<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, 1994
or
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
For Quarter Ended September 30, 1994 Commission file number 1-7585
THE NEWHALL LAND AND FARMING COMPANY
(a California Limited Partnership)
(Exact name of Registrant as specified in its charter)
California 95-3931727
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
23823 Valencia Boulevard, Valencia, CA 91355
(Address of principal executive offices) (Zip Code)
(805) 255-4000
(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
--- ---
<PAGE> 2
Part I. Financial Information 2.
Item 1 - Financial Statements
THE NEWHALL LAND AND FARMING COMPANY
(a California Limited Partnership)
CONSOLIDATED STATEMENTS OF INCOME
<TABLE>
<CAPTION>
Unaudited Three months ended Nine months ended
September 30, September 30,
------------------ -----------------
In thousands, except per unit 1994 1993 1994 1993
------ ------ ------ ------
<S> <C> <C> <C> <C>
REVENUES
Real estate
Residential sales $ 3,742 $ 4,315 $25,277 $10,829
Industrial and other sales 5,368 2,989 6,430 6,107
Commercial operations 9,374 8,913 26,071 24,174
------- ------- ------- -------
18,484 16,217 57,778 41,110
------- ------- ------- -------
Agriculture
Operations 4,916 3,829 9,073 6,793
Ranch sales - - 11,800 8,557
------- ------- ------- -------
4,916 3,829 20,873 15,350
------- ------- ------- -------
TOTAL REVENUES $23,400 $20,046 $78,651 $56,460
======= ======= ======= =======
CONTRIBUTION TO INCOME
Real estate
Residential sales $ (571) $ 1,050 $ 2,494 $ 1,289
Industrial and other sales 2,650 1,712 2,444 1,052
Community development (1,766) (1,678) (4,737) (4,352)
Commercial operations 4,139 3,762 11,924 11,289
------- ------- ------- -------
4,452 4,846 12,125 9,278
------- ------- ------- -------
Agriculture
Operations 1,349 735 3,054 1,290
Ranch sales - - 9,227 3,984
------- ------- ------- -------
1,349 735 12,281 5,274
------- ------- ------- -------
Earthquake damage - - (3,700) -
------- ------- ------- -------
OPERATING INCOME 5,801 5,581 20,706 14,552
General and administrative expense (2,233) (1,853) (6,202) (5,557)
Interest and other, net (2,662) (1,894) (7,835) (5,793)
------- ------- ------- -------
NET INCOME $ 906 $ 1,834 $ 6,669 $ 3,202
======= ======= ======= =======
NET INCOME PER UNIT $ 0.02 $ 0.05 $ 0.18 $ 0.09
======= ======= ======= =======
Number of units used in computing
per unit amounts 36,781 36,774 36,793 36,781
Cash distributions per unit $ .10 $ .10 $ 0.30 $ 0.30
</TABLE>
See Notes to Consolidated Financial Statements
<PAGE> 3
THE NEWHALL LAND AND FARMING COMPANY
(a California Limited Partnership)
Part I. Financial Information 3.
Item 1 - Financial Statements
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
September 30, December 31,
In thousands, except units 1994 1993
------------- ------------
Unaudited
<S> <C> <C>
ASSETS
Cash and cash equivalents $ 37,092 $ 39,636
Accounts and notes receivable 20,326 19,508
Land under development 94,594 73,078
Land held for future development 34,103 34,563
Property and equipment, net 185,449 182,332
Other assets and deferred charges 11,008 10,781
-------- --------
$382,572 $359,898
======== ========
LIABILITIES AND PARTNERS' CAPITAL
Accounts payable $ 15,162 $ 12,419
Accrued expenses 28,822 26,794
Deferred revenues 4,956 1,835
Mortgage and other debt 192,493 174,157
Advances and contributions from
developers for utility construction 13,050 12,067
Other liabilities 21,004 21,347
-------- --------
Total liabilities 275,487 248,619
Partners' capital
36,758,624 units outstanding at September 30, 1994
and 36,756,530 units outstanding at December 31, 1993 107,085 111,279
-------- --------
$382,572 $359,898
======== ========
</TABLE>
See Notes to Consolidated Financial Statements
<PAGE> 4
THE NEWHALL LAND AND FARMING COMPANY
(a California Limited Partnership)
CONSOLIDATED STATEMENTS OF CASH FLOWS 4.
