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, 1997 Commission file number 0-305
NATIONAL PROPERTIES CORPORATION
(Exact name of registrant as specified in its charter)
Iowa 42-0860581
(State or 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)
439,470 SHARES AS OF JUNE 30, 1997
<PAGE>
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
<TABLE>
<CAPTION>
NATIONAL PROPERTIES CORPORATION
BALANCE SHEETS
ASSETS
June 30, December 31,
1997 1996
<S> <C> <C>
CURRENT ASSETS
Cash 202,897 120,784
Mortgage loans receivable - 718
Accounts receivable 13,060 15,576
Prepaid income taxes - 244,467
Other 2,874 6,724
---------- ----------
Total current assets 218,831 388,269
---------- ----------
PROPERTY AND EQUIPMENT, AT COST
Land 4,403,277 4,402,210
Buildings and improvements 21,896,495 21,896,495
Furniture and equipment 63,677 62,816
---------- ----------
26,363,449 26,361,521
Less - accumulated depreciation 8,659,297 8,259,087
---------- ----------
Property and equipment - net 17,704,152 18,102,434
---------- ----------
OTHER ASSETS
Marketable securities 1,817,194 1,581,725
Deferred charges and other assets 39,159 42,723
---------- ----------
Total other assets 1,856,353 1,624,448
---------- ----------
19,779,336 20,115,151
========== ==========
<CAPTION>
LIABILITIES AND STOCKHOLDERS' EQUITY
<S> <C> <C>
CURRENT LIABILITIES
Accounts payable 10,302 5,699
Notes payable 150,000 225,000
Accrued liabilities 355,946 264,653
Current maturities of long-term debt 101,870 96,929
Federal and state income taxes 30,286 -
---------- ----------
Total current liabilities 648,404 592,281
---------- ----------
LONG-TERM DEBT 5,068,993 6,030,779
---------- ----------
DEFERRED INCOME TAXES 709,474 592,638
---------- ----------
STOCKHOLDERS' EQUITY
Common stock - $1 par value
Authorized - 5,000,000 shares
Issued
(1997-439,470 shares; 1996-449,245 shares) 439,470 449,245
Retained earnings 12,208,345 11,881,556
Net unrealized gain-marketable securities 704,650 568,652
---------- ----------
Total stockholders' equity 13,352,465 12,899,453
---------- ----------
19,779,336 20,115,151
========== ==========
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
NATIONAL PROPERTIES CORPORATION
STATEMENTS OF INCOME
Three Months Ended Six Months Ended
June 30, June 30,
1997 1996 1997 1996
<S> <C> <C> <C> <C>
Income
Lease rental income 860,950 807,007 1,760,942 1,642,053
Interest income 131 39 231 68
Dividend income 19,925 20,095 37,475 40,190
Gain on sale of securities, etc. 13,564 19,378 24,336 22,061
--------- --------- --------- ---------
Total income 894,570 846,519 1,822,984 1,704,372
--------- --------- --------- ---------
Expenses
Depreciation 200,105 192,106 400,210 384,212
Interest 119,845 124,775 247,203 262,579
Salaries and wages 65,802 59,660 134,299 123,880
Property, payroll
and misc. taxes 16,908 14,976 33,437 32,759
Other expenses 48,858 55,517 101,644 96,914
--------- --------- --------- ---------
Total expenses 451,518 447,034 916,793 900,344
--------- --------- --------- ---------
Income before income taxes 443,052 399,485 906,191 804,028
Federal and State income taxes 162,157 163,000 331,665 289,000
--------- --------- --------- ---------
Net income 280,895 236,485 574,526 515,028
========= ========= ========= =========
Per share of common stock $0.63 $0.52 $1.30 $1.13
Weighted average shares
outstanding 445,261 454,907 443,134 454,578
Dividends declared per share $0.10 $0.10 $0.10 $0.10
<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
Three Months Ended
June 30,
1997 1996
<S> <C> <C>
CASH FLOW FROM OPERATING ACTIVITIES
Net income 574,526 515,028
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization 403,774 387,086
Deferred income taxes 35,505 -
Gain on sale of assets (24,336) (22,061)
Changes in assets and liabilities:
Accounts receivable 2,516 4,434
Prepaid expenses and deferred charges 3,850 4,233
Accounts payable and accrued expenses 51,950 (80,356)
Federal and State income taxes 274,753 5,732
-------- --------
Net cash provided by operations 1,322,538 814,096
-------- --------
CASH FLOW FROM INVESTING ACTIVITIES
Additions to property and equipment (1,928) (4,224)
Payments received on mortgage notes 718 1,500
Purchase of securities (37,368) (62,806)
Proceeds - from sale of assets 43,563 41,288
-------- --------
Net cash provided by (used in) investing activities 4,985 (24,242)
-------- -------
CASH FLOW FROM FINANCING ACTIVITIES
Borrowings on credit lines 325,049 857,078
Repayments - credit line borrowings (1,309,634) (1,175,078)
Principal payments on mortgage notes (47,260) (506,490)
Purchase of treasury stock (213,565) (36,420)
-------- --------
Net cash used in financing activities (1,245,410) (860,910)
-------- --------
Net increase (decrease) in cash 82,113 (71,056)
Cash at beginning of period 120,784 123,831
-------- --------
Cash at end of period 202,897 52,775
======== ========
SUPPLEMENTAL CASH FLOW INFORMATION
Cash paid during the period for
Interest expense 264,206 272,716
Income tax payments 138,975 283,268
</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 1997 increased approximately $119,000 primarily due to the increase
of lease rental income. The purchase of a convenience store building in
December, 1996, accounted for approximately $75,000 of the lease rental
increase. In addition, lease rental increases on existing properties and
contingent rental increases based on sales overages amounted to approximately
$29,000 and $15,000 respectively.
Total expenses increased approximately $16,000 as shown on the Income
Statement. Net income for the first six months increased approximately 12%
as compared to the same period for the prior year.
As of June 30, 1997, the Company's main sources of liquidity consisted
of: $202,897 in cash, marketable securities having a market value of
approximately $1,817,000 and a $7,375,000 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 4, 1997, the Company executed contracts to purchase and
leaseback for 15 years two convenience stores located in the Atlanta,
Georgia, area. One store is under construction and is scheduled for closing
by October 1, 1997. The second store is also under construction and closing
is expected in the first quarter of 1998. The purchase price of each store
is approximately $1,500,000.
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 flows 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 __7/30/97__ By _____/S/__Raymond_Di_Paglia_________
Raymond Di Paglia, President and
Chief Executive Officer
Date __7/30/97__ By _____/S/__Robert_W._Guely___________
Robert W. Guely, Controller
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> JUN-30-1997
<CASH> 202,897
<SECURITIES> 1,817,194
<RECEIVABLES> 13,060
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 218,831
<PP&E> 26,363,449
<DEPRECIATION> 8,659,297
<TOTAL-ASSETS> 19,779,336
<CURRENT-LIABILITIES> 648,404
<BONDS> 0
<COMMON> 439,470
0
0
<OTHER-SE> 12,208,345
<TOTAL-LIABILITY-AND-EQUITY> 19,779,336
<SALES> 0
<TOTAL-REVENUES> 1,822,984
<CGS> 0
<TOTAL-COSTS> 916,793
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 247,203
<INCOME-PRETAX> 906,191
<INCOME-TAX> 331,665
<INCOME-CONTINUING> 574,526
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 574,526
<EPS-PRIMARY> 1.30
<EPS-DILUTED> 1.30
</TABLE>
