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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10 Q
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD
ENDED JANUARY 31, 1998
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD
FROM __________ TO __________
Commission file number 1 - 8459
NEW PLAN REALTY TRUST
(Exact name of registrant as specified in its charter)
MASSACHUSETTS 13 - 1995781
(State or other Jurisdiction of (IRS Employer
Incorporation or Organization) Identification No.)
1120 Avenue of the Americas, New York, New York 10036
(Address of Principal Executive Office) (Zip Code)
(212) 869-3000
Registrant's Telephone Number
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months and (2) has been subject to such filing requirements for
the past 90 days.
Yes X No
The number of shares outstanding at February 28, 1998 was 59,457,511.
<PAGE>
NEW PLAN REALTY TRUST AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED)
(IN THOUSANDS EXCEPT FOR PER SHARE AMOUNTS)
================================================================================
<TABLE>
<CAPTION>
THREE MONTHS SIX MONTHS
ENDED ENDED
JANUARY 31, JANUARY 31,
1998 1997 1998 1997
---- ---- ---- ----
<S> <C> <C> <C> <C>
REVENUES
Rental income and
related revenues $60,827 $50,047 $119,392 $96,665
Interest and dividend
income 1,018 1,100 1,960 2,265
------- ------- -------- -------
61,845 51,147 121,352 98,930
------- ------- -------- -------
OPERATING EXPENSES
Operating costs 15,252 12,638 30,256 24,125
Leasehold rents 153 160 321 325
Real estate and
other taxes 5,664 4,580 10,908 9,027
Interest expense 8,660 7,085 17,213 12,946
Depreciation and amortization 7,683 6,181 15,133 11,867
Provision for doubtful accounts,
net of recoveries (Note C) 1,163 976 2,018 1,543
------ ----- ------- ------
TOTAL OPERATING EXPENSES 38,575 31,620 75,849 59,833
------ ------ ------ ------
Administrative expenses 745 504 1,374 998
------ ------ ------- ------
INCOME BEFORE GAIN (LOSS) ON SALE
OF PROPERTY 22,525 19,023 44,129 38,099
Gain (loss) on sale of property __ 69 (67) 69
------ ------ ------ ------
NET INCOME 22,525 19,092 44,062 38,168
PREFERRED DIVIDENDS (1,462) -- (2,925) --
------ ------ ------ -------
NET INCOME APPLICABLE TO SHARES OF
BENEFICIAL INTEREST $21,063 $19,092 $41,137 $38,168
======= ======= ======= =======
BASIC EARNINGS PER SHARE (NOTE D) $.36 $.33 $.70 $.66
DILUTED EARNINGS PER SHARE (NOTE D) $.35 $.32 $.69 $.65
DIVIDENDS PER SHARE $.3675 $.3575 $.7325 $.7125
WEIGHTED AVERAGE SHARES OUTSTANDING
BASIC (NOTE D) 59,228 58,337 59,116 58,235
WEIGHTED AVERAGE SHARES OUTSTANDING 59,720 58,666 59,514 58,489
DILUTED (NOTE D)
</TABLE>
See accompanying notes to consolidated financial statements.
2
<PAGE>
<TABLE>
<CAPTION>
NEW PLAN REALTY TRUST AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS (UNAUDITED)
(IN THOUSANDS)
JANUARY 31, JULY 31,
1998 1997
----------- --------
ASSETS
- ------
<S> <C> <C>
Real estate, at cost
Land $ 242,773 $ 232,502
Buildings and improvements 1,099,825 1,045,273
---------- ----------
1,342,598 1,277,775
Less accumulated depreciation
and amortization 120,764 105,866
---------- ----------
1,221,834 1,171,909
Cash and cash equivalents 49,381 42,781
Marketable securities 2,004 2,034
Mortgages and notes receivable 22,882 23,107
Receivables:
Trade and notes, net of allowance
for doubtful accounts 15,212 12,035
Other 1,591 1,464
Prepaid expenses and deferred charges 9,694 5,000
Other assets 3,318 2,814
---------- ----------
TOTAL ASSETS $1,325,916 $1,261,144
========== ==========
LIABILITIES
- -----------
Mortgages payable $ 69,909 $ 65,573
Notes payable, net of unamortized discount 462,710 412,634
Other liabilities 33,142 33,359
Tenants' security deposits 5,189 4,623
------- -------
TOTAL LIABILITIES 570,950 516,189
======= =======
COMMITMENTS AND CONTINGENCIES
- -----------------------------
SHAREHOLDERS' EQUITY
- --------------------
Preferred shares, par value $1.00,
authorized 1,000,000 shares; issued
and outstanding (150,000 Series A
Cumulative Preferred Shares),
$75,000,000 redemption value 72,775 72,775
Shares of beneficial interest without par
value, unlimited authorization; issued
and outstanding (January 31, 1998
59,424,011; July 31, 1997 58,934,371) 749,553 738,011
Less loans receivable for the purchase of
shares of beneficial interest 2,419 2,814
Add unrealized gain on securities reported
at fair value 1,026 1,057
---------- --------
820,935 809,029
Less distributions in excess of net income 65,969 64,074
---------- ----------
TOTAL SHAREHOLDERS' EQUITY 754,966 744,955
---------- ----------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $1,325,916 $1,261,144
========== ==========
</TABLE>
See accompanying notes to consolidated financial statements.