<TABLE>
<CAPTION>
Unaudited Nine months ended
September 30,
-----------------------
In thousands 1994 1993
-------- --------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 6,669 $ 3,202
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 5,525 5,573
Increase in land under development (21,516) (15,100)
Increase in accounts and notes receivable (818) (3,059)
Increase (decrease) in accounts payable, accrued expenses
and deferred revenues 7,892 (7,544)
Cost of property sold 1,466 3,829
Other adjustments, net 330 (1,673)
-------- -------
Net cash used by operating activities (452) (14,772)
-------- --------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property and equipment (10,108) (6,673)
Investment in joint venture (97) 96
-------- --------
Net cash used by investing activities (10,205) (6,577)
-------- --------
CASH FLOWS FROM FINANCING ACTIVITIES:
Distributions paid (11,027) (11,027)
Increase in mortgage and other debt 18,336 12,247
Increase in bank loans - 8,900
Other, net 804 2,936
-------- ---------
Net cash provided by financing activities 8,113 13,056
-------- --------
NET DECREASE IN CASH AND CASH EQUIVALENTS (2,544) (8,293)
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 39,636 10,792
-------- --------
CASH AND CASH EQUIVALENTS, END OF PERIOD $ 37,092 $ 2,499
======== ========
</TABLE>
See Notes to Consolidated Financial Statements
<PAGE> 5
THE NEWHALL LAND AND FARMING COMPANY
(a California Limited Partnership)
Part I. Financial Information 5.
Item 1 - Financial Statements
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 1. Accounting Policies
The consolidated financial statements include the accounts of The Newhall Land
and Farming Company and its subsidiaries, all of which are wholly-owned or
controlled, (collectively, "the Company"). All significant intercompany
transactions have been eliminated.
The Company's income from Residential Sales comes from two sources, sales of
entitled lots to merchant builders and sales of completed homes to homebuyers
through joint ventures. The Company recognizes income from sales of entitled
lots upon close of escrow to merchant builders or on the percentage of
completion basis if the Company has an obligation to complete certain future
development. The Company does not receive any income from subsequent sale of
completed homes by merchant builders to homebuyers. In the case of joint
ventures, the Company increases its inventories of homes completed or under
construction with joint-venture partners as it funds its portion of the
joint-venture obligation and records its portion of revenues and income as the
joint venture closes escrow on sales to homebuyers.
The Company's unaudited interim financial statements have been prepared
substantially in conformity with generally accepted accounting principles used
in the preparation of the Company's annual financial statements. In the
opinion of the Company, all adjustments necessary for a fair statement of the
results of operations for the three months ended September 30, 1994 and 1993
have been made. Certain reclassification have been made to prior periods'
amounts to conform to the current year presentation.
The interim statements are condensed and do not include some of the information
necessary for a more complete understanding of the financial data.
Accordingly, your attention is directed to the footnote disclosures found on
pages 20 through 26 of the December 31, 1993 Annual Report to Partners and
particularly to Note 2 which includes a summary of significant accounting
policies.
Interim financial information for the Company has substantial limitations as an
indicator for the calendar year because:
. Land sales occur irregularly and are recognized at the close of escrow or on
the percentage of completion basis if the Company has an obligation to
complete certain future improvements and provided profit recognition
criteria are met.
. Agricultural crops are on an annual cycle and income is recognized upon
harvest. Most major crops are harvested during the fall and winter.
. Sales of non-developable farm land occur irregularly and are recognized upon
close of escrow provided profit recognition criteria are met.
<PAGE> 6
Part I. Financial Information 6.
Item 1 - Financial Statements
Note 2. Details of Land Under Development
(In $000)
<TABLE>
<CAPTION>
September 30, December 31,
1994 1993
------------ -----------
(Unaudited)
<S> <C> <C>
Residential $39,367 $34,164
Industrial and commercial 43,526 35,092
Homes completed or under construction 8,888 3,381
with joint-venture partners
Other 2,813 441
------- -------
Total land under development $94,594 $73,078
======= =======
</TABLE>
Note 3. Details for Earnings per Unit Calculation
(Unaudited)
<TABLE>
<CAPTION>
Three months ended Nine months ended
------------------------- --------------------------
Sept. 30, Sept. 30, Sept. 30, Sept. 30,
1994 1993 1994 1993
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Average number of units
outstanding during
the period 36,756,713 36,756,530 36,756,592 36,756,530
Net units issuable in connection
with dilutive options based
upon use of the treasury
stock method 23,994 17,162 36,195 24,212
---------- ---------- ---------- ----------
Average number of primary units 36,780,707 36,773,692 36,792,787 36,780,742
========== ========== ========== ==========
</TABLE>
<PAGE> 7
Part I. Financial Information 7.
