 290,606 60,476 364,360 0 163,618 0 0 0 113,182 364,360 24,417 32,726 15,262 26,495 0 0 2,380 6,231 0 6,231 0 0 0 6,231 0.17 0.17
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