<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM 10-K
Annual Report Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
For the Fiscal Year Ended December 31, 1995, Commission File Number 0-497
NEW MEXICO AND ARIZONA LAND COMPANY
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(Exact name of registrant as specified in its charter)
Arizona 43-0433090
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(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
3033 North 44th Street, Suite 270, Phoenix, Arizona 85018
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code 602/952-8836
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Securities registered pursuant to Section 12(b) of the Act: None
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Securities registered pursuant to Section 12(g) of the Act:
Title of each class: Common stock, no par value
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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
---- ----
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of registrants's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K / /
State the aggregate market value of the voting stock held by non-affiliates of
the registrant. The aggregate market value shall be computed by 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:
aggregate market value $21,281,000. Closing price on the American Stock Exchange
on March 8, 1996: $16.125 per share.
Indicate the number of shares outstanding of each of the Registrant's classes of
common stock, as of the latest practicable date. Class: Common Stock, no par
value. Outstanding at March 8, 1996: 2,734,538 shares.
Documents Incorporated by Reference: Part III of the Form 10-K incorporates by
reference certain portions of the registrant's definitive proxy statement to be
filed with the Commission on or before April 15, 1996.
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INDEX
<TABLE>
<CAPTION>
<S> <C>
ITEM 1: Business 2 - 3
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ITEM 2: Properties 4 - 5
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ITEM 3: Legal Proceedings 5
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ITEM 4: Submission of Matters to a Vote of Security Holders 5
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ITEM 5: Market for Registrant's Common Equity and Related
Stockholder Matters 5
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ITEM 6: Selected Financial Data 6
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ITEM 7: Management's Discussion and Analysis of Financial Condition
and Results of Operations 6 - 7
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ITEM 8: Financial Statements and Supplementary Data 8 - 23
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ITEM 9: Changes in and disagreements with Accountants on Accounting
and Financial Disclosure 23
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ITEM 10: Directors and Executive Officers of the Registrant 23
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ITEM 11: Executive Compensation 23
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ITEM 12: Security Ownership of Certain Beneficial Owners and Management 24
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ITEM 13: Certain Relationships and Related Transactions 24
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ITEM 14: Exhibits, Financial Statement Schedules, and Reports on Form 8-K 24
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</TABLE>
ITEM 1: BUSINESS
New Mexico and Arizona Land Company ("the Company"or "NZ") was
organized in 1908 as an Arizona Corporation. Currently it has 21 full time
employees and is conducting business in Arizona, New Mexico, Texas and Oklahoma.
The Company owns various urban and rural real estate properties, most of which
are debt free. It also owns extensive mineral rights. Real estate and mineral
holdings are listed and briefly described on pages 3 and 4.
NZ's primary business objective is to at all times maintain financial
integrity, while maximizing shareholder values through participation in local
business trends and focused opportunities.
Nearly $12,000,000 in revenue was generated in 1995 by NZ's three
joint ventures involved in land parcel sales and residential lot
development in Albuquerque. 308 developed lots were sold by these joint ventures
to home builders in 1995; additionally, two parcels totaling about 16 acres were
sold for a church and a school. Residential lot inventory is adequate for 1996,
although sales are expected to taper off if the local residential real estate
market returns to more normal levels. NZ holds a 75% interest in each of these
joint ventures.
In 1995, NZ purchased two parcels of land, totaling 147 acres, in
Scottsdale for the development of residential lots. It is expected that
development of at least one of these parcels will begin in 1996.
Also, in 1995, NZ entered into two new partnerships. It purchased a 51%
interest in a limited liability company, Texas Elm Fork Ranch L.L.C., that is
developing a family entertainment center in the Dallas-Fort Worth area. The
Rancho del Oro partnership purchased a 132-acre parcel designated for a
timeshare/golf course project in Sedona, Arizona. The Company's initial
ownership in this partnership is 90%, with the other partner having the right to
increase ownership up to 45% by meeting certain time requirements.
In northeastern Arizona, NZ owns nearly 160,000 acres of rural land
derived from 19th Century railroad land grants. Accordingly, the Company's book
basis in these rural lands about $1.60 per acre. Over the last 16 years, over
70,000 acres of these rural lands have been subdivided and sold as recreational
parcels through a joint venture and brokerage agreement. In southern Arizona,
the Company has
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a smaller recreational lot sales program which is being marketed through a local
broker. All the parcels are typically sold on installment contracts with
outstanding notes receivables now amounting to over $7,000,000. Total cash
received in 1995 was over $1,900,000 from these two rural parcel sales programs.
Both programs have only enough inventory to maintain sales through 1996.
NZ owns and operates four apartment complexes, 342 units, in four New
Mexico communities. These units have federally- subsidized rent contracts
designed for the elderly or handicapped. They maintain essentially full
occupancy. Operating profit was over $1,600,000, before depreciation and debt
service, and operating results should continue at this general level through
1996.
NZ owns a number of undeveloped urban properties in Arizona and New
Mexico. Two of the Albuquerque parcels are now under contract for sale at
attractive prices, though closing is dependent upon achieving a change in the
land use designation.
NZ owns over one million acres of mineral rights in Arizona and New
Mexico which originated, like the rural lands, from railroad land grants. The
majority of these lands are prospective for petroleum discovery. More assuredly,
they contain two delineated deposits of uranium which should be amenable to
modern solution mining techniques. Given adequate uranium market prices these
deposits could become commercial in the future. One deposit, located at
Crownpoint, New Mexico is currently leased to a uranium company specializing in
solution mining. In 1995, additional mineral rights were acquired by NZ under
property known to contain uranium and located adjacent to NZ owned mineral
lands at Crownpoint. The Company is currently working on design and permitting
issues associated with development of a solution mine on the unleased Hosta
Butte deposit.
In addition, NZ has identified a large deposit of industrial
grade limestone on its fee lands in New Mexico, and has 337 acres of mineral
rights under a number of petroleum producing wells in the Anadarko basin of
Oklahoma. Revenue from these wells and other mineral leasehold payments does
not, presently, constitute a significant portion of the Company's consolidated
revenue.
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ITEM 2: PROPERTIES
The following are schedules of properties owned by the Company at
December 31, 1995:
<TABLE>
<CAPTION>
Year
acquired/ Encumbrance
Location Description developed (in thousands)
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<S> <C> <C> <C>
RENTAL PROPERTIES
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ARIZONA
Scottsdale I.C.E. Buildings
13,020-square feet of buildings
on 1.6 acres 1983 $ 833
Tempe 12th Place Building
37,908-square foot building
on 2.7 acres 1983 833
Tucson 8 acres leased to
Parking Company of America;
Park and fly facility 1984-1988 --
NEW MEXICO
Albuquerque Brentwood Gardens Apartments
122-unit complex on 7.5 acres 1985 3,131
Airpark Building(1)
40,000-square foot office
building on 2.5 acres 1985-1986 --
Farmington Apple Ridge Apartments
80-unit complex on 5.7 acres 1985 2,071
Las Cruces Montana Meadows Apartments
80-unit complex on 6.1 acres 1985 1,965
Roswell Wildewood Apartments
60-unit complex on 4.3 acres 1985 1,417
LAND HELD FOR SALE
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NEW MEXICO
Albuquerque Manzano Mesa Ltd Partnership(2)
Residential lot development
(WillowWood) planned for 500
lots in five phases of which
348 lots were sold as of mid-
February, 1996. 1992-1996 --
Brown/NZD Development joint Venture(3)
Residential lot development. Seven
Bar South, 174 lots in three phases
of which 170 were sold as of mid-
February, 1996. 1993-1995 --
Seven Bar North, 730 lots planned in ten
phases, with 137 lots sold and 209
lots under contract as of mid-
February, 1996. 1995-1999 989
</TABLE>
(1) The property is owned by a general partnership of which the Company owns
50%.
