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 March 31, 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)
443,370 SHARES AS OF APRIL 30, 1997
<PAGE>
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
<TABLE>
<CAPTION>
NATIONAL PROPERTIES CORPORATION
BALANCE SHEETS
ASSETS
March 31, December 31,
1997 1996
<S> <C> <C>
CURRENT ASSETS
Cash 286,198 120,784
Mortgage loans receivable - 718
Accounts receivable 14,715 15,576
Prepaid income taxes 91,508 244,467
Other 4,799 6,724
---------- ----------
Total current assets 397,220 388,269
---------- ----------
PROPERTY AND EQUIPMENT, AT COST
Land 4,402,210 4,402,210
Buildings and improvements 21,896,495 21,896,495
Furniture and equipment 63,677 62,816
---------- ----------
26,362,382 26,361,521
Less - accumulated depreciation 8,459,192 8,259,087
---------- ----------
Property and equipment - net 17,903,190 18,102,434
---------- ----------
OTHER ASSETS
Marketable securities 1,683,475 1,581,725
Deferred charges and other assets 40,941 42,723
---------- ----------
Total other assets 1,724,416 1,624,448
---------- ----------
20,024,826 20,115,151
========== ==========
<CAPTION>
LIABILITIES AND STOCKHOLDERS' EQUITY
<S> <C> <C>
CURRENT LIABILITIES
Accounts payable 17,699 5,699
Notes payable 150,000 225,000
Accrued liabilities 303,619 264,653
Current maturities of long-term debt 99,369 96,929
---------- ----------
Total current liabilities 570,687 592,281
---------- ----------
LONG-TERM DEBT 5,607,418 6,030,779
---------- ----------
DEFERRED INCOME TAXES 646,893 592,638
---------- ----------
STOCKHOLDERS' EQUITY
Common stock - $1 par value
Authorized - 5,000,000 shares
Issued
(1997-446,745 shares; 1996-449,245 shares) 446,745 449,245
Retained earnings 12,126,087 11,881,556
Net unrealized gain-marketable securities 626,996 568,652
---------- ----------
Total stockholders' equity 13,199,828 12,899,453
---------- ----------
20,024,826 20,115,151
========== ==========
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
NATIONAL PROPERTIES CORPORATION
STATEMENTS OF INCOME
For Quarter Ended
March 31,
1997 1996
<S> <C> <C>
Income
Lease rental income 899,992 835,046
Interest income 100 41
Dividend income 17,550 20,095
Gain on sale of assets 10,772 2,675
------- -------
Total income 928,414 857,857
------- -------
Expenses
Depreciation 200,105 192,106
Interest 127,358 137,804
Salaries and wages 68,497 64,220
Property, payroll
and misc. taxes 16,528 14,976
Other expenses 52,785 44,204
------- -------
Total expenses 465,273 453,310
------- -------
Income before income taxes 463,141 404,547
Federal and State income taxes 169,510 145,000
------- -------
Net income 293,631 259,547
======= =======
Per share of common stock 66 cents 57 cents
Weighted average shares
outstanding 447,387 455,235
Dividends per share None None
<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
March 31,
1997 1996
<S> <C> <C>
CASH FLOW FROM OPERATING ACTIVITIES
Net income 293,631 259,552
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization 201,887 193,543
Deferred income taxes 17,753 -
Gain on sale of assets (10,772) (2,675)
Changes in assets and liabilities:
Accounts receivable 861 3,726
Prepaid expenses and deferred charges 1,925 2,252
Accounts payable and accrued expenses 50,966 (40,636)
Federal and State income taxes 152,959 144,376
-------- --------
Net cash provided by operations 709,210 560,138
-------- --------
CASH FLOW FROM INVESTING ACTIVITIES
Additions to property and equipment (861) (4,223)
Payments received on mortgage notes 718 1,048
Purchase of securities (17,293) (28,260)
Proceeds - from sale of assets 21,161 2,675
-------- --------
Net cash provided by (used in) investing activities 3,725 (28,760)
-------- -------
CASH FLOW FROM FINANCING ACTIVITIES
Borrowings on credit lines 175,000 269,338
Repayments - credit line borrowings (647,585) (624,338)
Principal payments on mortgage notes (23,336) (243,760)
Purchase of treasury stock (51,600) (11,070)
-------- --------
Net cash used in financing activities (547,521) (609,830)
-------- --------
Net increase (decrease) in cash 165,414 (78,452)
Cash at beginning of period 120,784 123,831
-------- --------
Cash at end of period 286,198 45,379
======== ========
SUPPLEMENTAL CASH FLOW INFORMATION
Cash paid during the period for
Interest expense 133,026 138,710
Income tax payments - 624
</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 quarter
of 1997 increased approximately $71,000 primarily due to the increase of
about $65,000 in lease rental income. The purchase of a convenience store
building in December, 1996, accounted for approximately $37,000 of the lease
rental increase. In addition, lease rental increases on existing properties
and contingent rental increases based on sales overages amounted to
approximately $15,000 and $13,000 respectively.
Total expenses increased approximately $12,000 as shown on the Income
Statement. The increase in Other Expenses of approximately $9,000 is
attributable to increases in general expenses and professional fees amounting
to approximately $5,800 and $2,800 respectively. Net income for the first
quarter increased approximately 13% as compared to the same period for the
prior year.
As of March 31, 1997, the Company's main sources of liquidity consisted
of: $286,198 in cash, marketable securities having a market value of
approximately $1,683,000 and a $6,860,000 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
on September 1, 1997. Construction on the second store is planned to start
within 90 days 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.
Mr. Robert E. Combs, a director of the Company since 1960, died April
16, 1997. The vacancy will not be filled; the Board of Directors, having
amended the by-laws, reduced the number of directors to four at its meeting
on April 18, 1997.
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 __5/13/97__ By _____/S/__Raymond_Di_Paglia_________
Raymond Di Paglia, President and
Chief Executive Officer
Date __5/13/97__ By _____/S/__Robert_W._Guely___________
Robert W. Guely, Vice President
and Controller
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> MAR-31-1997
<CASH> 286,198
<SECURITIES> 1,683,475
<RECEIVABLES> 14,715
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 397,220
<PP&E> 26,362,382
<DEPRECIATION> 8,459,192
<TOTAL-ASSETS> 20,024,826
<CURRENT-LIABILITIES> 570,687
<BONDS> 0
<COMMON> 446,745
0
0
<OTHER-SE> 12,126,087
<TOTAL-LIABILITY-AND-EQUITY> 20,024,826
<SALES> 0
<TOTAL-REVENUES> 928,414
<CGS> 0
<TOTAL-COSTS> 465,273
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 127,358
<INCOME-PRETAX> 463,141
<INCOME-TAX> 169,510
<INCOME-CONTINUING> 293,631
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 293,631
<EPS-PRIMARY> 0.66
<EPS-DILUTED> 0.66
</TABLE>
