<PAGE> 1
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UNITED STATES
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 MARCH 31, 1997
[ ] 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: 0-06181
J.C. NICHOLS COMPANY
(Exact name of registrant as specified in its charter)
MISSOURI
(State or other jurisdiction of
incorporation or organization)
44-0371610
(I.R.S. Employer
Identification No.)
310 WARD PARKWAY, KANSAS CITY, MISSOURI
(Address of principal executive offices)
64112
(Zip code)
(816) 561-3456
(Registrant's telephone number, including area code)
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 [ ]
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS DURING THE
PRECEDING FIVE YEARS:
Indicate by check mark whether the registrant has filed all documents and
reports required to be filed by Sections 12, 13 or 15(d) of the Securities
Exchange Act of 1934 subsequent to the distribution of securities under a plan
confirmed by a court. Yes [ ] No [ ]
APPLICABLE ONLY TO CORPORATE ISSUERS:
Indicate the number of shares outstanding of each of the issuer's classes
of common stock, as of the latest practicable date.
<TABLE>
<CAPTION>
CLASS OUTSTANDING AT APRIL 30, 1997
----- -----------------------------
<S> <C>
Common Stock, $0.01 par value 3,849,358
</TABLE>
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<PAGE> 2
J.C. NICHOLS COMPANY
INDEX TO 10-Q FOR THE QUARTERLY
PERIOD ENDED MARCH 31, 1997
<TABLE>
<CAPTION>
PAGE
----
<S> <C> <C>
PART I -- FINANCIAL INFORMATION
ITEM 1 FINANCIAL STATEMENTS
Consolidated Balance Sheets at March 31, 1997 and December
31, 1996.................................................... 1
Consolidated Statements of Operations for the Three Months
Ended March 31, 1997 and March 31, 1996..................... 2
Consolidated Statements of Cash Flows for the Three Months
Ended March 31, 1997 and March 31, 1996..................... 3
Notes to Unaudited Consolidated Financial Statements........ 4
ITEM 2 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS................................... 5
PART II -- OTHER INFORMATION
ITEM 1 LEGAL PROCEEDINGS........................................... 9
ITEM 2 CHANGES IN SECURITIES....................................... 9
ITEM 3 DEFAULTS UPON SENIOR SECURITIES............................. 9
ITEM 4 SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS......... 9
ITEM 5 OTHER INFORMATION........................................... 9
ITEM 6 EXHIBITS AND REPORTS ON FORM 8-K............................ 9
SIGNATURES.................................................. 10
</TABLE>
<PAGE> 3
PART I -- FINANCIAL INFORMATION
ITEM 1 FINANCIAL STATEMENTS.
J. C. NICHOLS COMPANY
AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
MARCH 31, 1997 AND DECEMBER 31, 1996
<TABLE>
<CAPTION>
MARCH 31, DECEMBER 31,
1997 1996
--------- ------------
(UNAUDITED)
<S> <C> <C>
ASSETS
Revenue-producing properties................................ $186,598,000 $189,011,000
Land and improvement inventories............................ 28,919,000 29,645,000
Property held for future development........................ 1,477,000 1,477,000
------------ ------------
Total properties.......................................... 216,994,000 220,133,000
Cash and cash equivalents................................... 17,778,000 14,454,000
Temporary investments....................................... 35,376,000 45,053,000
Accounts receivable......................................... 1,910,000 2,000,000
Prepaid expenses............................................ 7,311,000 6,355,000
Notes receivable............................................ 18,658,000 21,514,000
Investments in real estate partnerships..................... 1,541,000 2,163,000
Minority interest in consolidated partnerships.............. 4,446,000 4,431,000
Deferred income taxes....................................... 2,501,000 3,456,000
Other assets, net........................................... 583,000 768,000
------------ ------------
$307,098,000 $320,327,000
============ ============
LIABILITIES AND SHAREHOLDERS' EQUITY (DEFICIT)
Mortgage indebtedness....................................... $306,378,000 $309,188,000
Notes payable to banks and others........................... 14,990,000 2,000,000
Accounts payable and tenants' deposits...................... 6,459,000 6,633,000
Accrued expenses and other liabilities...................... 8,971,000 8,020,000
Income taxes payable........................................ 13,596,000 11,525,000
Accrued contribution to Employee Stock Ownership Trust...... 11,050,000 11,050,000
Deferred gains on the sale of property...................... 513,000 517,000
------------ ------------
361,957,000 348,933,000
------------ ------------
Shareholders' equity (deficit):
Common stock, par value $.01 per share; 10,000,000 shares
authorized and 5,016,745 shares issued................. 100,000 100,000
Additional paid-in capital................................ 8,319,000 8,319,000
Retained earnings......................................... 81,989,000 80,402,000
------------ ------------
90,408,000 88,821,000
Less:
Treasury stock, at cost (1,167,387 and 164,345 shares of
common stock) (note 3)................................. 145,267,000 117,427,000
------------ ------------
Total shareholders' equity (deficit)................. (54,859,000) (28,606,000)
Commitments and contingencies...............................