(2) The property is owned by a limited partnership of which the Company owns
75%.
(3) The property is owned by a general partnership of which the Company owns
75%.
<TABLE>
<CAPTION>
Year Encumbrance
Location Description acquired Acres (in thousands)
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<S> <C> <C> <C> <C>
UNDEVELOPED URBAN PROPERTIES
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ARIZONA
Gilbert Cooper and Warner Roads 1986 11.95 $ 333
Mesa Greenfield Road and Dorsey Lane 1989 56.74
Chandler Ray and McClintock Roads 1986 14.66 141
Scottsdale Black Mountain and Pima Roads 1995 39.80
Scottsdale Carefree Highway and 104th Street 1995 107.91 643
Green Valley Continental and Frontage Roads 1986 9.53
Flagstaff Zuni and Walapai Streets 1981 10.00
Sedona Dry Creek Road (Long Canyon)(1) 1995 132.00
NEW MEXICO
Albuquerque Menaul and Broadway Roads 1986 17.70 1,500
Albuquerque Spain and Juan Tabo Blvd. 1985 5.89
Albuquerque Tramway and Academy Roads 1986 11.21
Albuquerque Seven Bar Loop and Ellison Roads(2) 1993 51.21 104
Las Cruces Mesilla Hills 1990 305.00
</TABLE>
(1) Owned by a partnership of which the Company's initial interest is 90%
(2) Owned by a general partnership of which the Company owns 75%.
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<TABLE>
<CAPTION>
RURAL AND MINERAL PROPERTIES
Acres Acres Encumbrance
County State Surface Mineral (in thousands)
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<S> <C> <C> <C> <C>
Apache Arizona 77,771 146,640
Coconino Arizona 21,191
Mohave Arizona 46,602
Navajo Arizona 80,951 474,932
Pima Arizona 752 752
Catron New Mexico 11,346
Cibola New Mexico 5,068 225,185
McKinley New Mexico 160 117,238 120
San Juan New Mexico 5,040
Socorro New Mexico 2,399
Valencia New Mexico 43,925
Various Oklahoma 337
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164,702 1,095,587 $14,080
===============================================================================================
</TABLE>
The Company is lessor on grazing and mineral leases covering
approximately 158,000 and 6,060 acres, respectively, and owns working interests
in various oil and gas joint ventures located in New Mexico, acquired from 1986
through 1988.
ITEM 3: LEGAL PROCEEDINGS
As of December 31, 1995 there existed no litigation which posed a
significant threat to New Mexico and Arizona Land Company or its assets.
ITEM 4: SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None
ITEM 5: MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
There are 2,739,446 shares of no par common stock issued, which consist
of 4,908 shares of treasury stock and 2,734,538 shares outstanding, at December
31, 1995. Sun NZ, L.L.C. owns approximately 50.13% of the outstanding shares of
the Company. The stock is admitted to unlisted trading privileges on the
American Stock Exchange under the symbol "NZ". Shareholders of record at
December 31, 1995, totaled 887. On March 4, 1995, the Board of Directors
declared a 10% stock dividend, which was paid on May 1, 1995. No dividends were
declared in 1991 through 1994.
The Company has authority to issue up to 10,000,000 shares of no par
serial preferred stock. To date no preferred shares have been issued.
<TABLE>
<CAPTION>
THE MARKET PRICE RANGE BY QUARTER:
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1995 1994
HIGH LOW High Low
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<S> <C> <C> <C> <C>
1st quarter 11 1/4 7 5/8 10 1/4 8 5/8
2nd quarter 11 7/8 9 1/2 10 1/8 8 1/8
3rd quarter 13 5/8 10 5/8 9 3/8 8 1/4
4th quarter 12 5/8 11 3/8 9 3/8 7 3/4
</TABLE>
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<TABLE>
<CAPTION>
ITEM 6: SELECTED FINANCIAL DATA
Years ended December 31,
(in thousands, except per share data) 1995 1994 1993 1992 1991
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<S> <C> <C> <C> <C> <C>
SUMMARY OF OPERATIONS:
Gross revenues from operations $22,062 $21,440 $10,337 $10,494 $ 9,507
Income (loss) before cumulative
effect of an accounting change 5,500 3,936 1,282 (1,472) 287
Net income (loss) 5,500 3,936 1,282 (892) 287
Earnings (loss) per share before
cumulative effect of an
accounting change(1) 2.02 1.44 0.47 (0.54) 0.11
Earnings (loss) per share(1) 2.02 1.44 0.47 (0.33) 0.11
SUMMARY OF FINANCIAL POSITION:
Total assets $57,682 $52,307 $46,622 $45,772 $53,457
Notes payable and lines of credit 14,080 14,546 15,268 17,392 22,001
Shareholders' equity 30,721 25,127 21,153 19,871 20,696
OTHER SUPPLEMENTAL INFORMATION:
Weighted average number of
shares outstanding(1) 2,727,845 2,727,538 2,728,326 2,731,738 2,723,550
Number of shareholders of record 887 925 970 1,035 1,070
Number of full time employees 21 19 19 19 19
</TABLE>
Reclassification of certain prior year amounts have been made for comparative
purposes.
(1) Prior years have been restated to reflect the 10% stock dividend paid May 1,
1995.
ITEM 7: MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATION
LIQUIDITY AND CAPITAL RESOURCES
Cash flow from sales of land, single-family and recreational lots,
distributions from its joint ventures and other on-going operations, along with
unused borrowing capacity, should be adequate for continuing operations and
investments during the next year.
Cash distributions from the three Albuquerque joint ventures in 1995
was $6,400,000. As development of these properties continues, additional cash
distributions are expected. Currently one of the joint ventures has two loan
facilities, which have required guarantees by the Company as well as its
partner. The Company may be required to continue to guarantee loans made to this
joint venture, as development of single-family lots continue. The Company and
its partner have guaranteed a $2,800,000 development loan and a $3,850,500 line
of credit, both to be utilized for lot development. As of February 23, 1996,
there was $239,000 borrowed against the $2,800,000 and $1,396,000 borrowed
against the $3,850,500 line.
In 1995, the Company paid off an outstanding debt of $1,013,000 and
renewed its $1,000,000 line of credit for a one year period, maturing October
1996. At February 23, 1996 there were no borrowings against this line. Also at
February 23, 1996, the Company had cash on hand of over $4,700,000.
INFLATION, DEFLATION, AND CHANGING PRICES
The results of operations and capital expenditures will continue to be
affected by inflation, deflation and changing prices. Price changes and market
trends in real estate, rental rates, oil, gas and uranium could have significant
effects on Company operations.
