FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
QUARTERLY REPORT UNDER SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For quarter ended Sept. 30, 1996 Commission file number 0-305
NATIONAL PROPERTIES CORPORATION
(Exact name of registrant as specified in its charter)
Iowa 42-0860581
(State of other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
4500 Merle Hay Road, Des Moines, Iowa 50310
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (515) 278-1132
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, and (2) has been subject to such filing
requirement for the past 90 days.
Yes __X__ No _____
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
COMMON STOCK (PAR VALUE $1.00)
450,385 SHARES AS OF NOVEMBER 1, 1996
<PAGE>
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
<TABLE>
<CAPTION>
NATIONAL PROPERTIES CORPORATION
BALANCE SHEETS
ASSETS
Sept. 30, December 31,
1996 1995
<S> <C> <C>
CURRENT ASSETS
Cash 220,197 123,831
Mortgage loans receivable 1,585 3,304
Accounts receivable 16,985 17,734
Other 544 6,767
---------- ----------
Total current assets 239,311 151,636
---------- ----------
PROPERTY AND EQUIPMENT, AT COST
Land 4,245,625 4,245,625
Buildings and improvements 20,572,495 20,572,495
Furniture and equipment 62,816 63,512
---------- ----------
24,880,936 24,881,632
Less - accumulated depreciation 8,058,706 7,487,308
---------- ----------
Property and equipment - net 16,822,230 17,394,324
---------- ----------
OTHER ASSETS
Marketable securities
(1996 at market; cost $679,956)
(1995 at market; cost $596,563) 1,491,600 1,537,475
Deferred charges and other assets 29,849 34,160
---------- ----------
1,521,449 1,571,635
---------- ----------
18,582,990 19,117,595
========== ==========
<CAPTION>
LIABILITIES AND STOCKHOLDERS' EQUITY
<S> <C> <C>
CURRENT LIABILITIES
Accounts payable 10,222 19,022
Notes payable 375,000 800,000
Accrued liabilities 275,959 176,064
Current maturities of long-term debt 98,215 564,704
Federal and State income taxes 31,415 3,333
---------- ----------
Total current liabilities 790,811 1,563,123
---------- ----------
LONG-TERM DEBT 4,858,336 5,148,123
---------- ----------
DEFERRED INCOME TAXES 289,757 335,906
---------- ----------
STOCKHOLDERS' EQUITY
Common stock - $1 par value
Authorized - 5,000,000 shares
Issued
(1996-451,395 shares; 1995-455,655 shares) 451,395 455,655
Retained earnings 11,670,804 11,009,782
Net unrealized gain-marketable securities 521,887 605,006
---------- ----------
Total stockholders' equity 12,644,086 12,070,443
---------- ----------
18,582,990 19,117,595
========== ==========
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
NATIONAL PROPERTIES CORPORATION
STATEMENTS OF INCOME
Three Months Ended Nine Months Ended
Sept. 30, Sept. 30,
1996 1995 1996 1995
<S> <C> <C> <C> <C>
Income
Lease rental income 801,478 785,669 2,443,531 2,359,074
Interest income 80 179 148 1102
Dividend income 20,360 20,810 60,550 68,172
Gain on sale of securities, etc. 27,249 44,795 49,310 102,823
--------- --------- --------- ---------
Total income 849,167 851,453 2,553,539 2,531,171
--------- --------- --------- ---------
Expenses
Depreciation 192,106 191,895 576,318 572,385
Interest 116,362 155,309 378,941 492,657
Salaries and wages 58,247 68,490 182,127 196,847
Property, payroll
and misc. taxes 11,561 11,499 44,320 46,623
Other expenses 46,718 45,916 143,632 138,052
--------- --------- --------- ---------
Total expenses 424,994 473,109 1,325,338 1,446,564
--------- --------- --------- ---------
Income before income taxes 424,173 378,344 1,228,201 1,084,607
Federal and State income taxes 153,000 136,500 442,000 390,500
--------- --------- --------- ---------
Net income 271,173 241,844 786,201 694,107
========= ========= ========= =========
Per share of common stock $0.60 $0.53 $1.73 $1.51
Weighted average shares
outstanding 453,924 459,075 453,269 458,758
Dividends declared per share $0.10 $0.00 $0.10 $0.00
<FN>
Prepared from the books of the Company without audit. In the opinion of
management, all adjustments (none of which were other than normal recurring
accruals) necessary to present fairly the results of operations for the above
stated periods have been included.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
NATIONAL PROPERTIES CORPORATION
STATEMENTS OF CASH FLOWS
Nine Months Ended
Sept. 30,
1996 1995
<S> <C> <C>
CASH FLOW FROM OPERATING ACTIVITIES
Net income 786,201 694,107
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization 580,629 577,350
(Gain) loss on sale of securities (49,310) (102,823)
Changes in assets and liabilities
Accounts receivable 749 15,343
Prepaid expenses and deferred charges 6,223 5,956