------------ ------------
$307,098,000 $320,327,000
============ ============
</TABLE>
See accompanying notes to consolidated financial statements.
1
<PAGE> 4
J. C. NICHOLS COMPANY
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
THREE MONTHS ENDED MARCH 31, 1997 AND 1996
(UNAUDITED)
<TABLE>
<CAPTION>
1997 1996
---- ----
<S> <C> <C>
Sales and revenues:
Rents..................................................... $20,011,000 $20,067,000
Property sales............................................ 1,347,000 2,651,000
Commissions and fees...................................... 228,000 300,000
Dividends and interest.................................... 1,071,000 1,072,000
Gains on sales of investments and other assets............ 15,000 32,976,000
Other..................................................... 249,000 211,000
----------- -----------
22,921,000 57,277,000
----------- -----------
Costs and expenses:
Selling, general and operating expenses................... 9,973,000 11,865,000
Cost of property sales.................................... 1,107,000 2,143,000
Interest.................................................. 5,849,000 6,261,000
Depreciation and amortization............................. 3,373,000 3,461,000
Equity in losses of unconsolidated affiliates............. 77,000 59,000
----------- -----------
20,379,000 23,789,000
----------- -----------
Income before income taxes............................. 2,542,000 33,488,000
Income tax expense.......................................... 955,000 12,500,000
----------- -----------
Net income............................................. $ 1,587,000 $20,988,000
=========== ===========
Net income per share (note 2)............................... $ 0.37 $ 4.26
=========== ===========
Dividends per share......................................... $ - $ -
=========== ===========
Average number of shares outstanding (notes 2 and 3)........ 4,298,122 4,925,372
=========== ===========
</TABLE>
See accompanying notes to consolidated financial statements.
2
<PAGE> 5
J. C. NICHOLS COMPANY
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
THREE MONTHS ENDED MARCH 31, 1997 AND 1996
(UNAUDITED)
<TABLE>
<CAPTION>
1997 1996
---- ----
<S> <C> <C>
Operating activities:
Net income................................................ $ 1,587,000 $ 20,988,000
Adjustments to reconcile net income to net cash provided
by operating activities:
Depreciation of properties........................... 3,160,000 3,240,000
Amortization of deferred costs....................... 213,000 221,000
Deferred income taxes................................ 955,000 12,500,000
Equity in losses of unconsolidated affiliates........ 77,000 59,000
Earned stock compensation............................ - 775,000
Gains on sales of investments and other assets....... (15,000) (32,976,000)
Changes in:
Land and improvement inventories.................. 726,000 1,668,000
Accounts receivable............................... 90,000 1,509,000
Prepaid expenses.................................. (1,169,000) (1,211,000)
Income taxes receivable........................... 2,071,000 51,000
Minority interest in consolidated partnerships.... (15,000) (22,000)
Accounts payable and tenants' deposits............ (174,000) 1,633,000
Accrued expenses and other liabilities............ 951,000 (470,000)
Other, net........................................ (69,000) (233,000)
----------- ------------
Net cash provided by operating activities....... 8,388,000 7,732,000
----------- ------------
Investing activities:
Net (increase) decrease in temporary investments.......... 9,677,000 (21,010,000)
Payments on notes receivable.............................. 1,805,000 3,931,000
Issuance of notes receivable.............................. (931,000) (1,239,000)
Additions to revenue-producing properties................. (1,531,000) (1,199,000)
Return of capital from unconsolidated affiliates.......... 548,000 274,000
Proceeds from sales of marketable equity securities....... - 38,601,000
Other, net................................................ 188,000 -
----------- ------------
Net cash provided by investing activities....... 9,756,000 19,358,000
