SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D. C. 20549
FORM 10-K ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended: December 31, 1995
Commission file number: 0-305
Name of registrant: NATIONAL PROPERTIES CORPORATION
I.R.S. Employer Identification Number: 42-0860581
Address: 4500 Merle Hay Road, Des Moines, Iowa 50310
telephone number: (515) 278-1132
Securities registered pursuant to Section 12(g) of the Act:
Common Stock, Par Value $1.00 (Title of Class)
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 _____
State the aggregate market value of the voting stock held by non-affiliates
of the Registrant. The aggregate market value shall be computed by the
reference to the price at which the stock was sold, or the average bid and
asked prices of such stock as of a specified date within 60 days prior to
the date of filing.
$3,423,420 as of March 1, 1996
Indicate the number of shares outstanding of each of the issuer's classes of
common stock as of the latest practicable date.
Common Stock, Par Value $1.00 - March 1, 1996 - 455,335 Shares
DOCUMENTS INCORPORATED BY REFERENCE
Proxy Statement for the 1996 annual meeting of Stockholders See Part III
PART I
Item 1. Business
(a) General Development of Business. The Registrant,
organized under the Iowa Business Corporation Act, is engaged
principally in the development of commercial real estate for
lease to tenants under net lease arrangements. The Registrant
also derives revenues from its portfolio of investment
securities.
On June 21, 1995, approximately 2 acres of real estate owned by the Registrant
in Ankeny, Iowa, was sold for $458,512, net of selling expenses and on June 30,
1995, a convenience store building located in Clive, Iowa, was acquired in a
qualified IRC Section 1031 Exchange for $730,814. The cash balance of $272,302
to complete the exchange was drawn on the Registrant's short-term line of
credit.
On November 9, 1995, approximately 1.5 acres of the Ankeny, Iowa, real estate
was sold for $321,920, net of selling expenses, and on December 28, 1995, land
and a restaurant building adjoining an existing company owned convenience store
in Herculaneum, Missouri was acquired in a qualified IRC section 1031 Exchange
for #386,600. The cash balance of $64,680 to complete the exchange was drawn
on the Registrant's short-term line of credit.
(b) Financial Information About Industry Segments. The
Registrant operates in a single industry segment.
(c) Narrative Description of Business.
Real Estate Held For Investment
The Registrant seeks to acquire or develop improved real estate
properties suitable for lease to commercial tenants. It is the
Registrant's policy to invest in properties which are fully leased to a
single tenant which is responsible for payment of real estate taxes,
insurance, utilities and repairs. Under such circumstances, the
Registrant has limited management responsibilities for such properties
once they are constructed and leased. In most cases properties are
constructed by the tenant and conveyed to the Registrant under a sale
and leaseback arrangement. It is not the policy of the Registrant to
invest in multiple tenant office buildings or residential facilities.
Primary factors considered by the Registrant in developing a property
for lease are the use to be made of the property, its location, the
nature and credit standing of the tenant, the rental income to be
derived under the lease, and the ability of the Registrant to utilize
the property or dispose of it upon termination of the lease.
All of the investment properties now owned by the Registrant are located
in Arizona, Georgia, Iowa, Kansas, Missouri, Nebraska, Oklahoma, and
Texas. The Registrant has placed no limitations, however, on the
locations in which it is willing to develop properties in the future.
The commercial real estate acquired by the Registrant is normally
purchased with funds drawn on the Registrants lines of credit. In most
cases, the Registrant gives careful consideration to the rate of return
which it will receive from an investment based on the original cost
thereof to the Registrant without regard to possible mortgage financing.
While the rate of return varies, it has ranged generally from 10% to
13%.
Real estate investments acquired or developed by the Registrant are not
held for resale, but are held as long-term investments. The Registrant
may, however, dispose of properties depending upon the circumstances
then existing.
Virtually all of the Registrant's development activity is handled by its
President, including lease negotiations, site acquisitions, construction
activities, and financing.
The real estate investment activity engaged in by the Registrant is
highly competitive, with numerous investors seeking to develop
properties for lease to qualified tenants. These competitors include
numerous major national financial institutions with resources and
abilities to attract tenants which are far greater than those of the
Registrant; as well as many other types of full-time and part-time real
estate investors.
At December 31, 1995, the Registrant owned 38 leased properties having
an aggregate cost of $24,461,983. The rental income for 1995 on these
leased properties amounted to $3,094,050. Seven of the properties are
leased to two restaurant operators and account for 20.5% of rental
income; four telephone service center buildings and one Goodyear Tire
Service Center building account for 10.6% of rental income; sixteen
QuikTrip Convenience stores and one related office building account for
47.0% of rental income; three nurseries (garden centers) account for
15.3% and three 7-Eleven Convenience stores, one motel land lease and
three office buildings account for the balance of 6.6%. In addition to
the foregoing, other properties, held for future development, generated
rental income of $45,928 in 1995.