RESULTS OF OPERATIONS--1995 COMPARED TO 1994
Net income for 1995 was $5,500,000 ($2.02 per share) compared to
$3,936,000 ($1.44 per share) in 1994, an increase of about 40%. The 1994
earnings per share reflect the effects of the 10% stock dividend paid in 1995.
Revenue in 1995 from the sale of single-family lots was up by about $2,000,000
over 1994, but revenue from the sale of other properties was down by
approximately $3,000,000. Revenue from property sales was down by about
$1,000,000.
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<PAGE> 7
Rental properties continue to produce a steady cash flow and income
from year to year, in both 1995 and 1994 operating income before depreciation
and debt service was over $1,900,000 .
Investment income fluctuates according to the amount of cash on hand
and the amount of the outstanding notes receivable. Cash on hand during the
majority of 1995 was considerably greater than in 1994, thereby producing
interest income of $373,000 compared to $32,000 in 1994.
In 1995, the Company sold a note receivable for a gain of almost
$1,100,000, which is reflected in other income on the income statement. Also in
1995, one of the joint ventures in which the Company owned a 50% interest sold
its only asset, an office complex. The Company's investment in this joint
venture had been written off in prior years. Revenue of $1,609,000 was
recognized in 1995 and is reflected in gain (loss) from joint ventures on the
income statement.
The change in general and administrative expense from 1994 was a
decrease of $128,000. In 1994, there was a one-time charge of $398,000 that
resulted from a liability in connection with the resignation of a corporate
officer. In 1995, the Company awarded its corporate officers and directors
bonuses in the amount of $135,000 and $116,000, respectively.
Cash flow from operating activities decreased by $5,300,000 from the
prior year, due primarily to the purchase of property in the Sedona, Arizona
area that will be developed into a timeshare/golf course facility.
RESULTS OF OPERATIONS - 1994 COMPARED TO 1993
Results for 1994 were the best in eight years, with net income of
$3,936,000 compared to $1,282,000 in 1993. On March 4, 1995, the Board of
Directors declared a 10% stock dividend which was paid on May 1, 1995. Earnings
per share were $1.59 and $0.52 before restatement for the 10% dividend and $1.44
and $.047 after restatement in 1994 and 1993, respectively. Revenue from the
sale of residential lots doubled over last year, $8,700,000 compared to
$4,300,000 in 1993. The two multi-family parcels in our Seven Bar property were
also sold in 1994, which generated revenue of $4,400,000. The total gain on
sales of properties increased by $5,600,000 in 1994 over 1993.
Rental properties continue to produce a steady cash flow and income
from year to year. One of the industrial/office buildings located in Phoenix was
sold in 1994, for a gain of over $620,000.
The increase of $325,000 in interest income resulted from the
recognition of interest received from a note receivable. Interest expense
decreased by $488,000. The principal contributing factors were (a) the ability
to capitalize interest as a result of the on-going lot development programs in
our Seven Bar and WillowWood projects, (b) the refinancing of the four
apartment complexes at a lower interest rate and (c) the repayment of the
outstanding balance on the credit line. General and administrative expenses
increased by $512,000 in 1994. The major factor in the increase was a
one-time charge of $398,000. This represented the amount due under an employment
agreement with Richard E. Leonard, who resigned as Chairman, President and Chief
Executive Officer of the Company on June 27, 1994. Also in 1994, the majority of
the shares of the Company changed ownership. With the change in ownership,
certain costs such as insurance, legal fees and board of director fees
increased.
The increase in cash flow from operating activities and investing
activities in 1994 compared to 1993, was the result of sales of property, single
and multi-family residential lots in Albuquerque and an industrial property in
Phoenix.
RECENT ACCOUNTING PRONOUNCEMENTS
The Financial Accounting Standards Board recently issued SFAS No. 121,
"Accounting for the Impairment of Long- Lived Assets and for Long-Lived Assets
to Be Disposed Of," which the Company will be required to implement effective
for the fiscal year ending December 31, 1996.
This statement requires that long-lived assets be reviewed for
impairment whenever events or changes in circumstances indicate that the
carrying amount of the asset may not be recoverable. If the sum of the expected
future net cash flows (undiscounted and without interest charges) from an asset
to be held and used is less than the carrying value of the asset, an impairment
loss must be recognized in the amount of the difference between the carrying
value and fair value. Assets to be disposed of must be valued at the lower of
carrying value or fair value less costs to sell.
Management believes that if this standard were to be implemented
currently, there would not be an impairment loss; however, until it is
implementated, management will periodically reassess the Company's situation in
relation to SFAS No. 121.
In October 1995, the Financial Accounting Standards Board issued SFAS
No. 123, "Accounting for Stock-Based Compensation," which will be effective for
transactions entered into for the fiscal year ending December 31, 1996. The
Company is currently assessing the impact of SFAS No. 123 on the Company's
financial statements.
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<PAGE> 8
ITEM 8: FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
INDEPENDENT AUDITORS' REPORT
The Board of Directors and Shareholders
New Mexico and Arizona Land Company:
We have audited the accompanying consolidated balance sheets of New
Mexico and Arizona Land Company and subsidiaries as of December 31, 1995 and
1994, and the related consolidated statements of income, shareholders' equity
and cash flows for each of the years in the three-year period ended December 31,
1995. In connection with our audits of the consolidated financial statements, we
also have audited financial statement schedules III and IV for each of the years
in the three-year period ended December 31, 1995. These consolidated financial
statements and financial statement schedules are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
consolidated financial statements and financial statement 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
misstatement. 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 consolidated financial statements referred to above
present fairly, in all material respects, the financial position of New Mexico
and Arizona Land Company and subsidiaries as of December 31, 1995 and 1994, and
the results of their operations and their cash flows for each of the years in
the three-year period ended December 31, 1995, in conformity with generally
accepted accounting principles. Also, in our opinion, the related financial
statement schedules, when considered in relation to the basic consolidated
financial statements taken as a whole, present fairly, in all material respects,
the information set forth therein.
KPMG Peat Marwick LLP
Phoenix, Arizona
February 16, 1996
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ITEM 8: FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA (CONTINUED)
<TABLE>
<CAPTION>
New Mexico and Arizona Land Company and Subsidiaries
CONSOLIDATED STATEMENTS OF INCOME
Years Ended December 31,
(in thousands, except per share data) 1995 1994 1993
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<S> <C> <C> <C>
Revenue:
Property sales $15,910 $16,868 $ 5,999
Property rentals 2,989 3,094 3,121
Investment income 1,678 1,221 896
Other 1,485 257 321
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22,062 21,440 10,337
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Expenses:
Cost of property sales 9,159 8,949 3,716
Rental property 1,089 1,173 1,130
General and administrative 1,518 1,647 1,141
Interest 946 1,053 1,541
Depreciation, depletion and amortization 487 528 592
- ------------------------------------------------------------------------------------------------------
13,199 13,350 8,120
Income Before Joint Ventures, Minority
Interests and Income Taxes 8,863 8,090 2,217
Gain (loss) from joint ventures 1,582 (234) (88)
Minority interests (1,316) (1,309) 38
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Income Before Income Taxes 9,129 6,547 2,167
Income taxes 3,629 2,611 885
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Net Income $ 5,500 $ 3,936 $ 1,282
=======================================================================================================
Earnings per Share of Common Stock(1) $ 2.02 $ 1.44 $ 0.47
=======================================================================================================
Weighted Average Number of Common Shares(1) 2,728 2,728 2,728
=======================================================================================================
</TABLE>
See accompanying Notes to Consolidated Financial Statements.