3
<PAGE>
NEW PLAN REALTY TRUST AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
SIX MONTHS ENDED JANUARY 31,
(UNAUDITED)(IN THOUSANDS)
<TABLE>
<CAPTION>
1998 1997
---- ----
<S> <C> <C>
OPERATING ACTIVITIES
Net Income $ 44,062 $ 38,168
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 15,133 11,867
Loss (gain) on sale of property 67 (69)
------- --------
59,262 49,966
Changes in operating assets and liabilities, net
Increase in trade and notes receivable (3,993) (1,709)
(Increase) decrease in other receivables (127) 114
Increase in allowance for doubtful accounts 816 1,042
(Decrease) increase in other liabilities (217) 3,268
Increase in net sundry assets and liabilities (4,794) (3,594)
------- --------
NET CASH PROVIDED BY OPERATING ACTIVITIES 50,947 49,087
------- --------
INVESTING ACTIVITIES
Sale of marketable securities 16 132
Purchase of marketable securities (17) --
Net proceeds from the sale of property (67) 1,161
Purchase and improvement of properties (58,635) (133,151)
Repayment of mortgage notes receivable 225 1,168
------- --------
NET CASH USED IN INVESTING ACTIVITIES (58,478) (130,690)
------- --------
FINANCING ACTIVITIES
- --------------------
Distributions to shareholders (45,956) (41,463)
Proceeds from the dividend reinvestment plan 8,856 7,978
Proceeds from the exercise of stock options 2,687 2,052
Repayment of short term debt (19,500)
Proceeds from the sale of notes 50,000 153,000
Principal payments on mortgages (500) (189)
Repayment of mortgages (1,351) --
Repayment of loans receivable for the purchase
of share of beneficial interest 395 180
------- --------
NET CASH PROVIDED BY FINANCING ACTIVITIES 14,131 102,058
------- --------
INCREASE IN CASH EQUIVALENTS 6,600 20,455
Cash and cash equivalents at beginning of year 42,781 4,300
-------- --------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 49,381 $ 24,755
======== ========
</TABLE>
See accompanying notes to consolidated financial statements.
4
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
------------------------------------------
Note A:
The accompanying unaudited consolidated financial statements have been prepared
by the Trust pursuant to the rules of the Securities and Exchange Commission as
they relaate to interim financial statements and, in the opinion of the Trust,
include all adjustments (consisting of normal recurring adjustments) necessary
for a fair presentation of financial position, results of operations and cash
flows in accordance with generally accepted accounting principles. Certain
information and footnote disclosures normally included in financial statements
prepared in accordance with generally accepted accounting principles have been
condensed or omitted pursuant to such SEC rules. The Trust believes that the
disclosures made are adequate to make the information presented not misleading.
The consolidated statements of income for the three month and six month periods
ended January 31, 1998 and 1997 are not necessarily indicative of the results
expected for the full year. These consolidated financial statements should be
read in conjunction with the audited financial statements and notes thereto
included in the Trust's latest annual report on Form 10 K.
Note B: Supplemental Cash Flow Information
State and local income taxes paid for the six months ended January 31, 1998 and
1997 were $107,000 and $820,000, respectively.
Interest paid, net of amounts capitalized, for the six months ended January 31,
1998 and 1997 was $16,853,000 and $9,960,000, respectively.
Interest costs capitalized for the six months ended January 31, 1998 and 1997
were $0 and $498,000, respectively.
The Trust entered into the following non cash investing and financing activities
(in thousands) for the six months ended January 31,
1998 1997
---- ----
Mortgage obligations assumed upon the
purchase of property $6,187 $10,100
Note C: Provision for Doubtful Accounts
The provision for doubtful accounts is net of recoveries. For the six months
ended January 31, 1998 and 1997, recoveries were $42,000 and $112,000,
respectively. For the three months ended January 31, 1998 and 1997, recoveries
were $33,000 and $96,000, respectively.