The tenants of all 38 leased properties are currently in compliance with
the terms of their respective leases. However, Sunbelt Nursery Group,
Inc., which operates approximately 98 retail nurseries (Garden Centers),
including three owned by the Registrant, has reported losses aggregating
approximately $13 million for the two years ended January 31, 1995, and
is expected to report a loss for the year ended January 31, 1996. The
three stores owned by the Registrant generate annual rental income of
approximately $455,000 of which $78,000 on one of the nursery properties
is guaranteed by a third party. During the past two years, Sunbelt has
taken significant steps to restore profitability. However, in the event
Sunbelt determines that a Chapter 11 Reorganization is necessary, the
Registrant may incur a substantial reduction in future lease rental
income.
Other Investments
The Registrant has a portion of its assets invested in marketable
securities which had a market value of $1,537,475 as of December 31,
1995.
Employees
The Registrant currently employs 6 persons; 4 full-time employees and
2 part-time employees.
<TABLE>
<CAPTION>
Item 2 - Part 1
Properties (Dec. 31, 1995) Land Bldgs. & Accumulated Rental Lease Renewal Mortgage Int.
Cost Improve. Depreciation Income 1994 Expires Options Balance Rate
--------- ---------- ------------ ----------- ------- -------- ---------- ------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
A. DAYS INN-LAND LEASE Newton, Ia. 82,500 - - 23,408 2006 4-10 Yr. -
--------- ---------- ------------ ----------- ----------
B. RESTAURANT PROPERTIES
Perkins 'Cake & Steak Des Moines, Ia. 137,000 343,365 262,102 60,695 1996 2-5 Yr. 50,261 9-1/2
Perkins 'Cake & Steak Des Moines, Ia. 140,000 341,602 259,617 76,108 1997 2-5 Yr. 53,173 9-1/2
Perkins 'Cake & Steak Des Moines, Ia. 200,000 373,193 337,428 71,893 1997 2-5 Yr. 98,266 9-1/2
Perkins 'Cake & Steak Newton, Ia. 112,500 485,181 388,145 84,424 1999 2-5 Yr. -
Perkins 'Cake & Steak Des Moines, Ia. 243,166 498,675 398,940 105,192 2000 2-5 Yr. -
Carl's Jr. Restaurant a Chandler, AZ. 168,000 772,000 501,800 114,778 2005 3-5 Yr. -
Carl's Jr. Restaurant a Tucson, AZ. 90,000 738,000 396,307 122,218 2005 6-5 Yr. -
--------- ---------- ------------ ----------- ----------
Total 1,090,666 3,552,016 2,544,339 635,308 201,700
--------- ---------- ------------ ----------- ----------
C. SERVICE CENTERS
Northwestern Bell Decorah, Ia. 20,000 191,102 120,394 22,966 1999 1-5 Yr. -
Northwestern Bell Cedar Rapids, Ia. 37,000 397,394 225,196 46,620 1996 2-5 Yr. 31,885 7-1/2
Continental Tel. Co. Chariton, Ia. 8,364 541,755 343,112 70,641 2000 - ) -
Continental Tel. Co. Fayette, Ia. 6,322 428,685 271,501 56,190 2000 - ) 430,879 10
Goodyear Service Ctr. Wichita, KS. 100,000 978,725 203,281 132,000 2004 4-5 Yr. -
--------- ---------- ------------ ----------- ----------
Total 171,686 2,537,661 1,163,484 328,417 462,764
--------- ---------- ------------ ----------- ----------
D. CONVENIENCE STORES
QuikTrip a Des Moines, Ia. 144,664 691,878 201,863 108,634 2010 2-5 Yr. -
QuikTrip & Off. Bldg. Des Moines, Ia. 215,000 672,000 432,320 97,722 1999 2-5 Yr. 243,363 10-
1/2
QuikTrip Des Moines, Ia. 50,000 185,000 142,604 39,430 2000 2-5 Yr. -
QuikTrip Des Moines, Ia. 60,000 200,000 177,778 44,057 2002 1-5 Yr. -
QuikTrip Des Moines, Ia. 50,240 265,360 199,020 43,305 2004 2-5 Yr. -
QuikTrip Wichita, KS. 53,500 436,637 79,757 58,081 2009 4-5 Yr. -
QuikTrip Norcross, Ga. 103,000 765,000 130,231 102,858 2014 4-5 Yr. -
QuikTrip Wichita, KS. 60,000 514,000 90,438 67,445 2010 4-5 Yr. -
QuikTrip Tulsa, OK. 155,000 1,340,000 228,671 175,662 2010 4-5 Yr. -
QuikTrip a Des Moines, Ia. 84,500 557,500 88,123 75,435 2010 4-5 Yr. -
QuikTrip a Johnston, Ia. 48,502 476,160 52,282 73,574 2012 4-5 Yr. -
QuikTrip a St. Louis, Mo. 152,000 1,575,433 179,016 186,844 2012 4-5 Yr. -
QuikTrip a Des Moines, Ia. 183,095 900,000 65,484 108,183 2013 4-5 Yr. -
QuikTrip Norcross, Ga. 92,500 834,000 36,554 92,650 2009 4-5 Yr. -
QuikTrip Norcross, Ga. 95,500 858,000 37,598 95,350 2009 4-5 Yr. -
QuikTrip Clive, Ia. 325,605 393,814 5,478 86,237 2015 4-5 Yr -