----------- ------------
Financing activities:
Payments on mortgage indebtedness......................... (2,010,000) (8,829,000)
Issuance of mortgage indebtedness......................... - 3,000,000
Purchase of treasury stock................................ (12,810,000) -
Payments on notes to banks and others..................... - (2,638,000)
----------- ------------
Net cash used in financing activities........... (14,820,000) (8,467,000)
----------- ------------
Net increase in cash and cash equivalents....... 3,324,000 18,623,000
Cash and cash equivalents, beginning of period.............. 14,454,000 7,209,000
----------- ------------
Cash and cash equivalents, end of period.................... $17,778,000 $ 25,832,000
=========== ============
</TABLE>
See accompanying notes to consolidated financial statements.
3
<PAGE> 6
J. C. NICHOLS COMPANY
AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 1997 AND 1996
(1) INTERIM FINANCIAL STATEMENTS
The consolidated financial statements of J.C. Nichols Company and
subsidiaries (the Company) have been prepared in accordance with the
instructions to interim financial statements. To the extent that information and
footnotes required by generally accepted accounting principles for complete
financial statements are contained in or consistent with the audited
consolidated financial statements, such information and footnotes have not been
duplicated herein. The December 31, 1996 consolidated balance sheet has been
derived from the audited consolidated financial statements as of that date. In
the opinion of management, all adjustments, including normal recurring accruals,
considered necessary for a fair presentation of financial statements have been
reflected herein. The results of the interim period ended March 31, 1997 are not
necessarily indicative of the results expected for the year ended December 31,
1997. Certain amounts in the consolidated financial statements have been
reclassified to conform with the 1997 presentation.
(2) NET INCOME PER SHARE
Net income per share has been computed based on the average number of
common and common equivalent shares outstanding during the period. All periods
presented reflect retroactive adjustment for the 80-for-1 stock split approved
by the Company on May 29, 1996.
(3) TREASURY STOCK
During January 1997, the Company purchased 948,880 shares of its common
stock from a shareholder for $25,857,000, payable in cash of $12,849,000 (which
included approximately $39,000 of interest) and a note payable of $12,990,000
(net of expenses totaling approximately $57,000), bearing interest at 8% and due
January 29, 1999. Also in January 1997, the J. C. Nichols Company Employee Stock
Ownership Trust transferred 54,162 shares of the Company's common stock to the
Company in repayment of a loan of $1,983,000.
(4) NEW ACCOUNTING PRONOUNCEMENT
In February 1997, the Financial Accounting Standards Board issued FASB
Statement No. 128, "Earnings Per Share" which revised the calculation and
presentation provisions of Accounting Principles Board Opinion 15 and related
interpretations. Statement No. 128 is effective for the Company's fiscal year
ending December 31, 1997. Retroactive application will be required. The Company
expects the effect of adopting the new standard to be immaterial.
4
<PAGE> 7
ITEM 2 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS.
GENERAL BACKGROUND
The following is a discussion of the historical operating results of the
Company. The discussion should be read in conjunction with the Form 10-K filed
for the fiscal year ended December 31, 1996.
RESULTS OF OPERATIONS
COMPARISON OF THE THREE MONTHS ENDED MARCH 31, 1997 TO THE THREE MONTHS ENDED
MARCH 31, 1996
SUMMARY. Net income decreased by $19.4 million from $21.0 million for the
three months ended March 31, 1996 to $1.6 million for the three months ended
March 31, 1997, primarily as a result of the absence of gains from disposition
of the Company's marketable equity securities portfolio for the three months
ended March 31, 1997. This reduction was partially offset by lower selling,
general, and operating expenses, and lower interest expense for the three months
ended March 31, 1997.
