<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
_____________
FORM 10-Q
QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
____________
For the quarter ended September 30, 1996. Commission File Number 0-9231
ALASKA NORTHWEST PROPERTIES INC.
(Exact name of registrant as specified in its charter)
ALASKA 92-0035034
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
23830 PACIFIC HIGHWAY S., SUITE 300 #3, SEATTLE, WA 98032
(Address of principal executive offices)
Registrant's telephone number, including area code: (206) 433-0730
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
----- -----
The company had 29,668 common shares, par value $1.00, outstanding at September
30, 1996.
______________________________________________________________________________
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PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
Attached are the following Alaska Northwest Properties Inc.(ANPI) unaudited
financial statements: (1) Balance sheet as of September 30, 1996 and
December 31, 1995; (2) Statements of operations for the three months ended
September 30, 1996 and 1995; (3) Statements of operations for the nine
months ended September 30, 1996 and 1995; (4) Statements of shareholders'
equity for the nine months ended September 30, 1996; and (5) Statements of
cash flows for the nine months ended September 30, 1996 and 1995.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS.
FINANCIAL CONDITION
In the third quarter of 1996, the State of Alaska Department of
Transportation (DOT) began construction on a highway improvement project
adjacent to the Company's largest commercial property in Fairbanks, Alaska.
Eventually, this project should enhance the value of the Company's property
by allowing direct access from the highway. In the fourth quarter of 1995,
the DOT purchased a 14,000 square foot parcel from the Company for an
additional right-of-way.
During the second quarter, payments commenced under a mortgage reduction
agreement reached in the first quarter on a 9% note receivable, as discussed
below. To date, all payment have been received in a timely manner.
In the first quarter, the Company reached an agreement with a debtor on an
allocation of insurance proceeds totaling $337,667, received when one of
three apartment buildings, securing a 9% note receivable, was destroyed in a
fire in Fairbanks, Alaska. Under an agreement dated February 23, 1996, the
debtor applied $262,667 to the mortgage on the note receivable, while
retaining the remaining $75,000 for improvements to the remaining
collateral. In addition, the Company agreed to release the portion of the
collateral that was damaged to the debtor and reduce the related monthly
payment from $5,800 to $3,365. During 1995, the debtor received an initial
insurance disbursement of $50,000 and applied half of the proceeds to the
mortgage, as required by the Company. As a result of continued additional
investment on the part of the debtor, to whom the Company sold the property
in 1993, the Company recognized the remaining deferred gain of $260,731,
under the full accrual method of accounting for real estate sales in
accordance with FAS 66. Also in the first quarter, the Company decided that
it was not in its best interest to disburse dividends in 1996.
RESULTS OF OPERATIONS
For the quarter ended September 30, 1996, a net loss of $63,000 was
recognized by the Company, as compared to a net loss of $96,000 for the same
period in 1995. There were no real estate sales in the third quarter of
1996 and 1995, respectively.
1
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For the three months ended September 30, 1996, total revenues increased
approximately $34,000 from same period of the previous year, primarily due
to an increase in interest income from notes and securities. Cost and
Expenses for the quarter ended September 30, 1996, including interest
expense, remained relatively consistent compared with the same quarter in
1995. A slight difference of $9,000 reflects a decrease in depreciation and
personnel expenses.
LIQUIDITY AND CAPITAL RESOURCES
Management anticipates that the current level of available liquidity is
adequate to satisfy its known future working capital and capital expenditure
requirements. The Company has no commitments other than normal operating
costs which would require the use of capital resources. The Company met its
liquidity requirements from investing, financing, and operating activities
as of September 30, 1996, as outlined below:
OPERATIONS: As presented in more detail in the accompanying statement of
cash flows, approximated cash used in operating activities was $68,000. The
Company has incurred a net loss of $128,000 in 1996, which included non-cash
charges for depreciation of $74,000, realized and unrealized investment
losses of $235,000 and non-cash gain recognition on real estate sales of
$260,000.
INVESTING: Net cash provided by investing activities have totaled $39,000.
Cash was paid from the purchase and sale of other assets in the amount of
$100,000, which includes the net difference in the purchase and sale of
futures and futures options contracts. Other uses of investment cash
include $146,000 from the purchase of Government Securities, net of
maturities.
PART II. OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
(a) No exhibits have been filed herewith.
(b) No Form 8-K reports were filed during the third quarter of 1996.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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.
ALASKA NORTHWEST PROPERTIES INC.
(REGISTRANT)
Date: November 12, 1996 /s/ Michael W. Shimasaki
-------------------------------------
Michael W. Shimasaki
President and Treasurer, Director and
Principal Financial Officer
2
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ALASKA NORTHWEST PROPERTIES INC.