7-Eleven Des Moines, Ia. 96,455 137,954 114,387 35,875 1999 1-5 Yr. -
7-Eleven Lincoln, NE. 104,990 78,888 65,082 30,838 1999 1-5 Yr. -
7-Eleven Omaha, NE. 80,000 128,574 109,824 29,608 1998 1-5 Yr. -
--------- ---------- ------------ ----------- ----------
Total 2,154,551 11,010,198 2,436,510 1,551,788 243,363
--------- ---------- ------------ ----------- ----------
E. OFFICE BUILDINGS
Associates Financial
Serv. Des Moines, Ia. 61,692 55,812 37,812 13,800 1997 1-3 Yr. -
Corporate Headquarters b Des Moines, Ia. 25,000 418,222 310,949 33,962 1996 1-5 Yr. -
GTech Des Moines, Ia. 16,000 174,953 120,062 33,552 2001 1-2 Yr. -
--------- ---------- ------------ ----------- ----------
Total 102,692 648,987 468,823 81,314 -
--------- ---------- ------------ ----------- ----------
F. GARDEN CENTERS
Wolfe Nursery a Dallas, TX. 125,000 586,825 459,680 96,831 1999 3-5 Yr. -
Tip-Top Nursery a Glendale, AZ. 66,144 433,057 120,879 158,484 2002 3-5 Yr. -
Wolfe Nursery a Arlington, TX. 200,000 1,700,000 146,183 218,500 2010 3-5 Yr. -
--------- ---------- ------------ ----------- ----------
Total 391,144 2,719,882 726,742 473,815 -
--------- ---------- ------------ ----------- ----------
G. OTHER PROPERTIES 252,386 103,751 92,142 45,928 -
--------- ---------- ------------ ----------- ----------
Totals 4,245,625 20,572,495 7,432,040 3,139,978 907,827
========= ========== ============ =========== ==========
</TABLE>
a Mortgaged to Lender - See Note 4 of Notes to Financial Statements.
b 50% Used by Registrant; 50% Leased
Employees
The Registrant currently employs 6 persons; 4 full-time
employees and 2 part-time employees.
Other Properties
The following unencumbered properties are held for future
development by the Registrant.
(1) Real Estate, S. E. Delaware and Oralabor Road, Ankeny, Iowa.
This commercially zoned property is located in Ankeny, Iowa, at the
Industrial Exit of Interstate 35. It contains approximately 33 acres
and has a cost of $213,586.
(2) Real Estate, Interstate 80 & Highway 14, Newton, Iowa.
This is a 4-acre undeveloped site adjoining the Perkins Restaurant and
Days Inn Motel.
(3) Real Estate, 4700 - 2nd Avenue, Des Moines, Iowa.
This site contains approximately 106,000 square feet of land and a 3,200
square foot concrete block building. The building is leased as a lounge
for $2,075 per month, and the lease expires December 31, 1998.
Approximately 82,000 square feet of unused land is available for
development. Total cost of the land and improvements is $52,330.
(4) Real Estate, 845 Sixth Avenue, Des Moines, Iowa
This 6,000 square foot concrete block building situated on a lot of the
same size was purchased for $75,000 in 1974. This building is rented
for $1,500 per month, and the lease expires April 30, 1996.
Item 3. Legal Proceedings.
The Registrant is not engaged in any material legal proceedings.
Item 4. Submission of Matters to a Vote of Security Holders.
NOT APPLICABLE
PART II
Item 5. Market for the Registrant's Common Stock and Related
Security Holder Matters
The Common Stock of the Registrant (symbol NAPE) is traded on
the over-the-counter bulletin board; a product of the National
Association of Security Dealers, Inc., sponsored by market
makers. Quotations are inter-dealer prices, without retail
mark-up, or mark-down, or commission and may not necessarily
represent actual transactions. The prices shown below are by
calendar quarters for 1995 and 1994. N/A indicates prices were
not available.
<TABLE>
<CAPTION>
Bid Asked
1995 High Low High Low
<S> <C> <C> <C> <C>
1st Quarter 22-1/2 21 N/A N/A
2nd Quarter 21 21 N/A N/A
3rd Quarter 22-3/4 20 N/A 25
4th Quarter 24 20 N/A 27
<CAPTION>
Bid Asked
1994 High Low High Low
<S> <C> <C> <C> <C>
1st Quarter 21-1/4 21 22-1/4 22-1/4
2nd Quarter 22-1/4 21-1/4 24-1/2 22-1/4
3rd Quarter 22-1/4 22 24-3/4 24-1/4
4th Quarter 22-1/2 22-1/4 24-3/4 24-1/4
</TABLE>
No dividend was paid in 1995. A cash dividend of 18 cents per share was
paid in 1994. Future dividend declarations will be dependent upon the
earnings of the Registrant, its financial condition, its capital
requirements and general business conditions.
There were 882 stockholders of record as of March 1, 1996.
