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 June 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)
453,685 SHARES AS OF July 31, 1996
<PAGE>
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
<TABLE>
<CAPTION>
NATIONAL PROPERTIES CORPORATION
BALANCE SHEETS
ASSETS
June 30, December 31,
1996 1995
<S> <C> <C>
CURRENT ASSETS
Cash 52,775 123,831
Mortgage loans receivable 1,803 3,304
Accounts receivable 13,300 17,734
Other 2,534 6,767
---------- ----------
Total current assets 70,412 151,636
---------- ----------
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 7,866,600 7,487,308
---------- ----------
Property and equipment - net 17,014,336 17,394,324
---------- ----------
OTHER ASSETS
Marketable securities
(1996 at market; cost $640,141)
(1995 at market; cost $596,563) 1,575,975 1,537,475
Deferred charges and other assets 31,286 34,160
---------- ----------
1,607,261 1,571,635
---------- ----------
18,692,009 19,117,595
========== ==========
<CAPTION>
LIABILITIES AND STOCKHOLDERS' EQUITY
<S> <C> <C>
CURRENT LIABILITIES
Accounts payable 7,098 19,022
Notes payable 425,000 800,000
Accrued liabilities 153,011 176,064
Current maturities of long-term debt 105,474 564,704
Federal and State income taxes 9,065 3,333
---------- ----------
Total current liabilities 699,648 1,563,123
---------- ----------
LONG-TERM DEBT 5,157,863 5,148,123
---------- ----------
DEFERRED INCOME TAXES 334,092 335,906
---------- ----------
STOCKHOLDERS' EQUITY
Common stock - $1 par value
Authorized - 5,000,000 shares
Issued
(1996-453,785 shares; 1995-455,655 shares) 453,785 455,655
Retained earnings 11,444,879 11,009,782
Net unrealized gain-marketable securities 601,742 605,006
---------- ----------
Total stockholders' equity 12,500,406 12,070,443
---------- ----------
18,692,009 19,117,595
========== ==========
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
NATIONAL PROPERTIES CORPORATION
STATEMENTS OF INCOME
Three Months Ended Six Months Ended
June 30, June 30,
1996 1995 1996 1995
<S> <C> <C> <C> <C>
Income
Lease rental income 807,007 780,417 1,642,053 1,573,405
Interest income 39 745 68 923
Dividend income 20,095 23,452 40,190 47,362
Gain on sale of securities, etc. 19,378 37,180 22,061 58,028
--------- --------- --------- ---------
Total income 846,519 841,794 1,704,372 1,679,718
--------- --------- --------- ---------
Expenses
Depreciation 192,106 190,725 384,212 380,490
Interest 124,775 168,111 262,579 337,348
Salaries and wages 59,660 64,703 123,880 128,357
Property, payroll
and misc. taxes 14,976 19,979 32,759 35,124
Other expenses 55,517 48,699 96,914 92,136
--------- --------- --------- ---------
Total expenses 447,034 492,217 900,344 973,455
--------- --------- --------- ---------
Income before income taxes 399,485 349,577 804,028 706,263
Federal and State income taxes 163,000 126,000 289,000 254,000
--------- --------- --------- ---------
Net income 236,485 223,577 515,028 452,263
========= ========= ========= =========
Per share of common stock $0.52 $0.50 $1.13 $0.98
Weighted average shares
outstanding 454,907 459,662 454,578 459,392
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
Six Months Ended
June 30,
1996 1995
<S> <C> <C>
CASH FLOW FROM OPERATING ACTIVITIES
Net income 515,028 452,263
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization 387,086 383,800
(Gain) loss on sale of securities (22,061) (58,028)
Changes in assets and liabilities
Accounts receivable 4,434 572
Prepaid expenses and deferred charges 4,233 3,815
Accounts payable and accrued expenses (80,356) (173,001)
Federal and State income taxes 5,732 (70,451)
-------- ---------
Net cash provided by operations 814,096 538,970
-------- ---------
CASH FLOW FROM INVESTING ACTIVITIES
Additions to property and equipment (4,224) (268,814)
Payments received on mortgage notes 1,500 3,740
Purchase of securities (62,806) -
Proceeds - sale of securities 41,288 337,459
-------- ---------
Net cash provided by (used in) investing activities (24,242) 72,385
-------- ---------
CASH FLOW FROM FINANCING ACTIVITIES
Principal payments on mortgage loans (506,490) (128,216)
Net borrowings under line of credit agreements (318,000) (568,698)
Purchase of treasury stock (36,420) (52,882)
-------- ---------
Net cash provided by (used in) financing activities (860,910) (749,796)
-------- ---------
Net increase (decrease) in cash (71,056) (138,441)
Cash at beginning of period 123,831 238,660
-------- ---------
Cash at end of period 52,775 100,219
======== =========
SUPPLEMENTAL CASH FLOW INFORMATION
Cash paid during the period for
Interest expense 272,716 356,261
Income tax payments 283,268 324,451
</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 six months of
1996 increased approximately $26,000. The increase in rental income of
approximately $69,000 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 $61,000.
Total expenses for the six months ended June 30, 1996, decreased
approximately $73,000, as compared to the same period for 1995. The decrease
is primarily due to a reduction of approximately 0.75 percent in the prime
rate coupled with an average reduction in total indebtedness amounting to
approximately $1,350,000.
As of June 30, 1996, the Company's main sources of liquidity consisted of:
$53,000 in cash, marketable securities having a market value of approximately
$1,600,000 and a $4,600,000 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 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. Future cash flow, however, 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 8/5/96 By__/S/_Raymond_Di_Paglia_______
Raymond Di Paglia, President
Date 8/5/96 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> 6-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> JUN-30-1996
<CASH> 52,775
<SECURITIES> 1,575,975
<RECEIVABLES> 13,300
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 70,412
<PP&E> 24,880,936
<DEPRECIATION> 7,866,600
<TOTAL-ASSETS> 18,692,009
<CURRENT-LIABILITIES> 699,648
<BONDS> 0
<COMMON> 453,785
0
0
<OTHER-SE> 12,500,406
<TOTAL-LIABILITY-AND-EQUITY> 18,692,009
<SALES> 0
<TOTAL-REVENUES> 1,704,372
<CGS> 0
<TOTAL-COSTS> 900,344
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 262,579
<INCOME-PRETAX> 804,028
<INCOME-TAX> 289,000
<INCOME-CONTINUING> 515,028
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 515,028
<EPS-PRIMARY> 1.13
<EPS-DILUTED> 1.13
</TABLE>
