SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D. C. 20549
FORM 10-K - AMENDED ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended: December 31, 1996
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.
$3,399,105 as of March 1, 1997
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, 1997 - 447,595 Shares
DOCUMENTS INCORPORATED BY REFERENCE
Proxy Statement for the 1997 annual meeting of Stockholders See Part III
Item 8. Financial Statements and Supplementary Data.
Financial statements filed herewith:
Balance Sheets as of December 31, 1996 and December 31, 1995.
Statements of Income and Stockholders' Equity for the year
ended December 31, 1996, December 31, 1995 and December 31, 1994.
Statements of Cash Flows for the years ended December 31, 1996,
December 31, 1995 and December 31, 1994.
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 1997 annual meeting of
stockholders and will be filed with the Commission not later than 120 days
after December 31, 1996.
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 III as of December 31, 1996.
Note to schedule III as of December 31, 1996, 1995 and
1994.
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 1996.
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 __5/9/97__ By _____/S/__Raymond_Di_Paglia_________
Raymond Di Paglia, President and Chief
Executive Officer
Date __5/9/97__ 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 __5/9/97__ By _____/S/__William_D._Buzard________
William D. Buzard
Date __5/9/97__ By _____/S/__Raymond_Di_Paglia________
Raymond Di Paglia
Date __5/9/97__ By _____/S/__Kristine_M._Fasano_______
Kristine M. Fasano
Date __5/9/97__ By _____/S/__Robert_H._Jamerson_______
Robert H. Jamerson
NORTHUP, HAINES, KADUCE, SCHMID, MACKLIN, P.C.
Certified Public Accountants
Board of Directors and Stockholders
National Properties Corporation
INDEPENDENT AUDITOR'S REPORT
We have audited the accompanying balance sheets of National Properties
Corporation as of December 31, 1996 and 1995 and the related statements of
income, stockholders' equity and cash flows for each of the three years in the
period ended December 31, 1996. These financial statements and the schedules
referred to below are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements and
schedules based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatements. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements.
An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of National Properties
Corporation as of December 31, 1996 and 1995, and the results of its
operations and its cash flows for each of the three years in the period ended
December 31, 1996, in conformity with generally accepted accounting
principles.
Our audits were made for the purpose of forming an opinion on the basic
financial statements taken as a whole. The schedules listed in Item 14(a)(2)
are presented for purposes of complying with the Securities and Exchange
Commission's rules and are not part of the basic financial statements. These
schedules have been subjected to the auditing procedures applied in our audits
of the basic financial statements and, in our opinion, fairly state in all
material respects the financial data required to be set forth therein in
relation to the basic financial statements taken as a whole.
/S/ NORTHUP, HAINES, KADUCE, SCHMID, MACKLIN, P.C.
NORTHUP, HAINES, KADUCE, SCHMID, MACKLIN, P.C.
March 4, 1997
West Des Moines, Iowa
1025 Ashworth Road. Suite 500, West Des Moines, IA 50265-3500, Phone (515)
223-0221 Fax: (5 15) 223- 1030
NOTES TO FINANCIAL STATEMENTS
SUMMARY OF ACCOUNTING POLICIES
Marketable Securities: Marketable securities 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.
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 451,876 in 1996; 457,720 in
1995; and 462,946 in 1994.
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
$36,166 in 1996; $39,142 in 1995; and $33,875 in 1994.
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.
Fair Value of Financial Instruments: The Registrant's financial instruments
are valued at their carrying amounts which are reasonable estimates of fair
value.
Asset Impairment: On January 1, 1996, the Registrant adopted SFAS 121,
"Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets
to be Disposed Of" (SFAS 121). This statement describes circumstances that
may result in assets being impaired. The statement also provides criteria for
recognition and measurement of asset impairment.
The Registrant periodically reviews its leased properties whenever events or
changes in circumstances indicate that the recoverability of these assets is
uncertain. Generally, the determination of recoverability is based on the net
cash flows expected to result from such assets. Projected net cash flows
depends on the future cash revenues expected to be generated from the assets
less the future cash outflows expected to be necessary to obtain these inflows
over the remaining life of the assets. Based on current estimates of future
cash flows as prescribed under SFAS 121, management anticipates that future
revenues from such assets of the Registrant will fully recover all related
costs.
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 $56,294 in 1996;
$54,701 in 1995 and $44,251 in 1994. Future minimum rentals over the next
five years, not including renewal options and contingent rentals, are as
follows: 1997 - $3,347,852; 1998 - $3,299,385; 1999 - $3,144,616; 2000 -
$2,681,924; 2001 - $2,575,321.