<TABLE>
<CAPTION>
Item 6. Selected Financial Data. (In thousands except for per
share amounts)
Year ended December 31,
1995 1994 1993 1992 1991
<S> <C> <C> <C> <C> <C>
Year ended December 31,
Lease rental income 3,140 3,016 2,766 2,477 2,269
Interest income 3 8 2 3 5
Dividend income 89 107 114 122 123
Gain on sale of
securities 103 104 1 22 41
Net income 903 905 792 733 596
At December 31,
Total assets 19,118 19,600 17,412 15,031 13,752
Long-term debt 5,148 6,758 6,220 4,409 4,150
Book value-properties &
equipment 17,394 17,682 16,352 13,996 12,532
Net Unrealized Gain
Marketable Securities 605 462 - - -
Stockholders' equity 12,070 11,142 10,025 9,463 9,012
Per Common Share
Net income* 1.97 1.96 1.68 1.52 1.21
Cash dividends 0.00 0.18 0.17 0.16 0.15
Book value 26.49 24.15 21.38 19.86 18.46
</TABLE>
*Based on weighted average shares outstanding
Item 7. Management's Discussion and Analysis of Financial
Condition and Results of Operations.
Liquidity and Capital Resources
At December 31, 1995, the Registrant's primary source of
liquidity was $123,831 in cash; marketable securities with a
market value of approximately $1,537,000; and a $4,895,000
remaining loan balance available on three lines of credit with
two local banks. (See Note 4 of the Notes to Financial
Statements). In addition, the Registrant owns unencumbered real
estate having an aggregate cost of approximately $11,000,000. Management
believes that its cash flow from operations and other potential
sources of cash, will be sufficient to finance current and
projected operations.
Each year for many years the Registrant has reacquired a limited
amount of its common stock. During the three years ended
December 31, 1995, 20,872 shares were repurchased in the open
market and negotiated transactions. The total cost of the
reacquired shares amounted to $433,986; an average per share
cost of $20.79.
Results of Operations 1995 Compared to 1994
As detailed on the Income Statement total income for the year 1995 was
approximately $100,000 more than in 1994. The increase in rental income
of approximately $124,000 was due to property acquisitions in 1994 and
1995 that produced additional rental income of approximately $154,000.
($377,000 in 1995 versus $223,000 in 1994). In addition, contingent
rentals based on sales overages increased approximately $10,000 in 1995.
These increases were offset by a reduction of approximately $43,000 in
rental income due to the sale of two properties; one in 1994 and one in
1995.
Total expenses increased approximately $89,000 in 1995 primarily due to
increased depreciation, interest and payroll costs aggregating
approximately $81,000.
The effective income tax rate was 36.4% in 1995 as compared to 35.7% in
1994.
Results of Operations 1994 Compared to 1993
Total revenues for 1994 amounted to $3,234,600 an increase of
approximately $352,000 over 1993. Lease rental income increased
$250,000 primarily due to the acquisition of two convenience
stores in Norcross, Georgia, in April 1994, which generated
$132,000 in rental income. In addition, a nursery (garden
center) property purchased in April 1993, and a convenience
store purchased in September 1993, provided additional rental
income of approximately $120,000 for the full year 1994 versus
partial year rentals received in 1993. The balance of the 1994
increase in revenue is due to an increase of approximately
$103,000 in gains on the sale of securities.
The increase in depreciation and interest expense aggregating
approximately $193,000 is directly related to property
acquisitions. In addition, the prime rate of interest on
borrowings increased in five intervals, from 6.0% to 8.5% during
1994. The decrease in other expenses of approximately $21,000
is primarily due to a reduction in professional fees and a
reduction in repair and maintenance costs of approximately
$8,000 and $10,000 respectively.
The effective income tax rate was 35.7% in both years.
Item 8. Financial Statements and Supplementary Data.
Financial statements filed herewith:
Balance Sheets as of December 31, 1995 and December 31, 1994.
Statements of Income and Stockholders' Equity for the years ended
December 31, 1995, December 31, 1994 and December 31, 1993.
Statements of Cash Flows for the years ended December 31, 1995,
December 31, 1994 and December 31, 1993.
Notes to Financial Statements.
Accountant's Report.
Item 9. Disagreements on Accounting and Financial Disclosures.
NONE
PART III
In answer to Items 10, 11, 12 and 13 of Part III, the Registrant
incorporates by reference the required information which is
contained in its definitive Proxy Statement. The Proxy
Statement is for the 1996 annual meeting of stockholders and
will be filed with the Commission not later than 120 days after
December 31, 1995.
PART IV
Item 14. Exhibits, Financial Statement Schedules, and Reports
on Form 8-K.
(a) List the following documents filed as part of this report.
1. All financial statements.
See Item 8 of Part II.
2. Financial statement schedules.
Schedule 1 as of December 31, 1995.
Schedules V and VI as of December 31, 1995, December 31, 1994 and
December 31, 1993.
Schedule IX as of December 31, 1995, December 31, 1994 and December
31, 1993.
Schedule X as of December 31, 1995, December 31, 1994 and December
31, 1993.
All other Schedules are omitted because they are inapplicable or
not required.
(b) No report on Form 8-K was filed during the last quarter of 1995.
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.