RENTS. Rental income decreased by $56,000 from $20.1 million for the three
months ended March 31, 1996 to $20.0 million for the three months ended March
31, 1997, primarily due to the absence of $757,000 in rental income from the
Company's leasehold interest in the Raphael Hotel of San Francisco (as the
underlying lease expired in the third quarter of 1996) and $200,000 of certain
nonrecurring items. These decreases were substantially offset by an increase in
rental income of $472,000 related to one of the Company's larger office
buildings that was substantially vacant during the first half of 1996 while the
Company made significant tenant improvements for a new tenant that is now
leasing all of the vacant space in that building. The remainder of the $429,000
increase is due primarily to improved rents in the Company's office, retail, and
apartment properties.
PROPERTY SALES. Property sales primarily represent sales of residential
lots in subdivisions developed by the Company, sales of condominiums in the
Alameda Towers project, and sales of villas in the Corinth Place Villas project.
Property sales decreased by $1.3 million (49.2%) from $2.6 million for the three
months ended March 31, 1996 to $1.3 million for the three months ended March 31,
1997 and included lot sales of $518,000, condominium sales of $660,000, and
villa sales of approximately $169,000. Property sales of $2.6 million for the
three months ended March 31, 1996 included lot sales of $563,000, condominium
sales of $1.9 million and villa sales of $140,000.
GAINS ON SALES OF INVESTMENTS AND OTHER ASSETS. Gains on sales of
investments and other assets represent gains associated with the sales of
revenue-producing properties, property held for future development, marketable
equity securities, and other assets used in the business. These gains fluctuate
with the volume of asset dispositions and the magnitude of the difference
between sales proceeds and carrying value. In the three months ended March 31,
1996, the Company liquidated for $38.6 million its entire investment in
marketable equity securities recognizing a pre-tax gain of approximately $33.0
million.
SELLING, GENERAL, AND OPERATING EXPENSES. Selling, general, and operating
expenses (S,G, & O) represent the expenses directly associated with operating
the Company's real estate assets and expenses that are considered to be
overhead. These expenses decreased by $1.9 million (16.0%) from $11.9 million
for the three months ended March 31, 1996 to $10.0 million for the three months
ended March 31, 1997, principally due to the absence of $897,000 of costs to
secure a new management team and the absence of $842,000 in expenses related to
the operation of the Raphael Hotel of San Francisco due to the expiration of the
underlying lease.
COST OF PROPERTY SALES. Cost of property sales represents the Company's
cost basis in residential lots, condominium units, and villas sold during the
year. The cost of property sales is a function of the number of lots,
condominium units, and villas sold and their underlying cost basis. Cost of
property sales decreased by $1.0 million (48.3%) from $2.1 million for the three
months ended March 31, 1996 to $1.1 million for the three months ended March 31,
1997. Of this $1.0 million decrease, the cost of condominium sales decreased by
$1.0 million, the cost of lots sold increased by $25,000, and the cost of villa
sales decreased by
5
<PAGE> 8
approximately $16,000. The gross margin percentage on lot sales was 34.2% for
the three months ended March 31, 1997 as compared to 43.9% for the three months
ended March 31, 1996. The decrease in gross margin percentage on lot sales for
the three months ended March 31, 1997 resulted from a change in sales mix, as
sales for this period contained a lower percentage of sales from higher margin
subdivisions. The gross margin percentage on condominium sales was 5.6% for the
three months ended March 31, 1997, as compared to 14.4% for the three months
ended March 31, 1996. The decrease in gross margin percentage on condominium
sales for the three months ended March 31, 1997 resulted from the Company
incurring greater finishing costs on condominium sales for the three months
ended March 31, 1997 than for the three months ended March 31, 1996.