(1) 1994 and 1993 restated to reflect a 10% stock dividend paid May 1, 1995.
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<PAGE> 10
ITEM 8: FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA (CONTINUED)
<TABLE>
<CAPTION>
New Mexico and Arizona Land Company and Subsidiaries
CONSOLIDATED BALANCE SHEETS
December 31,
(in thousands) 1995 1994
- ---------------------------------------------------------------------------------------------------
<S> <C> <C>
Assets
Properties, net $41,327 $35,432
Receivables, net 9,690 10,224
Investments in joint ventures 409 454
Cash and cash equivalents 5,301 5,111
Other 955 1,086
- ---------------------------------------------------------------------------------------------------
Total assets $57,682 $52,307
===================================================================================================
Liabilities and Shareholders' Equity
Notes payable and lines of credit $14,080 $14,546
Accounts payable and accrued liabilities 999 2,165
Deferred revenue 5,330 5,494
Deferred income taxes 4,188 3,723
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Total liabilities 24,597 25,928
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Minority interests 2,364 1,252
- ---------------------------------------------------------------------------------------------------
Shareholders' equity:
Preferred stock, no par value; 10,000,000 shares
authorized, none issued
Common stock, no par value; 30,000,000 shares
authorized; 2,739,446 shares issued; 2,734,538
and 2,727,538 shares outstanding at December 31,
1995 and 1994, respectively(1) 10,051 7,812
Additional paid-in capital 966 929
Retained earnings 19,736 16,478
Treasury stock, at cost, 4,908 and 11,908 shares
at December 31, 1995 and 1994, respectively(1) (32) (92)
- ------------------------------------------------------------------------------------------------------
Total shareholders' equity 30,721 25,127
- ------------------------------------------------------------------------------------------------------
Total liabilities and shareholders' equity $57,682 $52,307
======================================================================================================
</TABLE>
See accompanying Notes to Consolidated Financial Statements.
(1) Restated to reflect a 10% stock dividend paid May 1, 1995.
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<PAGE> 11
ITEM 8: FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA (CONTINUED)
<TABLE>
<CAPTION>
New Mexico and Arizona Land Company and Subsidiaries
CONSOLIDATED STATEMENTS OF CASH FLOWS
Years ended December 31,
(in thousands) 1995 1994 1993
- -----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
CASH FLOW FROM OPERATING ACTIVITIES:
Net income $5,500 $3,936 $1,282
Non-cash items included above:
Depreciation, depletion and amortization 487 528 592
Deferred revenue (1,234) (1,091) (782)
Deferred income taxes 465 653 (430)
(Gain) loss from joint ventures (1,582) 234 88
Minority interests 1,316 1,309 (38)
Employee restricted stock plan 13 38 51
Directors stock bonus 84 -- --
Net change in:
Receivables 1,262 (1,438) 28
Land held for sale (6,789) (1,095) (231)
Other assets 131 (155) 215
Accounts payable and accrued liabilities (1,169) 859 867
- -----------------------------------------------------------------------------------------------------------
Net cash flow from operating activities (1,516) 3,778 1,642
- -----------------------------------------------------------------------------------------------------------
CASH FLOW FROM INVESTING ACTIVITIES:
Additions to properties (3,635) (814) (2,043)
Proceeds from sale of properties 4,042 1,849 1,938
Proceeds from notes receivable 994 1,074 1,265
Addition to notes receivable (652) -- --
Distribution to minority interest partners (1,443) (316) --
Contribution to joint ventures -- (22) (20)
Distributions from joint ventures 1,627 -- 43
- -----------------------------------------------------------------------------------------------------------
Net cash flow from investing activities 933 1,771 1,183
- -----------------------------------------------------------------------------------------------------------
CASH FLOW FROM FINANCING ACTIVITIES:
Proceeds from debt 3,664 3,808 3,122
Payment of debt (4,130) (4,780) (5,875)
Capital contribution from minority
interest partners 1,239 -- 297
Purchase treasury shares -- -- (51)
- -----------------------------------------------------------------------------------------------------------
Net cash flow from financing activities 773 (972) (2,507)
- -----------------------------------------------------------------------------------------------------------
Net increase in cash and cash equivalents 190 4,577 318
- -----------------------------------------------------------------------------------------------------------
Cash and cash equivalents at beginning of year 5,111 534 216
- -----------------------------------------------------------------------------------------------------------
Cash and cash equivalents at end of year $5,301 $5,111 $ 534
============================================================================================================
</TABLE>
See accompanying Notes to Consolidated Financial Statements.
-11-
<PAGE> 12
ITEM 8: FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA (CONTINUED)
New Mexico and Arizona Land Company and Subsidiaries
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
<TABLE>
<CAPTION>
Total
Additional Share-
Common stock Treasury stock paid-in Retained holders'
(in thousands) Shares(1)Amount Shares(1) Amount capital earnings Equity
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
BALANCES AT
DECEMBER 31, 1992 2,740 $ 7,812 6 $(41) $840 $11,260 $19,871
======================================================================================================================
Net income 1,282 1,282
Employee restricted
stock plan 51 51
Purchase of
treasury stock 6 (51) (51)
- ----------------------------------------------------------------------------------------------------------------------
BALANCES AT
DECEMBER 31, 1993 2,740 $ 7,812 12 $(92) $891 $12,542 $21,153
======================================================================================================================
Net income 3,936 3,936
Employee restricted
stock plan 38 38
- ----------------------------------------------------------------------------------------------------------------------
BALANCES AT
DECEMBER 31, 1994 2,740 $ 7,812 12 $(92) $929 $16,478 $25,127
======================================================================================================================
Net income 5,500 5,500
10% stock dividend 2,239 (2,242) (3)
Employee restricted
stock plan 13 13
Directors bonus (7) 60 24 84
- ----------------------------------------------------------------------------------------------------------------------
BALANCES AT
DECEMBER 31, 1995 2,740 $10,051 5 $(32) $966 $19,736 $30,721
======================================================================================================================
</TABLE>
See accompanying Notes to Consolidated Financial Statements.
(1) Restated to reflect a 10% Stock Dividend Paid May 1, 1995.
-12-
<PAGE> 13
ITEM 8: FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA (CONTINUED)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1 - SUMMARY OF ACCOUNTING POLICIES:
Nature of Business
New Mexico and Arizona Land Company was organized in 1908 as an Arizona
Corporation and is conducting business in Arizona, New Mexico, Texas and
Oklahoma. The Company owns and develops urban real estate. It also owns
extensive rural real estate and mineral rights.
Principles of consolidation
The consolidated financial statements include the accounts of New
Mexico and Arizona Land Company, its wholly-owned subsidiaries and
majority-owned partnerships ("the Company"). All material intercompany
transactions have been eliminated in consolidation. Certain financial statement
items from prior years may have been reclassified to be consistent with the
current year financial statement presentation.
Properties
Properties are recorded at cost net of valuation allowances. Depreciation on
rental properties is provided over the estimated useful lives of the assets,
ranging from 5 to 35 years, using the straight-line method. Maintenance and
repairs are charged to income as incurred and renewals or betterments are
capitalized.