___NATIONAL PROPERTIES CORPORATION___ (Registrant)
Date __3/15/96__ By _____/S/__Raymond_Di_Paglia_________
Raymond Di Paglia, President and Chief
Executive Officer
Date __3/15/96__ By _____/S/__Robert_W._Guely__________
Robert W. Guely, Vice President
and Controller
Pursuant to the requirements of the Securities Exchange Act of
1934, this report has been signed below by the following persons
on behalf of the Registrant and in the capacities and on the
dates indicated.
DIRECTORS OF THE REGISTRANT
Date __3/15/96__ By _____/S/__William_D._Buzard________
William D. Buzard
Date __3/15/96__ By _____/S/__Robert_E._Combs__________
Robert E. Combs
Date __3/15/96__ By _____/S/__Raymond_Di_Paglia________
Raymond Di Paglia
Date __3/15/96__ By _____/S/__Kristine_M._Fasano_______
Kristine M. Fasano
Date __3/15/96__ By _____/S/__Robert_H._Jamerson_______
Robert H. Jamerson
<TABLE>
<CAPTION>
NATIONAL PROPERTIES CORPORATION BALANCE SHEETS
December 31,
1995 1994
<S> <C> <C>
ASSETS
CURRENT ASSETS
Cash 123,831 238,660
Mortgage loans receivable 3,304 7,222
Accounts receivable 17,734 17,894
Other 6,767 6,747
---------- ----------
Total current assets 151,636 270,523
---------- ----------
PROPERTY AND EQUIPMENT, AT COST - Notes 1 and 5
Land 4,245,625 4,289,975
Buildings and improvements 20,572,495 20,105,570
Furniture and equipment 63,512 51,481
---------- ----------
24,881,632 24,447,026
Less-accumulated depreciation 7,487,308 6,765,175
---------- ----------
Property and equipment-net 17,394,324 17,681,851
---------- ----------
OTHER ASSETS
Marketable securities-Note 3
(1995 at market; cost $596,563)
(1994 at market; cost $883,571) 1,537,475 1,601,650
Long-term portion - mortgage loans - 4,795
Deferred charges and other assets 34,160 40,780
---------- ----------
Total other assets 1,571,635 1,647,225
---------- ----------
19,117,595 19,599,599
========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable 19,022 7,211
Notes payable - Note 4 800,000 425,000
Accrued liabilities 176,064 329,149
Current maturities of long-term debt 564,704 612,392
Federal and state income taxes 3,333 69,062
---------- ----------
Total current liabilities 1,563,123 1,442,814
---------- ----------
LONG-TERM DEBT - Notes 4 & 5 5,148,123 6,758,075
---------- ----------
DEFERRED INCOME TAXES 335,906 256,500
---------- ----------
STOCKHOLDERS' EQUITY
Common stock - $1 par value
Authorized - 5,000,000 shares
Issued - (1995-455,655 shares; 1994-461,313 shares) 455,655 461,313
Retained earnings 11,009,782 10,219,318
Net unrealized gain on marketable securities 605,006 461,579
---------- ----------
Total stockholders' equity 12,070,443 11,142,210
---------- ----------
19,117,595 19,599,599
========== ==========
</TABLE>
<TABLE>
<CAPTION>
NATIONAL PROPERTIES CORPORATION
STATEMENTS OF INCOME AND STOCKHOLDERS' EQUITY
For the years ended December 31, 1995, 1994 and 1993
STATEMENTS OF INCOME 1995 1994 1993
<S> <C> <C> <C>
REVENUES
Lease rental income 3,139,978 3,015,945 2,765,933
Interest income 2,975 8,463 1,714
Dividend income 89,168 106,518 113,668
Gain on sale of securities 102,823 103,674 920
---------- ---------- ----------
Total revenues 3,334,944 3,234,600 2,882,235
---------- ---------- ----------
EXPENSES
Salaries and wages 269,964 246,773 244,722
Depreciation 767,455 751,419 693,987
Property, payroll and misc. taxes 57,586 55,896 53,791
Interest 638,821 597,172 461,302
Other 181,603 174,894 195,999
---------- ---------- ----------
Total expenses 1,915,429 1,826,154 1,649,801
---------- ---------- ----------
Income before taxes 1,419,515 1,408,446 1,232,434
FEDERAL AND STATE INCOME TAXES-Note 2 516,822 503,240 440,316
---------- ---------- ----------
Net income 902,693 905,206 792,118
========== ========== ==========
Net income per share 1.97 1.96 1.68
Average common shares outstanding 457,720 462,946 470,712
</TABLE>
<TABLE>
<CAPTION>
STATEMENTS OF STOCKHOLDERS' EQUITY Capital in
Common Excess of Retained
Stock Par Value Earnings
---------- ---------- ----------
<S> <C> <C> <C>
Balances December 31, 1992 476,527 36,324 8,950,500
Net income - 1993 - - 792,118
Purchase and retirement of common stock (7,579) (36,324) (106,138)
Cash dividend - 17 cents per share - - (80,338)
---------- ---------- ----------
Balances December 31, 1993 468,948 - 9,556,142
Net income - 1994 - 905,206
Purchase and retirement of common stock (7,635) - (158,423)
Cash dividend - 18 cents per share - - (83,607)
---------- ---------- ----------
Balances December 31, 1994 461,313 - 10,219,318