Accounts payable and accrued expenses 91,095 (210,775)
Federal and State income taxes 28,082 (63,251)
-------- ---------
Net cash provided by operations 1,443,669 915,907
-------- ---------
CASH FLOW FROM INVESTING ACTIVITIES
Additions to property and equipment (4,224) (269,875)
Payments received on mortgage notes 1,719 7,530
Purchase of securities (130,686) (98,687)
Proceeds - sale of securities 96,602 518,792
-------- ---------
Net cash provided by (used in) investing activities (36,589) 157,760
-------- ---------
CASH FLOW FROM FINANCING ACTIVITIES
Principal payments on long-term debt (538,275) (194,628)
Purchase of treasury stock (84,060) (69,262)
Dividends paid (45,379) -0-
Net borrowings under line of credit agreements (643,000) (940,000)
-------- ---------
Net cash used in financing activities (1,310,714) (1,203,890)
-------- ---------
Net increase (decrease) in cash 96,366 (130,223)
Cash at beginning of period 123,831 238,660
-------- ---------
Cash at end of period 220,197 108,437
======== =========
SUPPLEMENTAL CASH FLOW INFORMATION
Cash paid during the period for
Interest expense 390,942 510,648
Income tax payments 413,918 453,751
SUPPLEMENTAL NON-CASH FLOW INFORMATION
Sale of real estate -0- 462,000
Basis of property -0- 180,000
-------- ---------
Deferred 1031 gain -0- 282,000
======== =========
</TABLE>
<PAGE>
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
The Company, an Iowa corporation, is engaged principally in the development of
commercial real estate for lease to qualified tenants under net lease
arrangements.
As detailed on the Income Statement total income for the first nine
months of 1996 increased approximately $22,000. The increase in rental income
of approximately $84,000 was primarily due to a convenience store building
acquired in June, 1995, and a restaurant building and land acquired in
December, 1995, which generated additional rental income in 1996 of
approximately $72,000.
Total expenses for the nine months ended September 30, 1996, decreased
approximately $121,000, as compared to the same period for 1995, primarily due
to a decrease in interest costs of approximately $114,000. The decrease
resulted from a decrease in the prime rate coupled with a decrease in average
debt outstanding, between the two periods, of approximately $1,300,000.
As of September 30, 1996, the Company's main sources of liquidity consisted
of: $220,000 in cash, marketable securities having a market value of
approximately $1,500,000 and a $4,900,000 remaining loan balance available on
three lines of credit with two local banks. In addition, the Company owns
unencumbered real estate having an aggregate cost of approximately
$11,000.000. On October 29, 1996, the Company executed new loan agreements
with Norwest Bank increasing the unsecured short-term line of credit from
$3,000,000 to $4,000,000 and secured long-term line of credit from the current
balance of $2,900,000 to $6,000,000.
On March 30, 1996, the Company entered into an agreement to acquire a
convenience store, now under construction in Atlanta, Georgia, on a purchase
and leaseback arrangement, at a cost of $1,445,000. Closing is scheduled to
take place in November, 1996. The purchase will be financed with funds drawn
on the Company's long term line of credit.
Management believes that its cash flow from operations and other potential
sources of cash will be sufficient to finance current and projected
operations. However, future cash flow may be impaired because of financial
difficulties being experienced by the tenant of three garden center
properties, which currently generate a monthly rental income of approximately
$38,000.
PART II. OTHER INFORMATION.
No applicable items.
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.
NATIONAL PROPERTIES CORPORATION
Date 11/5/96 By__/S/_Raymond_Di_Paglia_______
Raymond Di Paglia, President
Date 11/5/96 By__/S/_Robert_W_Guely__________
Robert W. Guely, Vice President
and Chief Financial Officer
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> SEP-30-1996
<CASH> 220,197
<SECURITIES> 1,491,600
<RECEIVABLES> 16,985
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 239,311
<PP&E> 24,880,936
<DEPRECIATION> 8,058,706
<TOTAL-ASSETS> 18,582,990
<CURRENT-LIABILITIES> 790,811
<BONDS> 0
<COMMON> 451,395
0
0
<OTHER-SE> 12,644,086
<TOTAL-LIABILITY-AND-EQUITY> 18,582,990
<SALES> 0
<TOTAL-REVENUES> 2,553,539
<CGS> 0
<TOTAL-COSTS> 1,325,338
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 378,941
<INCOME-PRETAX> 1,228,201
<INCOME-TAX> 442,000
<INCOME-CONTINUING> 786,201
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 786,201
<EPS-PRIMARY> 1.68
<EPS-DILUTED> 1.68
</TABLE>