5
<PAGE>
Note D: On January 31, 1998 the Trust implemented Financial Accounting
Standard No. 128 "Earnings Per Share". The following table sets forth
the computation of average shares outstanding and basic earnings and
diluted earnings per share. (Amounts in thousands except per share
amounts.)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
January 31, January 31,
1998 1997 1998 1997
---- ---- ---- -----
<S> <C> <C> <C> <C>
Basic EPS Computation
- ---------------------
Net income $22,525 $19,092 $44,062 $38,168
Less preferred stock dividends (1,462) -- (2,925) --
------- ------- ------- -------
Net income available to shares of
beneficial interest $21,063 $19,092 $41,137 $38,168
======= ======= ======= =======
Weighted average shares outstanding 59,228 58,337 59,116 58,235
Basic EPS $ .36 $ .33 $ .70 $ .66
Diluted EPS Computation
- -----------------------
Proceeds from assumed exercise of stock
options $81,924 $39,379 $81,826 $38,470
Average price of shares during the
period $24.940 $23.651 $24.214 $22.615
Treasury shares re purchasable 3,285 1,665 3,379 1,701
Option shares assumed exercised 3,777 1,994 3,777 1,955
------ ------ ------ ------
Diluted potential shares 492 329 398 254
Weighted average shares outstanding 59,228 58,337 59,116 58,235
------ ------ ------ ------
Adjusted weighted average shares
outstanding 59,720 58,666 59,514 58,489
======= ====== ====== ======
Net income available to shares of
beneficial interest $21,063 $19,092 $41,137 $38,168
Diluted EPS $ .35 $ .32 $ .69 $ .65
</TABLE>
6
<PAGE>
Note E: Computation of Basic and Diluted Earnings Per Share
The following sets forth the computation of basic and diluted earnings per share
in accordance with Financial Accounting Standard No. 128 "Earnings Per Share"
for the preceding five fiscal years ending July 31. (Amounts are in thousands
except per share amounts.)
<TABLE>
<CAPTION>
For the Years Ended July 31,
----------------------------
1997 1996 1995 1994 1993
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Proceeds from assumed exercise of stock options
$49,307 $30,753 $30,050 $34,807 $31,429
Weighted average price of shares $22.688 $21.223 $21.042 $23.052 $23.542
Treasury shares re purchasable 2,173 1,449 1,428 1,510 1,335
Option shares assumed exercised 2,447 1,607 1,574 1,776 1,625
------- ------- ------- ------- -------
Diluted potential of shares 274 158 146 266 290
Weighted average shares outstanding 58,461 56,484 52,894 49,502 48,838
------- ------- ------- ------- -------
Adjusted weighted average shares outstanding 58,735 56,642 53,040 49,768 49,128
======= ======= ======= ======= =======
Net income applicable to shares of beneficial
interest $76,576 $70,521 $62,716 $52,317 $43,229
Basic EPS $ 1.31 $ 1.25 $ 1.19 $ 1.06 $ 0.89
Diluted EPS $ 1.30 $ 1.25 $ 1.18 $ 1.05 $ 0.88
</TABLE>
7
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
I. Liquidity and Capital Resources
On January 31, 1998 the Trust had approximately $51.4 million in
available cash, cash equivalents and marketable securities.
During the six month period ended January 31, 1998, the Trust paid
approximately $38.5 million in cash and assumed mortgage debt of
approximately $6.2 million to acquire four shopping centers (579,000
gross leasable square feet) and three apartment properties (964 units).
In addition, $20.1 million was paid for improvements to existing
properties and the construction of the Six Flags Factory Outlet Center.
Debt at January 31, 1998 consisted of $69.9 million of mortgages
payable and $462.7 million of notes payable, net of unamortized
discount.
During the six months ended January 31, 1998, the Trust sold an issue
of unsecured notes totaling $50 million. The issue matures in 31 years
and has an annual interest rate of 6.9%.
The Trust's dividend reinvestment program generated approximately $8.9
million during the six month period ended January 31, 1998. In
addition, during such period the Trust made dividend distributions of
$43.3 million to holders of shares of beneficial interest and $2.7
million to preferred stock shareholders.
Funds from operations applicable to shares of beneficial interest,
defined as net income plus depreciation and amortization of real estate
less gains from asset sales less preferred stock dividends, increased
$6.4 million to $56.3 million ($.95 per share diluted) from $50.0
million ($.85 per share diluted) in the prior year's comparable six
month period.