Investments in joint ventures
The Company's investments in joint ventures are accounted for using the
equity method.
Property sales and deferred revenue
Profits on property sales are recognized, subject to the assessment of
collectibility of the related receivables, when the buyer's investment amounts
to at least 20% of the sales price when development is to commence within a two
year period or 25% of the sales price on all other sales. In all instances the
buyer remains obligated to increase this investment by a minimum amount
annually. Profits on sales that do not meet these requirements are recognized on
the installment basis provided minimum down payments are received.
Deferred revenue results from land sales being accounted for on the
installment basis and rents collected in advance. Rents collected in advance
represent annual rental payments made in advance of the lease year and are
considered earned ratably over the lease year for financial statement purposes.
Income taxes
The Company follows Statement of Financial Accounting Standards No.109,
"Accounting for Income Taxes" ("Statement 109"). Under the asset and liability
method of Statement 109, deferred tax assets and liabilities are recognized for
the future tax consequences attributable to differences between the financial
statement carrying amounts of existing assets and liabilities and their
respective tax bases and operating loss and tax credit carryforwards. Deferred
tax assets and liabilities are measured using enacted tax rates expected to
apply to taxable income in the years in which those temporary differences are
expected to be recovered or settled. The effect on deferred tax assets and
liabilities of a change in tax rates is recognized in income in the period that
includes the enactment date.
Earnings per share
Earnings per share computations are based on the weighted average
number of common shares outstanding during the year of 2,727,845 in 1995,
2,727,538 in 1994 and 2,728,326 in 1993. The amounts for 1994 and 1993 have been
restated to reflect a stock dividend paid on May 1, 1995.
Cash and cash equivalents
Cash and cash equivalents include cash on hand, money market accounts
and temporary investments, with an original maturity of three months or less.
Fair Value of Financial Instruments
Statement of Financial Accounting Standards No. 107, Disclosures about
Fair Value of Financial Instruments, requires
-13-
<PAGE> 14
ITEM 8: FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA (CONTINUED)
that a company disclose estimated fair values for its financial instruments. The
carrying amounts of the Company's receivables and notes payable approximate
their estimated fair value because they are at interest rates comparable to
market rates, given the terms and maturities. Considerable judgement is required
to interpret market data to develop the estimates of fair value. Accordingly,
these fair value estimates are not necessarily indicative of the amounts the
Company might pay or receive in actual market transactions.
Management Estimates
The preparation of 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;
disclosure of contingent assets and liabilities and; the amounts of revenue and
expenses at the date of the financial statements. Actual results could differ
from those estimates.
NOTE 2: - PROPERTIES
<TABLE>
<CAPTION>
Properties are comprised of the following at December 31,
(in thousands) 1995 1994
- ------------------------------------------------------------------------
<S> <C> <C>
Rural lands and unimproved
urban properties $18,542 $18,296
Land held for sale 12,475 4,738
Rental properties 17,953 16,827
Other 1,507 5,113
Accumulated depreciation,
depletion and amortization (4,845) (4,442)
Valuation Allowance (4,305) (5,100)
- ------------------------------------------------------------------------
$41,327 $35,432
========================================================================
</TABLE>
The future rentals on non-cancelable operating leases related to the
Company's rental properties, but excluding its four apartment complexes, are as
follows: $634,990 in 1996; $553,414 in 1997; $279,837 in 1998; $279,837 in 1999;
$267,337 in 2000; and $722,535 in later years. The four apartment complexes,
which are Federally subsidized under the U.S. Department of Housing and Urban
Development Section 8 Housing-Assistance-Payments Program, have contributed
revenue of $2,412,000 in 1995, $2,377,000 in 1994 and $2,337,000 in 1993.
In 1995 the Company sold the note it held on a property that was
classified as an insubstance foreclosure. The note was carried at $3,019,000 and
sold for $4,100,000. A gain of $1,081,000 was recognized with the sale of this
note.
During 1995 and 1994 the Company acquired two residential real estate
parcels at a cost of $2,981,000 and $1,438,000, of which $606,000 and $999,000
was financed, respectively. Also in 1995, the Company acquired a 90% interest in
a real estate parcel, at a cost of $7,500,000 that is scheduled to be developed
as a timeshare/golf course resort and a 51% interest in a limited liability
company, at a cost of $500,000, that is developing a family entertainment
center.
On an annual basis the Company performs a net realizable value ("NRV")
determination of its properties. At December 31, 1995, it was determined that
the NRV was at or above the book carrying value for each of its properties.
-14-
<PAGE> 15
ITEM 8: FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA (CONTINUED)
<TABLE>
<CAPTION>
NOTE 3 - RECEIVABLES
Receivables consist of the following at December 31,
(in thousands) 1995 1994
- -----------------------------------------------------------------------
<S> <C> <C>
Mortgage notes receivable $9,590 $ 8,832
Other notes receivable 7 38
Accounts receivable 168 1,429
Reserve for bad debts (75) (75)
- -----------------------------------------------------------------------
$9,690 $10,224
=======================================================================
</TABLE>
The Company sells recreational land, principally in 40-acre parcels.
Since 1980, over 70,000 acres have been sold in Arizona. The mortgage notes
receivable from these land sales, due over ten to fifteen years, bear interest
at rates ranging from 10.5% to 12%, and are secured by the properties sold. At
December 31, 1995 and 1994 mortgage notes receivable relating to these sales
totalled $7,318,000 and $6,499,000, respectively. The Company sold land for
mortgage notes receivable in the amount of $2,045,000 and $1,285,000 during the
years ended December 31, 1995 and 1994, respectively. In 1995 and 1994 the
Company collected $903,000 and $969,000 in principal payments on these land sale
contracts. In 1995 the sales volume increased due to the addition of a
1,370-acre program begun in southern Arizona. By the end of 1996, both the
northern and southern Arizona programs will have sold the bulk of the remaining
inventory. So, with these programs winding down and if no new inventory is
added, it is expected that the 1996 sales volume will decrease. Principal
payments should remain at the 1995 level for the next two to three years and
then decrease as the older contracts are paid off.
The Company has a mortgage note receivable with a remaining principal
balance of $2,221,000, from a 1983 sale of an apartment complex located in
Flagstaff, Arizona. This note, which matured in September 1992, was restructured
under a bankruptcy reorganization plan. Under the reorganization plan the
maturity of the note was extended to January 13, 2000, the interest rate was
reduced from 10% to 8.75% and the payments were changed from quarterly
interest-only payments to monthly payments of principal and interest. Also in
connection with that sale, the Company remained contingently liable under a
mortgage note that was assumed by the purchaser. The estimated fair value of the
property securing the Company's mortgage note receivable exceeds the basis of
the mortgage note receivable and the mortgage assumed by the buyer.
Consequently, should the buyer default under the note, the Company would not
recognize a loss on foreclosure.
NOTE 4 - NOTES PAYABLE AND LINES OF CREDIT
On November 1, 1995, the Company obtained a $1,000,000 line of credit
which matures October, 1996. The loan is secured by certain real estate
holdings. Interest is at the bank's prime rate (8.50% at December 31, 1995) plus
3/4%. At December 31, 1995, there were no borrowings on this line.
