<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM 10-Q
[X] Quarterly Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
For the quarterly period ended September 30, 1997.
[ ] Transition Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
For the transition period from N/A to N/A .
Commission File Number: 0-497
NEW MEXICO AND ARIZONA LAND COMPANY
(Exact name of registrant as specified in its charter)
ARIZONA 43-0433090
(State or other jurisdiction of ( I.R.S. Employer
incorporation or organization) Identification No.)
3033 N. 44TH STREET, SUITE 270, PHOENIX, ARIZONA 85018-7228
(Address of principal executive offices) (Zip Code)
602/952-8836
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports 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 the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
COMMON STOCK, NO PAR VALUE 3,313,818 SHARES
Class Outstanding at November 5, 1997
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NEW MEXICO AND ARIZONA LAND COMPANY AND SUBSIDIARIES FORM 10-Q
For the Quarter Ended September 30, 1997
Page
Number
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
Consolidated Statements of Income for the three
and nine months ended September 30, 1997 and 1996 3
Consolidated Balance Sheets as of
September 30, 1997 and December 31, 1996 4
Consolidated Statements of Cash Flows for the
nine months ended September 30, 1997 and 1996 5
Notes to Consolidated Financial Statements 6
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations 7
PART II - OTHER INFORMATION 8
SIGNATURES 8
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New Mexico and Arizona Land Company and Subsidiaries FORM 10-Q
CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
<TABLE>
<CAPTION>
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Three months ended Nine months ended
September 30, September 30,
(in thousands, except per share data) 1997 1996 1997 1996
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<S> <C> <C> <C> <C>
Revenue:
Property sales $ 4,711 $ 3,438 $ 8,961 $ 8,889
Property rentals 761 763 2,323 2,262
Investment income 292 316 895 964
Other 59 173 196 304
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5,823 4,690 12,375 12,419
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Expenses:
Cost of property sales 3,138 2,264 5,566 5,458
Rental property 287 252 901 771
General and administrative 461 318 1,321 964
Interest 253 226 769 693
Depreciation, depletion and amortization 123 106 364 340
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4,262 3,166 8,921 8,226
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Income Before Joint Ventures, Minority
Interests and Income Taxes 1,561 1,524 3,454 4,193
Gain from joint ventures 9 -- 40 8
Minority interests (281) (255) (601) (617)
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Income Before Income Taxes 1,289 1,269 2,893 3,584
Income taxes 508 507 1,152 1,434
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Net Income $ 781 $ 762 $ 1,741 $ 2,150
=============================================================================================
Earnings per Share of Common Stock(1) $ 0.24 $ 0.23 $ 0.53 $ 0.65
=============================================================================================
Weighted Average Number of Common Shares(1) 3,314 3,309 3,314 3,309
=============================================================================================
</TABLE>
See accompanying Notes to Consolidated Financial Statements.
(1) Shares and earnings per share for 1996 have been restated to reflect a 10%
stock dividend paid July 18, 1997.
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<PAGE> 4
New Mexico and Arizona Land Company and Subsidiaries FORM 10-Q
CONSOLIDATED BALANCE SHEETS
<TABLE>
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UNAUDITED
SEPTEMBER 30, December 31,
(in thousands) 1997 1996
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<S> <C> <C>
Assets
Properties, net $49,284 $47,478
Receivables, net 9,231 9,848
Cash and cash equivalents 4,126 7,142
Other 2,989 1,860
- -------------------------------------------------------------------------------
Total assets $65,630 $66,328
===============================================================================
Liabilities and Shareholders' Equity
Notes payable and lines of credit $13,513 $16,036
Accounts payable and accrued liabilities 1,913 1,542
Deferred revenue 4,747 5,002
Deferred income taxes 5,453 5,685
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Total liabilities 25,626 28,265
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Minority interests 2,640 2,435
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Shareholders' equity:
Preferred stock, no par value; 10,000,000 shares
authorized; none issued
Common stock, no par value; 30,000,000 shares
authorized; 3,313,818(1) shares issued and
outstanding at September 30, 1997 and
December 31, 1996 18,102 13,738
Additional paid-in capital 967 967
Retained earnings 18,295 20,923
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Total shareholders' equity 37,364 35,628
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Total liabilities and shareholders' equity $65,630 $66,328
===============================================================================
</TABLE>
See accompanying Notes to Consolidated Financial Statements.
(1) Restated to reflect a 10% stock dividend paid July 18, 1997.
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New Mexico and Arizona Land Company and Subsidiaries FORM 10-Q
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
Nine months ended September 30, (in thousands) 1997 1996
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<S> <C> <C>
CASH FLOW FROM OPERATING ACTIVITIES:
Net income $ 1,741 $ 2,150
Deduct: Gain from sale of investment properties (659) (75)
Non-cash items included above:
Depreciation, depletion and amortization 364 340
Deferred revenue (769) (467)
Deferred income taxes (232) 115
Gain from joint ventures (40) (8)
Minority interests 601 617
Net change in:
Receivables 1,131 (27)
Properties under development (158) (1,557)
Other assets (1,122) (382)
Accounts payable and accrued liabilities 366 543
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Net cash flow from operating activities 1,223 1,249
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CASH FLOW FROM INVESTING ACTIVITIES:
Additions to properties (4,196) (5,192)
Proceeds from sale of properties 2,843 75
Distributions to minority interests partners (396) (726)
Distributions from joint ventures 33 3
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Net cash flow from investing activities (1,716) (5,840)
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CASH FLOW FROM FINANCING ACTIVITIES:
Proceeds from debt 944 6,132
Payment of debt (3,467) (1,751)
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Net cash flow from financing activities (2,523) 4,381
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Net increase (decrease) in cash and cash equivalents (3,016) (210)
Cash and cash equivalents at beginning of period 7,142 5,301
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Cash and cash equivalents at end of period $ 4,126 $ 5,091
===========================================================================
</TABLE>
See accompanying Notes to Consolidated Financial Statements.