II. Results of operations for the six months ended January 31, 1998
and 1997
A. Revenues
Total revenues increased approximately $22.4 million to $121.4
million. The increase came primarily as a result of the
acquisition of 36 properties since July 31, 1996 and the
opening of the Six Flags Factory Outlet Center in March 1997.
B. Operating Expenses
Operating costs and leasehold rents increased approximately
$6.1 million to $30.6 million, reflecting the acquisition of
properties.
Real estate and other taxes increased approximately $1.9
million to $10.9 million. The principal reason for this
increase was the larger portfolio of properties.
Interest expense increased approximately $4.3 million to $17.2
million. This increase was due to
8
<PAGE>
the issuance, since January 1997, of $120 million of notes
which were used to fund the Trust's property acquisition
program.
Depreciation and amortization of properties increased
approximately $3.3 million to $15.1 million. This increase was
the result of the acquisition of properties.
Provision for doubtful accounts, net of recoveries, increased
$475,000 to $2.0 million. As a percentage of rental revenue,
this expense was 1.7% in the current period compared to 1.6%
in the prior year's period.
C. Administrative Expenses
Administrative expenses as a percent of revenue was 1.1% in
the current period compared to 1% in the prior comparable
period. Costs increased in personnel and professional fee
categories.
III. Results of operations for the three months ended January 31,
1998 and 1997
A. Revenues
Total revenues increased approximately $10.7 million to $61.8
million. The increase was a result of the acquisition of 25
properties since October 31, 1996 and the opening of the Six
Flags Factory Outlet Center in March 1997.
B. Operating Expenses
Operating costs and leasehold rents increased approximately
$2.6 million to $15.4 million, reflecting the acquisition of
properties.
Real estate and other taxes increased approximately $1.1
million to $5.7 million. The principal reason for this
increase was the larger portfolio of properties.
Interest expense increased approximately $1.6 million to $8.7
million. This increase was due to the issuance, since November
1996, of $120 million of notes which were used to fund the
Trust's property acquisition program.
Depreciation and amortization of properties increased
approximately $1.5 million to $7.7 million. This increase was
the result of the acquisition of properties.
Provision for doubtful accounts, net of recoveries, increased
$.2 million to $1.2 million. As a percentage of rental
revenue, the expense was approximately 1.9% in both periods.
C. Administrative Expenses
Administrative expenses as a percent of revenue was 1.2% in
the current period compared to 1.0% in the comparable prior
year's period. Costs increased in the personnel and
professional fee categories.
9
<PAGE>
D. Gain on Sale of Property and Securities
In the prior year's comparable period, the sale of a shopping
center in Annville, Pennsylvania resulted in a gain of
$69,000. There were no asset sales in the current period.
IV. New Accounting Standards
During 1997 and 1998, the Financial Accounting Standards Board issued
Statements of Financial Accounting Standards: (i) No. 129 "Disclosure
of Information About Capital Structure" ("SFAS 129"), which is
effective for fiscal years ending after December 15, 1997, (ii) No. 130
"Reporting Comprehensive Income" ("SFAS 130"), which is for fiscal
years beginning after December 15, 1997, (iii) No. 131 "Disclosures
About Segments of an Enterprise and Related Information" ("SFAS 131"),
which is for fiscal years beginning after December 15, 1997 and (iv)
No. 132 "Employers' Disclosures about Pensions and Other Postretirement
Benefits ("SFAS 132), which is effective for fiscal years beginning
after December 15, 1997. Management believes that the implementation of
SFAS 129, 130 and 132 will not have a material impact on the Trust's
financial statements. The Trust has yet to determine the impact of SFAS
131.
10
<PAGE>
PART II OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security Holders
---------------------------------------------------
An annual meeting of shareholders was held on December 10, 1997.
Proxies for the meeting were solicited by the registrant pursuant to Regulation
14 under the Securities Exchange Act of 1934; there was no solicitation in
opposition to management's nominees as listed in the proxy statement and all of
such nominees were elected.
Proposal One: Election of three Trustees
(a) Votes of 50,354,236 shares were cast for the election
of William Newman as a Trustee; votes of 926,703 were
withheld.
(b) Votes of 50,383,039 shares were cast for the election
of Arnold Laubich as a Trustee; votes of 897,900 were
withheld.
(c) Votes of 50,379,353 shares were cast for the election
of John Wetzler as a Trustee; votes of 901,586 were
withheld.
There were no abstentions or broker non votes in connection with this
proposal.
Proposal Two: To vote upon approval of the Trust's 1997 Stock
Option Plan. The Plan was approved.