BALANCE SHEETS (UNAUDITED)
(amounts in thousands except # of shares)
ASSETS 9/30/96 12/31/95
- --------------------------------------------------------------------------
OPERATING PROPERTY AND EQUIPMENT, at cost:
Land and land improvements $ 393 $ 393
Buildings 1,318 1,318
Furniture, fixtures and equipment 234 195
Leasehold costs and other 218 218
------- -------
2,163 2,124
Less accumulated depreciation and amortization (1,365) (1,311)
------- -------
798 813
LAND HELD FOR INVESTMENT, at cost
(net of accumulated depreciation of $543
and $523, respectively) 6,995 7,015
NOTES RECEIVABLE (net of deferred
gain of $0 and $247, respectively) 1,292 1,368
CASH AND CASH EQUIVALENTS 183 148
RESTRICTED CASH 130 88
U.S. GOVERNMENT SECURITIES, at cost 364 218
OTHER ASSETS 100 104
------- -------
TOTAL ASSETS $ 9,862 $ 9,754
------- -------
------- -------
LIABILITIES AND SHAREHOLDERS' EQUITY
- ----------------------------------------------------------------------------
NOTES PAYABLE 66 112
ACCOUNTS PAYABLE AND ACCRUED LIABILITIES 94 58
LIABILITY FOR UNSETTLED FUTURES AND
OPTIONS CONTRACTS 338 203
------ ------
TOTAL LIABILITIES 498 373
SHAREHOLDERS' EQUITY:
Common stock $1.00 par value, authorized
50,000 shares, issued 47,641 476 476
Capital in excess of par value 14,756 14,756
Treasury stock, at cost
(1996 - 17,973; 1995 - 18,554 shares) (4,895) (5,005)
Retained deficit (973) (846)
------- -------
TOTAL SHAREHOLDERS' EQUITY 9,364 9,381
------- -------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 9,862 $ 9,754
------- -------
------- -------
The accompanying notes are an integral part of these financial statements.
3
<PAGE>
ALASKA NORTHWEST PROPERTIES INC.
STATEMENTS OF OPERATIONS (UNAUDITED)
FOR THE THREE MONTHS ENDED SEPTEMBER 30, 1996 AND 1995
(amounts in thousands except # of shares and per share data)
1996 1995
------ ------
REVENUES
Interest Income $34 $18
Building and Land Rents 95 77
Other Income 1 1
------ -----
130 96
EXPENSES
Operating Expenses 83 91
General & Adminstrative Expenses 52 53
Interest Expense 1 1
----- -----
136 145
OTHER INCOME (EXPENSE)
Gain on sale of real estate 0 5
Gain (loss) on sale of investments 12 (117)
Increase (Decrease) in unrealized appreciation
(depreciation) on investments (69) 65
------ ------
(57) (47)
------ ------
NET LOSS $(63) $(96)
------ ------
------ ------
AVERAGE SHARES OUTSTANDING 29,379 29,088
------ ------
------ ------
NET LOSS PER COMMON SHARE: $(2.14) $(3.30)
------ ------
------ ------
The accompanying notes are an integral part of these financial statements.
4
<PAGE>
ALASKA NORTHWEST PROPERTIES INC.
STATEMENTS OF OPERATIONS (UNAUDITED)
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1996 AND 1995
(amounts in thousands except # of shares and per share data)
1996 1995
------ ------
REVENUES
Interest Income $86 $69
Building and Land Rents 191 183
Other Income 3 6
----- -----
280 258
EXPENSES
Operating Expenses 245 279
General & Adminstrative Expense 185 192
Interest Expense 3 4
----- -----
433 475
OTHER INCOME (EXPENSE)
Gain on sale of real estate 260 46
Loss on sale of investments (251) (115)
Increase (decrease) in unrealized appreciation
(depreciation) on investments 16 (92)
----- -----
25 (161)
----- -----
LOSS FROM OPERATIONS BEFORE INCOME TAXES (128) (378)
PROVISION FOR INCOME TAXES 0 0
----- -----
NET LOSS $(128) $(378)
----- -----
----- -----
AVERAGE SHARES OUTSTANDING 29,379 29,088
NET LOSS PER COMMON SHARE: $(4.36) $(13.00)
------ -------
------ -------
5
<PAGE>
ALASKA NORTHWEST PROPERTIES INC.
STATEMENTS OF SHAREHOLDERS' EQUITY (UNAUDITED)
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1996
Common Stock
----------------------------------
Capital in
$1.00 Par Excess of Treasury Retained
(amounts in thousands) Value Par Value Stock Deficit
- ---------------------- --------- --------- -------- -----------
BALANCES AT
DECEMBER 31, 1995 $476 $14,756 $(5,005) $(846)
Net loss (127)
Treasury shares:
Purchased (2)
Sold 112
----- ------- -------- -----
BALANCES AT
SEPTEMBER 30, 1996 $476 $14,756 $(4,895) $(973)
----- ------- -------- -----
----- ------- -------- -----
The accompanying notes are an integral part of these financial statements.
6
<PAGE>
ALASKA NORTHWEST PROPERTIES INC.