INTEREST EXPENSE. Fluctuations in interest expense occur due to the level
of the Company's interest bearing indebtedness and the effect changes in
interest rates have on the Company's variable rate indebtedness. Interest
expense declined by $412,000 (6.6%) from $6.2 million for the three months ended
March 31, 1996 to $5.8 million for the three months ended March 31, 1997
primarily due to the lower average balance of outstanding indebtedness during
the three months ended March 31, 1997.
LIQUIDITY AND CAPITAL RESOURCES
Net cash provided by operating activities, permanent mortgage financing,
and short term notes payable to banks represent the Company's primary sources of
liquidity to fund recurring capital costs associated with renewing leases and
renovating the Company's properties, payments on the Company's outstanding
indebtedness, and distributions to shareholders. The Company has a $10 million
unsecured line of credit with Commerce Bank, N.A. (Kansas City, Missouri)
bearing interest at the prime rate. At March 31, 1997, there were no outstanding
borrowings on this line of credit.
Management anticipates that cash generated before debt payments and capital
expenditures, together with the bank line of credit, will provide adequate
liquidity to conduct the Company's operations, fund its recurring capital costs
and interest expense, and permit normal amortization payments on outstanding
indebtedness.
On January 29, 1997, the Company purchased all outstanding shares of the
Company owned beneficially and of record by AHI Metnall L.P. ("AHI").
Additionally, Mr. John Simon and Mr. James W. Quinn, who are affiliated with
AHI, resigned as directors of the Company.
The Company paid consideration of $27.25 per share, or a total of $25.9
million for the 948,880 shares of the Company's common stock owned by AHI. At
the closing, the Company delivered to AHI $12.8 million in cash (which included
approximately $39,000 of interest) and executed a promissory note ("Note") in
the amount of $13.0 million (which reflected a $57,500 reduction for certain
expenses), bearing interest at a rate of eight percent (8%) per annum with
interest only payable quarterly. The Note is secured by the pledge of a mortgage
receivable and real property, and is due on January 29, 1999.
The purchase price for the stock held by AHI was based on a negotiated
price within the range of trades in the fourth quarter of 1996, which trades
were between $27 and $31.06 per share. The purchase by the Company of such stock
decreased the number of outstanding shares of common stock of the Company from
4,852,400 to 3,903,520 shares. The number of outstanding shares of common stock
of the Company was further reduced to 3,849,358 in January 1997 when the
Employee Stock Ownership Trust transferred 54,162 shares to the Company in
repayment of a loan from the Company of approximately $2.0 million.
On December 19, 1996, the Company announced a comprehensive plan to
redevelop areas on and around the Plaza. The proposed $240 million redevelopment
includes 780,000 square feet of new construction on the Plaza, rehabilitation of
180,000 square feet of existing structures on the Plaza, and the addition of 350
residential apartment units near the Plaza. The proposal also includes
construction of 3,965 parking spaces and $5 million of public amenities on the
Plaza. The Company filed on December 20, 1996, an application with the Tax
Increment Financing Commission of Kansas City seeking to use funds generated
from tax increment financing to fund approximately 25% of the proposed
redevelopment. The application was approved by the Tax Increment Financing
Commission, and the City Council of Kansas City, Missouri gave final approval on
6
<PAGE> 9
April 17, 1997. The City Council's approval is subject to a thirty day comment
period; however, as of the date of this filing, the Company is unaware of any
issues that might jeopardize the City Council's approval. The plan is to be
executed over the next ten years and is contingent on market demand. The Company
is currently exploring various options for funding development costs in excess
of the approved tax increment financing.
COMPARISON OF THREE MONTHS ENDED MARCH 31, 1997 TO THREE MONTHS ENDED MARCH 31,
1996
Net cash provided by operating activities increased by $656,000 from $7.7
million for the three months ended March 31, 1996 to $8.4 million for the three
months ended March 31, 1997. The primary reasons for such increase are discussed
above under "Results of Operations."