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New Mexico and Arizona Land Company and Subsidiaries FORM 10-Q
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. In the opinion of the Company, the accompanying unaudited consolidated
financial statements contain all adjustments necessary to present fairly
the financial position, the results of operations and cash flows for the
periods presented. The accompanying statements do not include all
disclosures considered necessary for a fair presentation in conformity
with generally accepted accounting principles. Therefore, it is
recommended that these accompanying statements be read in conjunction
with the consolidated financial statements appearing in the Company's
1996 annual report on Form 10-K
2. The results of operations for the nine months ended September 30, 1997 and
1996, are not necessarily comparable and may not be indicative of the
results which may be expected for future quarters or future years.
3. During the nine months ended September 30, 1997 and 1996, the Company sold
land in exchange for notes receivable in the amount of $707,000 and
$1,674,000, respectively, of which $707,000 and $566,000, respectively, was
deferred.
4. The Company's consolidated financial statements include those of its
wholly-owned subsidiaries, NZ Properties, Inc., NZ Development Corporation,
NZU Inc. and Great Vacations International Inc., along with five joint
ventures in which the Company holds a majority ownership.
5. Certain amounts have been reclassified for comparative purposes.
6. Earnings per share computations are based on the weighted average number of
shares outstanding of 3,313,818 and 3,308,568 in 1997 and 1996
respectively, which have been restated to reflect a 10% stock dividend paid
July 18, 1997.
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<PAGE> 7
New Mexico and Arizona Land Company and Subsidiaries FORM 10-Q
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
LIQUIDITY AND CAPITAL RESOURCES
Cash flow from sales of land, single-family and recreational lots, distributions
from its joint ventures and other ongoing operations, along with unused
borrowing capacity, should be adequate for continuing operations and some
investments during the 1997 fiscal year. When construction and marketing begins
on the Sedona project, financing from outside sources will be required to fund
this project. (See Developments in Item 7 of the Company's 1996 Annual Report on
Form 10-K.)
Financing, at the joint venture level, is being utilized to develop
single-family lots. These loans are secured by the property involved, along with
guarantees from the Company and its partner. At September 30, 1997, there was
$547,000 borrowed against a $3,850,500 development line of credit, maturing
August 6, 1998, and $276,000 borrowed against a $750,000 development loan,
maturing June 5, 1999. The Company has a $1,000,000 working capital line of
credit, which matures April 24, 1998, and is secured by certain real estate
holdings. At September 30, 1997 there were no borrowings against this line.
RESULTS OF OPERATIONS
For the nine months ended September 30, 1997, net income was $1,741,000
(53(cent) per share) compared to $2,150,000 (65(cent) per share) for the same
period of 1996. General and administrative expenses increased by about $357,000
during the nine months ended September 30, 1997 due to costs associated with the
addition of management staff employed to support planned growth.
NEW VENTURES
The Board of Directors of New Mexico and Arizona Land Company ("NZ") approved
the acquisition of a loan portfolio, totaling approximately $7,980,000, of
short-term commercial real estate development loans from R.R. Hensler, Inc., d.
b. a. RRH Financial ("RRH"), along with other miscellaneous assets of RRH. With
this acquisition, NZ is entering into the short-term commercial real estate
lending business, which will be conducted through its newly-formed subsidiary,
Bridge Financial Corporation ("BFC"). This acquisition, valued at approximately
$9,970,000, will be financed with the issuance of approximately 531,700 shares
of NZ common stock (Rule 144 stock) and about $1,994,000 cash.
Paul Sargent, currently with RRH, has agreed to join Bridge Financial
Corporation as President. Mr. Sargent has extensive experience in the mortgage
business having originated about $100 million in loan transactions during the
five years he was associated with RRH. Prior to forming RRH, he worked with
Chase Bank in both Arizona and New York. Over the past decade he has placed
loans ranging up to $35,000,000. We are looking forward to this association and
the long-term growth of BFC.
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<PAGE> 8
New Mexico and Arizona Land Company and Subsidiaries FORM 10-Q
PART II - OTHER INFORMATION
There were no proceedings, changes, occurrences or other matters occurring
during the nine month period ended September 30, 1997, requiring a response to
Items 1 through 5.
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibits
Exhibit 27 Financial Data Schedule
(b) No reports of Form 8-K were filed during the reporting quarter.
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.
New Mexico and Arizona Land Company
s/E.M.Bedewi
- ----------------------------
E. M. Bedewi,
Sr. Vice President and Treasurer
s/R. Randy Stolworthy
- ----------------------------
R. Randy Stolworthy,
Executive Vice President and Chief Operating Officer
Date: November 5, 1997
-----------------------
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<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> SEP-30-1997
<CASH> 4,126
<SECURITIES> 0
<RECEIVABLES> 9,231
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 54,791
<DEPRECIATION> 5,507
<TOTAL-ASSETS> 65,630
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18,102
0
<COMMON> 0
<OTHER-SE> 19,262
<TOTAL-LIABILITY-AND-EQUITY> 65,630
<SALES> 8,961
<TOTAL-REVENUES> 12,375
<CGS> 5,566
<TOTAL-COSTS> 6,467
<OTHER-EXPENSES> 1,685
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 769
<INCOME-PRETAX> 2,893
<INCOME-TAX> 1,152
<INCOME-CONTINUING> 1,741
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,741
<EPS-PRIMARY> 0.53
<EPS-DILUTED> 0.53
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