STATEMENTS OF CASH FLOWS (UNAUDITED)
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1996 AND 1995
(amounts in thousands)
Net increase (decrease)
in cash
1996 1995
------ ------
Cash flows from operating activites:
Net loss $(128) $(378)
Adjustments to reconcile net loss to cash
used in operating activities:
Depreciation and amortization 74 108
Gain on sale of real estate (260) (46)
Loss on sale of investments 251 115
Increase (decrease) in unrealized depreciation
(appreciation) on investments (16) 92
Increase in accounts payable 36 12
Other (25) 30
----- -----
Net cash used in operating activites $(68) $(67)
----- -----
Cash flows from investing activities:
Proceeds from disposal of assets 0 15
Collection of notes receivable 323 86
Maturing U.S. Government securities 315 316
Acquisition of U.S. Government securities (461) (363)
Addition to property and equipment (38) (44)
Sale of land held for investment 0 36
(Purchase) Sale of other assets (100) 45
----- -----
Net cash provided by investing activities $39 $91
----- -----
Cash flows from financing activities:
Treasury stock sales and purchases 109 42
Decrease in long term debt (45) (36)
Unclaimed dividends 0 2
----- -----
Net cash provided by financing activities $64 $8
----- -----
Net increase in cash and cash equivalents 35 32
Cash and cash equivalents:
Beginning of period 148 111
----- -----
End of period $183 $143
----- -----
----- -----
The accompanying notes are an integral part of these financial statements.
7
<PAGE>
ALASKA NORTHWEST PROPERTIES INC.
NOTES TO FINANCIAL STATEMENTS
1. The 1995 Annual Report on Form 10-K of the Company includes a summary of
significant accounting policies and should be read in conjunction with this
Form 10-Q. The financial statements presented herein include all
adjustments which are, in the opinion of management, necessary to present
fairly the operating results for the interim periods reported. The results
of operations for the three months ended September 30, 1996 and 1995, are
not necessarily indicative of the results of operations for the entire year.
The financial statements for the three months ended September 30, 1996 and
1995, are unaudited, condensed and do not contain all information required
by generally accepted accounting principles to be included in a full set of
annual financial statements. Certain reclassification's have been made to
prior year's financial statements to conform to the current format.
2. The Company reached an agreement with a debtor on an allocation of
insurance proceeds totaling $337,667, received when one of three apartment
buildings, securing a 9% note receivable, was destroyed in a fire in
Fairbanks, Alaska. The debtor received an initial insurance disbursement of
$50,000 and applied half of the proceeds to the mortgage, as required by the
Company, in an agreement dated September 8, 1995. Under the agreement dated
February 23, 1996, the debtor applied $262,667 to the mortgage on the note
receivable, while retaining the remaining $75,000 for improvements to the
remaining collateral. As a result of continued additional investment on the
part of the debtor, to whom the Company sold the property in 1993, the
Company recognized a real estate gain of $260,731, including $13,290 in
deferred interest income in the first quarter, under the full accrual method
of accounting for real estate sales in accordance with FAS 66. During the
second quarter, payments commenced under a mortgage reduction agreement and
have been received in a timely manner.
3. The Company's futures and futures options contracts are relatively
short-term, generally 6 months to less than 2 years. At September 30, 1996,
notional (or contract) amounts of unsettled futures and futures options
contracts approximated $900,000 and $700,000, relating to precious metals
and stock index derivatives, respectively. The notional amounts do not
represent amounts exchanged, and thus, are not a measure of the Company's
exposure through its use of such financial instruments. The Company
realized a gain of approximately $12,000 from the termination of futures and
futures options contracts for the third quarter of 1996, compared to a
realized loss of approximately $117,000 for the same period in 1995. At
September 30, 1996, an increase in the unrealized appreciation on
investments, primarily futures and futures options, was approximately
$16,000, compared to an increase in the unrealized depreciation of
approximately $92,000 at September 30, 1995. The liability for unsettled
futures and options contracts approximated $338,000 and $203,000 at
September 30, 1996, and December 31, 1995, respectively.
4. Earnings per share are computed using the weighted-average number of
common shares outstanding.
8
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<PAGE>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JUL-01-1996
<PERIOD-END> SEP-30-1996
<CASH> 182,893
<SECURITIES> 52,554
<RECEIVABLES> 1,314,334
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 0
<DEPRECIATION> 1,364,975
<TOTAL-ASSETS> 9,862,000
<CURRENT-LIABILITIES> 498,000
<BONDS> 0
0
0
<COMMON> 476,409
<OTHER-SE> 8,888,000
<TOTAL-LIABILITY-AND-EQUITY> 9,862,000
<SALES> 0
<TOTAL-REVENUES> 280,000
<CGS> 0
<TOTAL-COSTS> 430,000
<OTHER-EXPENSES> 25,000
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1,000
<INCOME-PRETAX> (128,000)
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (128,000)
<EPS-PRIMARY> (4.36)
<EPS-DILUTED> 0
</TABLE>