Broker
For Against Abstain Non Vote
- --- ------- ------- --------
47,331,202 2,976,603 973,034 100
Proposal Three
(A): Approving the Amendment to the Amended and Restated
Declaration of Trust of New Plan Realty Trust
relating to the elimination of the limitation on the
number of Preferred Shares that may be issued by the
Trust. The amendment was not approved because the
required two thirds majority of outstanding shares
was not achieved.
Broker
For Against Abstain Non Vote
- --- ------- ------- --------
31,765,700 2,296,475 975,898 16,242,866
Proposal Three
(B): Approving the Amendment to the Ammended and Restated
Declaration of Trust of New Plan Realty Trust
relating to the ability to grant the holders of
Preferred Shares voting rights with respect to the
election of Trustees under certain limited
circumstances. The amendment was not approved because
the required two thirds majority of outstanding
shares was not achieved.
Broker
For Against Abstain Non Vote
- --- ------- ------- --------
31,863,127 2,190,137 984,811 16,242,864
11
<PAGE>
Item 6. Exhibits and Reports on Form 8 K
--------------------------------
(a) Exhibits:
Exhibit 12.1 Ratio of Earnings to Fixed Charges
Exhibit 12.2 Calculation of Ratio of Earnings to
Fixed Charges
Exhibit 27 Financial Data Schedule. This exhibit
is filed for EDGAR filing purposes only.
(b) During the period covered by this report the Trust filed the
following:
1. Form 8-K dated and filed January 23, 1998. This
report contained items 5 and 7.
SIGNATURE
---------
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.
Dated: March 9, 1998
NEW PLAN REALTY TRUST
By:/s/ Michael I. Brown
-------------------
MICHAEL I. BROWN
Chief Financial Officer,
Controller
12
<PAGE>
EXHIBIT INDEX
Number Description
- ------ -----------
12.1 Ratio of Earnings to Fixed Charges
12.2 Calculation of Ratio of Earnings
to Fixed Charges
27 Financial Data Schedule
13
NYFS05...:\40\65240\0003\91\FRM3068L.420
EXHIBIT 12.1
RATIO OF EARNINGS TO FIXED CHARGES
----------------------------------
The ratio of earnings to fixed charges for the six months ended
January 31, 1998 is: 3.0
For purposes of computing these ratios, earnings have been calculated
by adding fixed charges (excluding capitalized interest and preferred stock
dividends) to income before extraordinary items. Fixed charges consist of
interest costs, whether expensed or capitalized, preferred stock dividend
requirements, the interest component of rental expense, if any, and amortization
of debt discounts and issue costs, whether expensed or capitalized.
EXHIBIT 12.2
CALCULATION OF RATIO OF EARNINGS TO FIXED CHARGES
-------------------------------------------------
SIX MONTHS ENDED JANUARY 31, 1998
---------------------------------
(DOLLAR AMOUNTS IN THOUSANDS)
-----------------------------
EARNINGS:
Net income $44,062
Interest expense (including debt
discount and debt issuing costs) 17,213
Capitalized interest
Other adjustments 324
-------
$61,599
=======
FIXED CHARGES:
Interest expense (including debt
discount and debt issuing costs) $17,213
Capitalized interest --
Preferred stock dividends 2,925
Other adjustments 146
-------
$20,284
=======
RATIO OF EARNINGS TO FIXED CHARGES 3.0
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONSOLIDATED BALANCE SHEETS AND CONSOLIDATED STATEMENTS OF INCOME AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> JUL-31-1998
<PERIOD-END> JAN-31-1998
<CASH> 49,381
<SECURITIES> 2,004
<RECEIVABLES> 15,212
<ALLOWANCES> 6,397
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 1,342,598
<DEPRECIATION> 120,764
<TOTAL-ASSETS> 1,325,916
<CURRENT-LIABILITIES> 0
<BONDS> 532,619
0
72,775
<COMMON> 749,553
<OTHER-SE> (64,943)
<TOTAL-LIABILITY-AND-EQUITY> 1,325,916
<SALES> 0
<TOTAL-REVENUES> 121,352
<CGS> 0
<TOTAL-COSTS> 56,619
<OTHER-EXPENSES> 1,374
<LOSS-PROVISION> 2,018
<INTEREST-EXPENSE> 17,213
<INCOME-PRETAX> 44,062
<INCOME-TAX> 0
<INCOME-CONTINUING> 44,062
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 44,062
<EPS-PRIMARY> 0.70
<EPS-DILUTED> 0.69
</TABLE>
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