NOTE 2 - INCOME TAXES
<TABLE>
Income tax expense for the years ended December 31, 1996, 1995 and 1994 is
comprised of the following:
<CAPTION>
<S> <C> <C> <C>
1996 1995 1994
---------- ---------- ----------
Current
Federal 273,807 433,406 428,464
State 58,961 83,416 74,776
---------- ---------- ----------
Total current 332,768 516,822 503,240
Deferred 267,183 - -
---------- ---------- ----------
599,951 516,822 503,240
========== ========== ==========
A reconciliation of the statutory federal income tax rate of 34 percent in
1996, 1995 and 1994 to the effective tax rate is as follows:
1996 1995 1994
Statutory federal income tax rate 34.0% 34.0% 34.0%
State taxes, net of federal tax benefit 3.8 3.5 3.4
Tax savings on dividends (1.2) (1.1) (1.7)
---------- ---------- ----------
Total tax provision 36.6 36.4 35.7
========== ========== ==========
Temporary differences which give rise to deferred tax liabilities in 1996 and
1995 are as follows:
1996 1995
Excess of tax over book depreciation 267,183 -
Unrealized gain on marketable securities 325,455 335,906
---------- ---------
Total tax provision 592,638 335,906
========== =========
</TABLE>
Deferred income taxes result from the temporary differences in the recognition
of income and expenses for tax and financial statement purposes. The source
of the temporary difference for 1996 was due to a change in depreciation for
income tax purposes. The Small Business Job Protection Act of 1996 (The Act)
amended the Internal Revenue Code regarding depreciation of motor fuel retail
outlets permitting the Registrant to depreciate its qualifying convenience
stores on a straight line basis over a period of 20 years. The Act further
provided that this change could be applied retroactively to all such
properties placed in service after 1986. The shorter depreciation life
decreased the Registrant's Federal and State income taxes for the year 1996 by
$267,183. This amount was recorded as a deferred tax liability as of December
31, 1996. For financial statement purposes the Registrant did not change its
depreciation policy with respect to its convenience stores.
NOTE 3 - MARKETABLE SECURITIES
As of December 31, 1996, marketable securities available-for-sale had an
aggregate market value of $1,581,725 and a cost of $687,617 resulting in gross
unrealized gains of $894,108. The unrealized holding gains, net of related
income taxes, added $568,652 to shareholders equity at December 31, 1996. As
of December 31, 1995, the marketable securities available-for-sale had an
aggregate market value of $1,537,475 and a cost of $596,563. Gross unrealized
gains and losses amounted to $945,596 and $4,684 respectively. The unrealized
holding gain, net of related income taxes, added $605,006 to shareholders
equity at December 31, 1995. Gross realized gains included in the
determination of income for 1996 amounted to $59,144. Gross realized gains
and losses
NOTE 6 - SUBSEQUENT EVENT
On March 4, 1997, the Registrant executed contracts to purchase and leaseback
two convenience stores located in the Atlanta, Georgia area. The lease term
for both stores will be fifteen (15) years. One store, now under
construction, is scheduled for closing on September 1, 1997. The second
store, not presently under construction, is expected to be ready for closing
in the last quarter of 1997 or the first quarter of 1998. Each store will
cost approximately $1,500,000 and will be totally financed with funds drawn on
the Registrant's credit lines with two local banks.
<TABLE>
<CAPTION>
NOTE 7 - QUARTERLY OPERATING DATA (UNAUDITED)
The following is a summary of unaudited quarterly results of operations:
Quarter
First Second Third Fourth
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
1996
Revenues 855,170 846,519 849,167 853,268
Net Income 259,543 236,485 271,173 271,902
Per share 57 cents 52 cents 60 cents 60 cents
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
</TABLE>
<TABLE>
<CAPTION>
NATIONAL PROPERTIES CORPORATION
SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION
Description Encum- Initial costs Cost capi- Gross
Accumulated Date ac- Life on
brances to company talized amount at
depreciation quired which de-
subsequent which car-
preciation
to acquis- ried at
in latest in-
tion close of pe-
come state-
iod
ments is
computed
<S> <C> <C> <C> <C>
<>c> <C> <C>
QuikTrip Stores
Tulsa, OK $ -0- $ 1,340,000 $ -0- $ 1,340,000
$ 271,216 08/22/90 31 1/3
St. Louis, MO 1,381,946 1,454,000 121,433 1,575,433
228,294 1992/1995 31 1/2
Alpharetta, GA -0- 1,324,000 -0- 1,324,000
8,275 12/03/96 20
Garden Center
Wolfe Nursery
Arlington, TX 1,520,000 1,700,000 -0- 1,700,000
200,158 045/01/93 31 1/2
Miscellaneous
investments 828,349 15,085,426 871,636 15,957,062
7,494,740 1976/1995 15/39
Totals $3,730,295 $20,903,426 $ 993,069 $21,896,495
$8,202,683
<captions>
NOTE TO SCHEDULE III
Real Estate
1996 1995 1994
<S> <C> <C> <C>
Balance, Beginning of period $20,572,495 $20,105,570 $18,616,751
additions 1,324,000 515,247 1,818,637
----------- ----------- -----------
21,896,495 20,620,817 20,435,388
Reductions -0- 48,322 329,818
----------- ----------- -----------
Balance, End of period $21,896,495 $20,572,495 $20,105,570
=========== =========== ===========
Accumulated Depreciation
Real Estate
1996 1995 1994
<S> <C> <C> <C>
Balance, Beginning of period $ 7,432,040 $ 6,713,694 $ 6,194,580
additions 770,643 763,668 750,536
----------- ----------- -----------
8,202,683 7,477,362 6,945,116
Reductions -0- 45,322 231,422
----------- ----------- -----------
Balance, End of period $ 8,202,683 $ 7,432,040 $ 6,713,694
=========== =========== ===========
</TABLE>