The Company and its partner guaranteed a development loan and a line of
credit for one of its majority-owned partnerships. The maximum amount of the
development loan is $2,800,000. This loan expires April 1996. The commitment
amount of the line of credit is $3,850,500. This facility expires in August
1996. At December 31, 1995, the partnership had $135,000 outstanding on the
$2,800,000 loan and $854,000 outstanding on the $3,850,500 line. The interest
rates are at prime plus 1/2% and at prime, respectively. Interest on both
facilities is paid monthly.
At December 31, 1995, the Company had other notes payable secured
principally by real estate properties, aggregating $13,091,000, with interest
rates ranging from 7 1/8% to 10 3/4%, payable through 2009. Interest payments
vary from monthly to semiannually.
Principal payments due on all notes payable and lines of credit are as
follows: $4,778,000 in 1996; $618,000 in 1997; $668,000 in 1998; $663,000 in
1999; $685,000 in 2000; and $6,668,000 in later years. Interest paid in 1995,
1994 and 1993, amounted to $1,316,000, $1,449,000 and $1,601,000, respectively.
Interest cost incurred in 1995, 1994 and 1993, was $1,286,000, $1,434,000 and
$1,650,000, respectively, of which $340,000, $381,000 and $141,000 was
capitalized.
-15-
<PAGE> 16
ITEM 8: FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA (CONTINUED)
NOTE 5 - INCOME TAXES
Income tax expense is comprised of the following:
<TABLE>
<CAPTION>
(in thousands) 1995 1994 1993
- ---------------------------------------------------------------
<S> <C> <C> <C>
Current:
Federal $2,531 $1,566 $1,052
State 633 392 263
Deferred:
Federal 368 522 (340)
State 97 131 (90)
- ---------------------------------------------------------------
$3,629 $2,611 $ 885
===============================================================
</TABLE>
The reconciliation of the computed statutory income tax expense to the
effective income tax expense follows:
<TABLE>
<CAPTION>
(in thousands) 1995 1994 1993
- -------------------------------------------------------------
<S> <C> <C> <C>
Statutory Federal income
tax expense $3,104 $2,226 $737
Reconciling items:
State income taxes,
net of Federal benefit 474 345 114
Other 51 40 34
- --------------------------------------------------------------
$3,629 $2,611 $885
==============================================================
</TABLE>
The effects of temporary differences that give rise to significant
portions of the deferred tax assets and deferred tax liabilities at December 31,
<TABLE>
<CAPTION>
(in thousands) 1995 1994
- ------------------------------------------------------------------------
<S> <C> <C>
Deferred tax assets:
Properties, principally due to
valuation allowances, depreciation
and amortization of costs $ 2,764 $ 3,365
Investments in joint ventures,
principally due to valuation allowances 174 149
Other 142 138
- ------------------------------------------------------------------------
Total gross deferred tax assets $ 3,080 $ 3,652
- ------------------------------------------------------------------------
Deferred tax liabilities:
Properties, principally due to basis
differences upon acquisition $(5,665) $(5,446)
Receivables/deferred revenue principally
due to installment sales (1,537) (1,788)
Other (66) (141)
- -------------------------------------------------------------------------
Total gross deferred tax liabilities (7,268) (7,375)
- -------------------------------------------------------------------------
Net deferred tax liability $(4,188) $(3,723)
========================================================================
</TABLE>
-16-
<PAGE> 17
ITEM 8: FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA (CONTINUED)
Income taxes paid in 1995, 1994 and 1993 amounted to $3,596,000,
$2,164,000 and $1,004,000, respectively.
NOTE 6 - INVESTMENTS IN JOINT VENTURES
The Company participates in a joint venture that developed an office
building. Revenues, costs and profits or losses are shared equally. In prior
years the Company reduced its investment of its share of this joint venture to
the estimated realizable value of the building, which is the only asset of this
joint venture. Operations of this joint venture continue.
The following is a summary of the condensed combined balance sheets and
results of operations of this joint venture:
<TABLE>
<CAPTION>
December 31, (in thousands) 1995 1994
- -----------------------------------------------------------
<S> <C> <C>
Assets, primarily real estate $1,865 $1,908
===========================================================
Liabilities $ 18 $ 20
Capital 1,847 1,888
- -----------------------------------------------------------
$1,865 $1,908
===========================================================
</TABLE>
<TABLE>
<CAPTION>
Years ended December 31, (in thousands) 1995 1994
1993 -------------------------------------------------------------------------
<S> <C> <C> <C> Revenue
$ 249 $223 $ 183 Operating expenses 173
177 219 Depreciation and amortization 83 70
69 ------------------------------------------------------------------------- Net
loss $(7) $(24) $(105)
=========================================================================
</TABLE>
In 1995, a joint venture in which the Company owned a 50% interest sold
its only asset, an office complex. The Company's investment in this joint
venture had been written off in prior years. Revenue of $1,609,000 was
recognized in 1995.
In addition to the above real estate joint ventures, the Company has
invested in various working-interest petroleum properties principally located in
the San Juan Basin of New Mexico. The Company's interest ranges from 5% to 50%.
The net assets and results of operations applicable to the Company are as
follows:
<TABLE>
<CAPTION>
December 31,
(in thousands) 1995 1994 1993
- ---------------------------------------------------------------------
<S> <C> <C> <C>
Net assets $ 17 $ 37 $255
=====================================================================
Revenue $ 51 $ 54 $ 59
Expenses 71 276 95
- ---------------------------------------------------------------------
Net Loss $(20) $(222) $(36)
=====================================================================
</TABLE>
-17-
<PAGE> 18
ITEM 8: FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA (CONTINUED)
NOTE 7 - RETIREMENT PLANS
401(k) Savings Plan:
The Company has a 401(k) Savings Plan for all of its employees. The
Company matches up to 3% of the employee's salary contributed. Total expense for
the Company under this plan was $19,800, $23,600 and $21,500 for 1995, 1994 and
1993, respectively.
Pension Plan:
The Company's defined benefit retirement plan covers substantially all
full-time employees. The benefits are based on employment commencement date,
years of service and compensation. Plan restatement to conform with TRA86 and
subsequent changes was completed in December 1994. In accordance with Statement
of Financial Accounting Standards No. 87 Employers' Accounting for Pensions
(FAS87) rules, the effect of the restatement was recognized in 1995. No
additional post-employment benefits are provided and plan assets are invested in
various mutual funds.
The net periodic pension benefit is computed as follows:
<TABLE>
<CAPTION>
(in thousands) 1995 1994 1993
- ---------------------------------------------------------------
<S> <C> <C> <C>
Service cost $ 39 $ 41 $ 50
Interest cost 41 41 38
Return on assets
Actual (333) 32 (128)
Deferred gain (loss) 251 (115) 42
Amortization of unrecognized
net transition asset (26) (25) (25)
- ---------------------------------------------------------------
Net periodic pension benefit $ (28) $ (26) $ (23)
===============================================================
</TABLE>
The Company accrues retirement benefits based on an independent
actuarial valuation for the plan.
The discount rate and the rate of increase in future compensation
levels used in determining the actuarial present value of the projected benefit
obligations were 7% and 0%, respectively, at December 31, 1995, 1994 and 1993.
The expected long-term rate of return on plan assets was 7% for 1995, 1994 and
1993.