Net cash flows provided by investing activities decreased by $9.6 million
from $19.4 million for the three months ended March 31, 1996 to $9.8 million for
the three months ended March 31, 1997. The $9.8 million in net cash flows
provided by investing activities for the three months ended March 31, 1997 was
principally a result of decreasing temporary investments $9.7 million and
receiving $1.8 million in payments on notes receivable. These receipts were
partially offset by investments of $1.5 million for additions to revenue-
producing properties. For the three months ended March 31, 1996, the Company's
net cash provided by investing activities of $19.4 million was principally a
result of the receipt of $3.9 million of payments on notes receivable and
proceeds from the sale of marketable equity securities of $38.6 million. These
receipts were substantially offset by a net increase in temporary investments of
$21.0 million, the issuance of an additional $1.2 million of notes receivable
and investments of $1.2 million for additions to revenue-producing properties.
Net cash used by financing activities increased by $6.3 million from $8.5
million for the three months ended March 31, 1996 to $14.8 million for the three
months ended March 31, 1997. The $14.8 million of net cash used by financing
activities for the three months ended March 31, 1997 was principally a result of
purchasing $12.8 million of treasury stock and reducing mortgage indebtedness
$2.0 million. For the three months ended March 31, 1996, the Company's net cash
used in financing activities of $8.5 million resulted from a net reduction of
mortgage and notes payable indebtedness.
EARNINGS BEFORE INTEREST, TAXES, DEPRECIATION, AND AMORTIZATION
It is management's intent to apply the majority of the Company's operating
cash flows to reduce indebtedness and to improve and increase the Company's
portfolio of revenue-producing properties. The Company is organized as a
"Subchapter C" corporation and as such pays income taxes on its taxable income
and is generally not subject to distribution requirements based on net income.
Management believes that the Company's core operations are best measured by its
earnings before interest and dividend income, interest expense, income taxes,
depreciation and amortization, gains or losses from debt restructuring and sales
of assets, and valuation allowances, and after adjustments needed to similarly
convert the earnings of minority interests and unconsolidated partnerships.
Earnings, as so computed, are referred to herein as "EBITDA". This is a
supplemental performance measure used along with net income to report operating
results. EBITDA is not a measure of operating results or cash flows from
operating activities as defined by generally accepted accounting principles.
Additionally, EBITDA is not necessarily indicative of cash available to fund
operating needs and should not be considered as an alternative to cash flow as a
measure of liquidity. However, the Company believes that EBITDA provides
relevant information about its operations and, along with net income (loss),
facilitates understanding of its operating results. The EBITDA and EBITDA, as
adjusted, set
7
<PAGE> 10
forth below may not be comparable to other real estate companies, as each real
estate company may define differently such terms.
<TABLE>
<CAPTION>
EBITDA
$(000)
---------------------
FOR THE THREE MONTHS
ENDED MARCH 31,
---------------------
1997 1996
---- ----
<S> <C> <C>
NET INCOME.................................................. $ 1,587 $ 20,988
ADJUSTMENTS TO RECONCILE NET INCOME TO EBITDA:
Interest and dividend income.............................. (1,071) (1,072)
Interest expense.......................................... 5,849 6,261
Income tax expense........................................ 955 12,500
Depreciation and amortization............................. 3,373 3,461
Gains on sales of investments and other assets............ (15) (32,976)
Minority interest portion of add-backs.................... (699) (710)
Unconsolidated subsidiaries' portion of add-backs......... 1,071 929
------- --------
EBITDA...................................................... $11,050 $ 9,381
======= ========
</TABLE>
Because of the number and size of non-recurring transactions included in
the Company's consolidated financial statements during the last three years,
management believes it is important to also present a reconciliation of the
foregoing EBITDA to "adjusted" EBITDA, as described below, which represents
EBITDA exclusive of certain non-recurring transactions. Management believes
adjusted EBITDA is more representative of the Company's underlying operations.