Net income - 1995 - - 902,693
Purchase and retirement of common stock (5,658) - (112,229)
---------- ---------- ----------
Balances December 31, 1995 455,655 - 11,009,782
========== ========== ==========
</TABLE>
<TABLE>
<CAPTION>
NATIONAL PROPERTIES CORPORATION
STATEMENTS OF CASH FLOWS
For the years ended December 31, 1995, 1994 and 1993
Increase(Decrease) in Cash
1995 1994 1993
---------- ---------- ----------
<S> <C> <C> <C>
CASH FLOW FROM OPERATING ACTIVITIES
Net income 902,693 905,206 792,118
Adjustments to reconcile net income to
net cash provided by operating
activities:
Depreciation and amortization 774,075 761,518 708,268
(Gain) loss on sale of securities (102,823) (103,674) (920)
Changes in assets and liabilities:
Accounts receivable 161 (4,546) 1,590
Prepaid expenses and deferred charges (20) (6,754) (12,436)
Accounts payable and accrued expenses (141,275) 40,945 82,142
Federal and state income taxes (65,729) 37,105 (48,105)
---------- ---------- ----------
Net cash provided by operations 1,367,082 1,629,800 1,522,657
---------- ---------- ----------
CASH FLOW FROM INVESTING ACTIVITIES
Additions to property and equipment (479,928) (2,081,563) (3,049,992)
Payments received on mortgage notes 8,713 12,808 13,351
Purchase of securities (128,962) (329,127) -
Proceeds - sale of securities 518,793 365,724 1,520
---------- ---------- ----------
Net cash used in
investing activities (81,384) (2,032,158) (3,035,121)
---------- ---------- ----------
CASH FLOW FROM FINANCING ACTIVITIES
Principal payments on long-term debt (262,640) (238,701) (215,391)
Dividends paid - (83,607) (80,338)
Purchase of treasury stock (117,887) (166,058) (150,041)
Net borrowings (payments) on
credit lines (1,020,000) 975,000 2,000,000
---------- ---------- ----------
Net cash provided by (used) in
financing activities (1,400,527 486,634 1,554,230
---------- ---------- ----------
Net increase (decrease) in cash (114,829) 84,276 41,766
Cash at beginning of year 238,660 154,384 112,618
---------- ---------- ----------
Cash at the end of year 123,831 238,660 154,384
========== ========== ==========
SUPPLEMENTAL CASH FLOW INFORMATION
Cash paid during the year for:
Interest expense 657,366 591,351 426, 612
Income tax payments 582,551 466,135 488, 421
NON-CASH INVESTING TRANSACTIONS
Exchange of like kind real restate:
Basis of property received 535,247 325,605 -
Less cash paid 335,247 56,449 -
Basis of property given up ---------- ---------- ---------
200,000 269,156 -
========== ========== =========
</TABLE>
NOTES TO FINANCIAL STATEMENTS
SUMMARY OF ACCOUNTING POLICIES
Marketable Securities: Marketable securities as of December 31,
1995, are classified as available-for-sale and reported at fair
market value in accordance with the Statement of Financial
Accounting Standards (SFAS) No. 115. The Registrant's
investments are held for an indefinite period and prior to December 31,
1994, were reported at the lower of aggregate cost or market.
Property and Equipment: Property and equipment are recorded at
cost and depreciated on a straight-line basis over the estimated
useful lives of 15 to 39 years for buildings and 5 to 7 years
for equipment.
Net Earnings Per Common Share: Net earnings per share are based
on the weighted average number of shares outstanding 457,720 in
1995; 462,946 in 1994 and 470,712 in 1993.
Profit-Sharing Plan: The Registrant has a profit sharing plan adopted in 1965,
for eligible employees, under which it contributes a portion of its annual
earnings. The plan and all of its amendments have been approved by the
Internal Revenue Service. The Registrant's contribution to the plan was
$39,142 in 1995; $33,875 in 1994 and $34,491 in 1993.
Lease Rentals - Commercial Real Estate: Lease rentals received
on commercial real estate are accounted for under the operating
method; rentals are included in income as earned over the term
of the lease.
Estimates: The preparation of the financial statements in conformity with
generally accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could vary from the estimates that were used.
NOTE 1 - PROPERTIES UNDER LEASE
The Registrant is the lessor of commercial real estate under
non cancelable operating leases requiring fixed and contingent
rentals through the year 2017. Contingent rentals based on
sales overages amounted to $54,701 in 1995; $44,251 in 1994 and
$44,208 in 1993. The following is a schedule of future minimum
rentals at December 31, 1995, not including renewal options and
contingent rentals.