The funded status of the Company's defined benefit retirement plan is
as follows:
<TABLE>
<CAPTION>
December 31,
(in thousands) 1995 1994
- -----------------------------------------------------------------
<S> <C> <C>
Actuarial present value of
benefit obligations:
Vested benefits $ 672 $ 674
Nonvested benefits 4 3
- -----------------------------------------------------------------
Accumulated benefit obligation and
projected benefit obligation 676 677
Fair value of plan assets 1,414 1,271
- -----------------------------------------------------------------
Excess of assets over projected
benefit obligation (738) (594)
Unrecognized net gain (loss) 104 (38)
Unrecognized net transition asset 383 409
- -----------------------------------------------------------------
Prepaid pension asset $ (251) $ (223)
=================================================================
</TABLE>
-18-
<PAGE> 19
ITEM 8: FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA (CONTINUED)
NOTE 8 - RESTRICTED STOCK PLAN
In 1988 the Company adopted a Restricted Stock Plan ("the Plan") to
distribute shares of stock to senior executives at no cost. 100,000 shares of
common stock are authorized for awards during the Plan's ten year term. No
shares were awarded in 1995, 1994 and 1993. A total of 31,400 shares have been
awarded since inception of the plan. Forfeiture restrictions lapse on the third,
fourth and fifth anniversary after award. In 1994 a special dispensation was
given due to the change of control of the Company and restrictions were lifted
on 15,334 shares. In 1995 special dispensation was given due to internal
restructuring and restrictions were lifted on 4,507 shares. Restrictions will
be lifted on the remaining shares as follows: 1,283 in 1996; 733 in 1997.
Compensation expense is accrued for the awards of stock in each period
in which services are performed. The Company recognized compensation expense of
$13,000, $38,000 and $51,000 related to these awards for the years ended
December 31, 1995, 1994 and 1993, respectively.
NOTE 9 - DIRECTOR STOCK BONUS
At the December 15, 1995 Meeting of the Board of Directors the Company
determined that each Director be awarded 1,000 shares of the Company's common
stock. It was further determined that the stock used for these awards would be
treasury stock. Of the Company's 11,908 shares of treasury stock, 7,000 shares
were reissued at 1,000 shares each, to each director, on December 28, 1995. The
shares were valued at the fair market value on the grant date. In addition, a
cash award of $4,750 was paid to each director, resulting in a charge to
compensation expense of approximately $116,000 in 1995. The reissued shares
contain a restrictive legend as required under Rule 144 of the Securities Act
of 1933.
NOTE 10 - UNAUDITED QUARTERLY FINANCIAL INFORMATION
Certain unaudited quarterly financial information for the years ended
December 31, 1995, and 1994 is presented below:
<TABLE>
<CAPTION>
(in thousands, First Second Third Fourth
except per share data) Quarter Quarter Quarter Quarter Total
- --------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
1995
Revenue $4,095 $6,007 $7,665 $4,295 $22,062
Net income $1,446 $1,803 $1,404 $ 847 $ 5,500
Earnings per share $ 0.53 $ 0.66 $ 0.52 $ 0.31 $ 2.02
1994
Revenue $3,406 $4,100 $3,453 $10,481 $21,440
Net income $ 595 $ 394 $ 625 $ 2,322 $ 3,936
Earnings per share(1) $ 0.22 $ 0.14 $ 0.23 $ 0.85 $ 1.44
</TABLE>
(1) Restated to reflect 10% stock dividend paid May 1, 1995.
-19-
<PAGE> 20
ITEM 8: FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA (CONTINUED)
NOTE 11 - INDUSTRY SEGMENTS
The following summarizes information about the Company's industry
segments for the years ended December 31,
<TABLE>
<CAPTION>
(in thousands) 1995 1994 1993
- ---------------------------------------------------------------------
<S> <C> <C> <C>
TOTAL REVENUE
<S> <C> <C> <C>
Real estate $21,881 $21,216 $ 9,989
Minerals 181 224 348
OPERATING PROFIT
Real estate $ 9,054 $ 6,420 $ 2,064
Minerals 75 127 103
IDENTIFIABLE ASSETS
Real estate $56,969 $51,558 $45,849
Minerals 713 749 773
</TABLE>
20
<PAGE> 21
New Mexico and Arizona Land Company and Subsidiaries
SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION
<TABLE>
<CAPTION>
Cost
capi-
talized Gross amount at which
Initial cost to Subse- carried at Close
Company quent to of period(1)
-------------------- acqui- ------------------------------ Accum-
Buildings sition Buildings ulated
and -------- and depre- Date
December 31, 1995 Encum- improve- Improve- improve- Total ciation acqu-
(in thousands) brances Land ments ments Land ments (a)(2) (b)(6) ired
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
UNIMPROVED PROPERTIES(3)
Arizona and
New Mexico $2,721 $17,384 $1,158 $17,523 $ 1,019 $18,542 $ 193 1908-1995
LAND HELD FOR SALE
40-acre lots,
Arizona 609 609 609 1908-1986
Scottsdale, AZ 776 30 806 806 1995
Sedona, AZ(4) 7,500 59 7,559 7,559 1995
Albuquerque, NM(3) 989 1,204 2,297 1,204 2,297 3,501 1992-1995
RENTAL PROPERTIES
Commercial Buildings
Phoenix, AZ 1,666 947 1,354 152 947 1,506 2,453 607 1986
Land Leases
Tucson, AZ 2,130 2,130 2,130 1984
Apartments
New Mexico 8,584 1,187 10,665 406 1,187 11,071 12,258 3,388 1985
Family Entertainment
Center, Irving, TX(5) 1,112 1,112 1,112 1995
- ----------------------------------------------------------------------------------------------------------------------------------
$13,960 $31,737 $13,131 $4,102 $31,965 $17,005 $48,970 $4,188
==================================================================================================================================
</TABLE>
(1) Tax basis in $33,600,000
(2) A valuation allowance in the amount of $4,305,000 was established in prior
years to reflect the Company's estimated realizable value upon ultimate
disposition of certain of its properties, principally unimproved urban
real estate.
(3) Certain properties are owned by partnerships of which the Company has a
75% ownership.
(4) Owned by a partnership of which the Comapny has a 90% ownership.
(5) Owned by a limited liability company of which the Company has a 51%
ownership
(6) Life on which depreciation in the latest income statements is computed: 5
to 35 years.