<TABLE>
<CAPTION>
ADJUSTED EBITDA
$(000)
--------------------
FOR THE THREE MONTHS
ENDED MARCH 31,
--------------------
1997 1996
---- ----
<S> <C> <C>
EBITDA...................................................... $11,050 $ 9,381
NON-RECURRING ITEMS:
Costs of securing new management (including stock
options)............................................... - 897
Other, net................................................ - (200)
------- -------
ADJUSTED EBITDA............................................. $11,050 $10,078
======= =======
</TABLE>
The above adjusted EBITDA amounts illustrate the Company's EBITDA if
certain non-recurring items had been eliminated from the Company's statements of
operations. These amounts are not necessarily indicative of future performance.
However, management does believe that, when read in conjunction with the
Company's consolidated financial statements, they assist the reader in better
understanding the Company's underlying business operations. The adjustments made
to arrive at adjusted EBITDA are explained as follows: "Costs of securing new
management (including stock options)" reflects the expense to the Company for
the three months ended March 31, 1996 of obtaining the new members of its senior
management. "Other, net" for the three months ended March 31, 1996 reflects the
net of other less significant, non-recurring adjustments.
IMPACT OF RECENTLY ISSUED ACCOUNTING STANDARDS
In February 1997, the Financial Accounting Standards Board issued Statement
No. 128, "Earnings Per Share" which revises the calculation and presentation
provisions of Accounting Principles Board Opinion 15 and related
interpretations. Statement No. 128 is effective for the Company's fiscal year
ending December 31, 1997. Retroactive application will be required. The Company
believes the adoption of Statement No. 128 will not have a significant effect on
its reported earnings per share.
8
<PAGE> 11
PART II -- OTHER INFORMATION
ITEM 1 LEGAL PROCEEDINGS.
None
ITEM 2 CHANGES IN SECURITIES.
None
ITEM 3 DEFAULTS UPON SENIOR SECURITIES.
None
ITEM 4 SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
None
ITEM 5 OTHER INFORMATION.
None
ITEM 6 EXHIBITS AND REPORTS ON FORM 8-K.
(a) Exhibits required to be filed by Item 601 of Regulation S-K.
10.1 Stock Purchase Agreement among the Company, AHI Metnall
L.P., John Simon, and James W. Quinn.*
27.1 Financial Data Schedule
(b) Reports on Form 8-K.
None
- -------------------------
*Incorporated by reference to the Company's Form 10 filed on April 17, 1997.
9
<PAGE> 12
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.
J.C. NICHOLS COMPANY
Date: May 12, 1997 By: /s/ MARK A. PETERSON
--------------------------------------
Mark A. Peterson
Vice President, Chief Financial
Officer and Treasurer (Authorized
officer and principal financial
officer of the registrant)
10
<PAGE> 13
EXHIBIT INDEX TO FORM 10-Q OF
J.C. NICHOLS COMPANY
<TABLE>
<CAPTION>
DOCUMENT
--------
<S> <C>
10.1 Stock Purchase Agreement among the Company, AHI Metnall
L.P., John Simon, and James W. Quinn.*
27.1 Financial Data Schedule
</TABLE>
- -------------------------
*Incorporated by reference to the Company's Form 10 filed on April 17, 1997.
11
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> MAR-31-1997
<CASH> 53,154
<SECURITIES> 0
<RECEIVABLES> 18,194
<ALLOWANCES> 842
<INVENTORY> 28,919
<CURRENT-ASSETS> 0
<PP&E> 346,514
<DEPRECIATION> 159,325
<TOTAL-ASSETS> 307,098
<CURRENT-LIABILITIES> 0
<BONDS> 321,368
0
0
<COMMON> 100
<OTHER-SE> (54,959)
<TOTAL-LIABILITY-AND-EQUITY> 307,098
<SALES> 1,347
<TOTAL-REVENUES> 22,921
<CGS> 1,107
<TOTAL-COSTS> 20,379
<OTHER-EXPENSES> 0
<LOSS-PROVISION> (52)
<INTEREST-EXPENSE> 5,849
<INCOME-PRETAX> 2,542
<INCOME-TAX> 955
<INCOME-CONTINUING> 1,587
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,587
<EPS-PRIMARY> .37
<EPS-DILUTED> .37
</TABLE>