<TABLE>
<CAPTION>
Year ended December 31, Amount
<S> <C>
1996 3,126,475
1997 2,951,262
1998 2,900,131
1999 2,763,568
2000 2,322,420
Subsequent years 20,863,330
-----------
Aggregate future minimum rentals 34,927,186
==========
</TABLE>
NOTE 2 - INCOME TAXES
<TABLE>
Computation of Federal and State income taxes charged to income
are as follows:
<CAPTION>
<S> <C> <C> <C>
1995 1994 1993
---------- ---------- ----------
Income before income taxes 1,419,515 1,408,446 1,232,434
Miscellaneous 1,041 1.082 468
State income taxes net of
Federal tax benefit (83,416) (74,776) (73,004)
---------- ---------- ----------
Federal taxable income 1,337,140 1,334,752 1,159,898
========== ========== ==========
Federal tax at statutory rate 454,628 453,815 394,365
Tax saving on dividend income (21,222) (25,351) (27,053)
State income taxes 83,416 74,776 73,004
---------- ---------- ----------
Total tax provision 516,822 503,240 $ 440,316
========== ========== ==========
</TABLE>
Federal and State income taxes are based on book income for each year.
NOTE 3 - MARKETABLE SECURITIES
As of December 31, 1995, marketable securities available-for-sale
had an aggregate market value of $1,537,475, and a cost of
$596,563. Gross unrealized gains amounted to $945,596 and gross
unrealized losses amounted to $4,684. The unrealized holding
gains, net of related income taxes, added $605,006 to
shareholders equity at December 31, 1995. Gross realized gains
and losses included in the determination of income for 1995
amounted to $124,730 and $21,907 respectively. Realized gains
included in the determination of income for 1994 and 1993 was
$103,674 and $920 respectively. Gain or loss on sales was based on the
cost of the securities using the specific identification method.
NOTE 4 - NOTES PAYABLE - BANKS
In April, 1995, the Registrant's $3,000,000 unsecured working
capital line of credit with Norwest Bank Iowa, N.A. (Bank) was
renewed. The credit line which has been in effect for the past
several years was created to facilitate the Registrant's real
estate acquisitions. Borrowings will bear interest at the bank's
base (Prime) rate floating. No compensating balance is required
but a non-usage fee of 1/8 of 1% is payable quarterly to the bank
on the unused portion of the line. As of December 31, 1995, there
was an outstanding balance on this loan of $800,000, as compared to
$425,000 December 31, 1994.
Effective March 31, 1993, the Registrant entered into a new
$6,000,000 10-year, revolving credit line with Norwest Bank
Iowa, N.A. The $6,000,000 loan commitment reduces $600,000
beginning May 1, 1994, and each year thereafter until final
maturity on May 1, 2003. Borrowings secured by first mortgages
on various properties, bear interest at the bank's base (Prime)
rate floating, and no compensating balance is required. As of
December 31, 1995, the outstanding balance on this loan was
$3,500,000 as compared to $4,800,000 as of December 31, 1994.
In December 1995, Norwest Bank approved an increase from $3,000,000 to
$4,000,000 in the unsecured short-term line of credit and an increase in the
secured long-term line of credit from the current balance of $3,500,000 to
$6,000,000. The new loan agreements are expected to be executed in the latter
part of 1996.
In November, 1994, the Registrant established a $3,000,000
10-year revolving loan with Brenton Bank, N.A., Des Moines,
Iowa. The credit line reduces $300,000 beginning December 31,
1995, and each year thereafter until final maturity on December
31, 2004. Borrowings secured by first mortgages on properties,
bear interest at the bank's base (Prime) rate floating. At
December 31, 1995, the outstanding balance on this loan was
$1,305,000 compared to $1,400,000 as of December 31, 1994.
NOTE 5 - LONG-TERM DEBT
<TABLE>
Long-term debt consists of the following:
<CAPTION>
December 31,
Rate 1995 1994
---------- ---------- ----------
<S> <C> <C> <C>
Real estate mortgage notes
Due 1996-2000 7-1/2 to 10% 907,827 1,170,467
Norwest Bank Iowa, N.A.
Due 2003 - See Note 4 8.25% 3,500,000 4,800,000
Brenton Bank, N.A.