21
<PAGE> 22
(A) NOTE TO SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION
<TABLE>
<CAPTION>
Years ended December 31,
(in thousands) 1995 1994 1993
- ---------------------------------------------------------------------
<S> <C> <C> <C>
Balance at beginning of year $39,861 $40,453 $39,510
Additions during year:
Acquisitions 10,580 1,438 3,469
Improvements 5,539 7,123 2,199
Deductions during year:
Cost of real estate sold (7,010) (9,153) (4,725)
- ---------------------------------------------------------------------
Balance at Close of year $48,970 $39,861 $40,453
=====================================================================
</TABLE>
(B) NOTE TO SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION
<TABLE>
<CAPTION>
Years ended December 31,
(in thousands) 1995 1994 1993
- ---------------------------------------------------------------------
<S> <C> <C> <C>
Balance of accumulated
depreciation at beginning
of year $3,764 $3,526 $3,044
Additions during year:
Current year's depreciation 447 476 482
Deductions during year:
Real estate sold (23) (238)
- ---------------------------------------------------------------------
Balance at close of year $4,188 $3,764 $3,526
=====================================================================
</TABLE>
22
<PAGE> 23
SCHEDULE IV - MORTGAGE LOANS ON REAL ESTATE
<TABLE>
<CAPTION>
Principal
amount of
loans
subject to
Face Carrying deli-
amount amount quent
Final Period of mort- prin-
December 31,1995 Interest maturity payment mort- gages cipal or
(in thousands) rate date terns gages (3)(a) interest
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Conventional first mortgages
on unimproved land sales
in Arizona and New Mexico
(predominately 40-acres
parcel sales) 6%-12% 1996-2011 Monthly(1) $12,175 $7,295(2) $154
Mortgages on the sale
of commercial properties:
Apartment complex 8.75% 2000 Monthly(1) 2,852 2,220
- ------------------------------------------------------------------------------------------------------------------
$15,027 $9,515 $154
==================================================================================================================
</TABLE>
(1) Level payments of principal and interest
(2) Net of reserve for bad debt of $75,000.
(3) Tax basis is $7,687,000
(A) NOTE TO SCHEDULE IV - MORTGAGE LOANS ON REAL ESTATE
<TABLE>
<CAPTION>
Years ended December 31,
(in thousands) 1995 1994 1993
- -------------------------------------------------------------------------
<S> <C> <C> <C>
Balance at beginning of period $8,757 $8,804 $8,187
Additions during period:
New Mortgage loans 2,045 1,285 2,167
Deduction during period:
Collections of principal (964) (1,061) (1,103)
Forfeitures on installment
contracts (323) (271) (447)
- -------------------------------------------------------------------------
Balance at close of year $9,515 $8,757 $8,804
=========================================================================
</TABLE>
ITEM 9: CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
The Company has not changed nor had material disagreements with its
independent accountants over the past 24 months.
ITEM 10: DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
Information required under this item is contained in New Mexico and
Arizona Land Company's 1996 Proxy Statement, pursuant to Regulation 14A, and is
incorporated herein by reference.
ITEM 11: EXECUTIVE COMPENSATION
Information required under this item is contained in New Mexico and
Arizona Land Company's 1996 Proxy Statement, pursuant to Regulation 14A, and is
incorporated herein by reference.
23
<PAGE> 24
ITEM 12: SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
Information required under this item is contained in New Mexico and
Arizona Land Company's 1996 Proxy Statement, pursuant to Regulation 14A, and is
incorporated herein by reference.
ITEM 13: CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Information required under this item is contained in New Mexico and
Arizona Land Company's 1996 Proxy Statement, pursuant to Regulation 14A, and is
incorporated herein by reference.
ITEM 14: EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K
The following consolidated financial statements and schedules are included
in Item 8:
Independent Auditors' Report Statements of Shareholders' Equity
Balance Sheets Notes to Consolidated Financial Statements
Statements of Income Real Estate and Accumulated Depreciation
Statements of Cash Flows Mortgage Loans on Real Estate
Exhibit 27. Financial Data Schedule
All other exhibits are omitted because they are inapplicable, contained
elsewhere in the report or have been previously filed with the Securities and
Exchange Commission.
No Form 8-K was filed in 1995.
24
<PAGE> 25
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:
NEW MEXICO AND ARIZONA LAND COMPANY
(Registrant)
<TABLE>
<S> <C>
/s/William A Pope /s/Elizabeth M. Bedewi
- --------------------------- ----------------------------
William A. Pope Elizabeth M. Bedewi
President and Principal Senior Vice President and
Executive Officer Principal Financial Officer
</TABLE>
Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following persons in behalf of the Registrant and
in the capacities and on the date indicated:
<TABLE>
<S> <C>
/s/Stephen E. Renneckar /s/John C. Lucking
- --------------------------- ----------------------------
Stephen E. Renneckar John C. Lucking
Chairman Director
/s/William A. Pope /s/Arnold L. Putterman
- --------------------------- ----------------------------
William A. Pope Arnold L. Putterman
Director Director
/s/Ronald E. Strasburger /s/Robert Wertheim
- --------------------------- ----------------------------
Ronald E. Strasburger Robert Wertheim
Director Director
/s/Richard A. Wessman
- ---------------------------
Richard A. Wessman
Director
</TABLE>
Dated: March 8, 1996
25
<PAGE> 26
GENERAL INFORMATION
DIRECTORS
Term expiring in 1996:
Arnold L. Putterman(1), New York, New York, Counselor at Law
Stephen E. Renneckar(2)(3), Phoenix, Arizona, Vice President, General Counsel,
SunChase Holdings, Inc.
Robert Wertheim(1), Albuquerque, New Mexico, Chairman, Charter Companies
Richard A. Wessman(1)(3), Roseville, California, President, Sterling Pacific
Assets, Inc.
Term expiring in 1997:
John C. Lucking(2)(3), Phoenix, Arizona, Consulting Economist, Econ-Linc
William A. Pope, Phoenix, Arizona, President and CEO of the Company and SunChase
Holdings Inc.
Ronald E. Strasburger(2), Phoenix, Arizona, Loans and Acquisitions Manager,
Sterling Pacific Management Services, Inc.
1. Audit Committee
2. Compensation and Nominating Committee
3. Executive Committee
OFFICERS
William A. Pope, President and Chief Executive Officer
Elizabeth M. Bedewi, Senior Vice President, Treasurer and Secretary
Joe D. Sphar, Vice President--Minerals and Assistant Secretary
SHAREHOLDER INFORMATION
ANNUAL MEETING
The annual meeting of the shareholders of the Company will be held in Phoenix,
Arizona, Monday May 20, 1996. Notice of meeting and proxy will be mailed to
shareholders of record as of March 25, 1996. Please notify E. M. Bedewi,
Secretary, of any change of address.
TRANSFER AGENT AND REGISTRAR OF STOCK
American Stock Transfer & Trust Company, 40 Wall Street, New York, NY 10005,
(718) 921-8209; (800)937-5449
CORPORATE OFFICE
3033 N 44th Street, Suite 270, Phoenix, AZ 85018, (602)952-8836, Fax
(602)952-8769
ALBUQUERQUE OFFICE
6100 Indian School Road, N.E.,Albuquerque, NM 87110, (505)881-6644, Fax
(505)889-3682
26
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> DEC-31-1995
<CASH> 5,301
<SECURITIES> 0
<RECEIVABLES> 9,690
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 46,172
<DEPRECIATION> 4,845
<TOTAL-ASSETS> 57,682
<CURRENT-LIABILITIES> 0
<BONDS> 0
0
0
<COMMON> 10,051
<OTHER-SE> 20,670
<TOTAL-LIABILITY-AND-EQUITY> 57,682
<SALES> 15,910
<TOTAL-REVENUES> 22,062
<CGS> 9,159
<TOTAL-COSTS> 10,248
<OTHER-EXPENSES> 487
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 946
<INCOME-PRETAX> 9,129
<INCOME-TAX> 3,629
<INCOME-CONTINUING> 5,500
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 5,500
<EPS-PRIMARY> 2.02
<EPS-DILUTED> 2.02
</TABLE>