Due 2004 - See Note 4 8.25% 1,305,000 1,400,000
---------- ----------
5,712,827 7,370,467
Less-Current principal maturities 564,704 612,392
---------- ----------
5,148,123 6,758,075
========== ==========
</TABLE>
<TABLE>
Annual principal maturities over the next five years are as follows:
<CAPTION>
1996 1997 1998 1999 2000
------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C>
Mortgage Notes 564,704 96,930 107,062 118,254 20,877
Norwest Bank - - 500,000 600,000 600,000
Brenton Bank - - - 237,048 300,000
</TABLE>
NOTE 6 - QUARTERLY FINANCIAL DATA (UNAUDITED)
<TABLE>
<CAPTION>
First Second Third Fourth
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
1995
Revenues 837,924 841,794 851,453 803,773
Net Income 228,686 223,577 241,844 208,586
Per share 50 cents 49 cents 53 cents 46 cents
1994
Revenues 785,113 874,148 786,548 788,791
Net Income 235,326 261,978 202,436 205,466
Per share 50 cents 56 cents 44 cents 44 cents
</TABLE>
<TABLE>
<CAPTION>
SCHEDULE I
NATIONAL PROPERTIES CORPORATION
MARKETABLE SECURITIES
December 31, 1995
MARKET
SHARES COST VALUE
---------- ---------- ----------
<S> <C> <C> <C>
Drake Park Restr. Association 25,000 5,100 5,100
Ford Motor 2,000 62,434 57,750
Houston Industries, Inc. 2,000 18,225 48,500
MDU Resources, Inc. 6,000 33,370 119,250
Pacific Gas & Electric 10,000 103,892 283,750
Pacificorp 10,000 75,783 211,250
SCE Corp 20,000 124,621 352,500
San Diego Gas & Elec. 4,000 16,484 95,000
Transamerica Corporation 5,000 156,654 364,375
---------- ---------- ----------
84,000 596,563 1,537,475
========== ========== ==========
Annualized Dividends 78,980
Current Yield 13.2%
</TABLE>
<TABLE>
<CAPTION>
NATIONAL PROPERTIES CORPORATION SCHEDULES V & VI
SCHEDULE V - PROPERTY AND EQUIPMENT
Balance at Disposals Balance at
Beginning Additions or End of
Classification of Period at Cost Retirements Period
-------------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Year ended December 31, 1995*
Land 4,289,975 152,650 197,000 4,245,625
Buildings & improvements 20,105,570 515,247 48,322 20,572,495
Furnishings & equipment 51,481 12,031 - 63,512
----------- ----------- ----------- -----------
24,447,026 679,928 245,322 24,881,632
=========== =========== =========== ===========
*See Item 2 for details
Year ended December 31, 1994
Land 3,929,536 548,104 187,665 4,289,975
Buildings & improvements 18,616,751 1,818,637 329,818 20,105,570
Furnishings & equipment 50,598 883 - 51,481
----------- ----------- ----------- -----------
22,596,885 2,367,624 517,483 24,447,026
=========== =========== =========== ===========
Year ended December 31, 1993
Land 3,519,295 410,241 - 3,929,536
Buildings & improvements 15,981,751 2,635,000 - 18,616,751
Furnishings & equipment 45,847 4,751 - 50,598
----------- ----------- ----------- -----------
19,546,893 3,049,992 - 22,596,885
=========== =========== =========== ===========
</TABLE>
<TABLE>
<CAPTION>
SCHEDULE VI - ACCUMULATED DEPRECIATION OF PROPERTY AND EQUIPMENT
Balance at Additions Disposals Balance at
Beginning Charged to or End of
Classification of Period Expense Retirements Period
-------------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Year ended December 31, 1995
Buildings & improvements 6,713,694 763,668 45,322 7,432,040
Furnishings & equipment 51,481 3,787 - 55,268
----------- ----------- ----------- -----------
6,765,175 767,455 45,322 7,487,308
=========== =========== =========== ===========
Year ended December 31, 1994
Buildings & improvements 6,194,580 750,536 231,422 6,713,694
Furnishings & equipment 50,598 883 - 51,481
----------- ----------- ----------- -----------
6,245,178 751,419 231,422 6,765,175
=========== =========== =========== ===========
Year ended December 31, 1993
Buildings & improvements 5,505,344 689,236 - 6,194,580
Furnishings & equipment 45,847 4,751 - 50,598
----------- ----------- ----------- -----------
5,551,191 693,987 - 6,245,178
=========== =========== =========== ===========
</TABLE>
NATIONAL PROPERTIES CORPORATION SCHEDULES IX & X
<TABLE>
<CAPTION>
SCHEDULE IX - SHORT TERM BORROWINGS
Norwest Bank (1)
Year Ended December 31,
1995 1994 1993
-------- -------- --------
<S> <C> <C> <C>
Balance at End of Period 800,000 425,000 -0-
Interest Rate at End of Period 8.6% 8.6% 0.1%
Maximum Amount Outstanding During Period 800,000 1,900,000 2,855,000
Average Amount Outstanding During Period 463,046 1,431,154 1,592,308
Average Interest Rate During Period (2) 8.6% 6.1% 6.5%
(1) See Note 4 of the Notes to Financial Statements.
(2) Based on actual interest expense for each year divided
by the average monthly amount outstanding.
</TABLE>
<TABLE>
<CAPTION>
SCHEDULE X - SUPPLEMENTARY INCOME STATEMENT INFORMATION
Charged to Costs and Expenses
1995 1994 1993
-------- -------- --------
<S> <C> <C> <C>
Maintenance & repairs 12,245 14,889 24,838
Taxes - other than income
Property 28,051 29,846 27,799
Payroll 18,418 16,868 19,606
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> DEC-31-1995
<CASH> 128,831
<SECURITIES> 1,537,475
<RECEIVABLES> 17,734
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 151,636
<PP&E> 24,881,632
<DEPRECIATION> 7,487,308
<TOTAL-ASSETS> 19,117,595
<CURRENT-LIABILITIES> 1,563,123
<BONDS> 0
<COMMON> 455,655
0
0
<OTHER-SE> 12,070,443
<TOTAL-LIABILITY-AND-EQUITY> 19,117,595
<SALES> 0
<TOTAL-REVENUES> 3,334,944
<CGS> 0
<TOTAL-COSTS> 1,915,429
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 638,821
<INCOME-PRETAX> 1,419,515
<INCOME-TAX> 516,822
<INCOME-CONTINUING> 902,693
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 902,693
<EPS-PRIMARY> 1.97
<EPS-DILUTED> 1.97
</TABLE>