Item 2 - Management's Discussion and Analysis of Financial Condition and
Results of Operations
Financial Condition
Liquidity and Capital Resources
The Company had cash and cash equivalents totaling $37.1 million at September
30, 1994. The Company's strong cash position is primarily due to a $30 million
seven-year unsecured loan obtained in December, 1993 and an $11 million
long-term financing obtained by the Company's wholly-owned public water
utility in July, 1994. For further information on financing, see the Financing
Activities discussion in this Liquidity and Capital Resources section.
At September 30, 1994, there were no borrowings outstanding against available
lines of credit totaling $79 million. Letters of credit outstanding against
lines of credit totaled $5.5 million at the end of the period.
The Company believes its operations and available credit are sufficient to
provide the cash required to finance future operations and enable it to take
advantage of new development opportunities. There are no material commitments
for capital expenditures other than in the ordinary course of business.
The following discussion relates to principal items shown on the Consolidated
Statement of Cash Flows:
Operating Activities
Inventory expenditures for land development and infrastructure to support
pending and future land sales, residential construction costs for two
joint-venture projects and agricultural crop costs totaled $49.5 million for
the nine months ended September 30, 1994. Of these expenditures, approximately
$10.3 million relates to McDowell Mountain Ranch, the majority of which has
been funded by improvement district bonds. Please refer to the Financing
Activities section for information on public financings for this project.
Inventory expenditures were also partially offset during this period by sales
of 178 residential lots and 25 joint-venture home closings in Valencia, sale of
a 79-acre bulk parcel just outside the McDowell Mountain Ranch planned
community in Scottsdale and sales of 6.7 commercial acres in the Valencia area.
At September 30, 1994, $5.0 million of deferred revenues from current and prior
year land sales remain to be recognized in future periods as the Company
completes required site development, landscape and amenity work. Recognition
of deferred revenues has no impact on the Company's cash position. However,
more than $8 million in land sale notes receivable are scheduled for collection
in the fourth quarter of 1994.
<PAGE> 8
Part I. Financial Information 8.
Item 2 - Management's Discussion and Analysis of Financial Condition and
Results of Operations (continued)
The Meridian Ranch, consisting of 5,370 acres of farm land not suitable for
real estate development, was sold in June, 1994 for $11.8 million cash and
contributed $9.2 million to income.
Investing Activities
Capital expenditures during the nine-month period ended September 30, 1994
totaling $10.1 million includes construction costs for a 199,000-square-foot
build-to-suit for ITT Corporation in Valencia Commerce Center and a
7,000-square-foot build-to-suit for Trader Joe's, a specialty food retailer,
which opened in September. Also included are expenditures for various
commercial tenant improvements and water utility construction costs.
Financing Activities
Three quarterly distributions totaling $11.0 million, or $.30 per unit have
been paid year-to-date. The declaration of distributions is reviewed by the
Board of Directors on a quarterly basis. The declaration of any distribution,
and the amount declared, is determined by the Board of Directors, taking into
account the Company's earnings, cash requirements, financial condition and
prospects. The next quarterly distribution will be considered by the Board of
Directors at its November meeting.
In July, 1994, the Company's wholly-owned water utility subsidiary finalized an
$11 million long-term financing with a major insurance company. Subsequently,
the utility repaid $10.5 million to the Company which had been advanced in
December, 1993 to retire the utility's outstanding advances against a
revolving-to-term credit line.
In 1994, the Company commenced infrastructure development activities at its
McDowell Mountain Ranch to be partially funded by over $17 million of
improvement district bonds. As of September 30, 1994, $8.1 million of the $17
million available has been expended to construct these improvements which is
reflected as project debt. In addition, during the 1994 third quarter, the
City of Scottsdale successfully placed $9.1 million in Community Facilities
District Bonds to construct certain public improvements within McDowell
Mountain Ranch. Although the Community Facilities District Bonds are not
reflected as project debt, the Company is obligated to pay an ad valorem
property tax for these improvements until parcels are sold.
<PAGE> 9
Part I. Financial Information 9.
Item 2 - Management's Discussion and Analysis of Financial Condition and
Results of Operations (continued)
Results of Operations
Comparison of Third Quarter and Nine Months 1994 to Third Quarter and Nine
Months 1993 (unaudited)
The amounts of increase or decrease from the prior year periods are as follows
(in $000, except per unit):
<TABLE>
<CAPTION>
Increase/(Decrease) Increase/(Decrease)
------------------------ ------------------------
Three Months Nine Months
------------------------ ------------------------
Revenues Amount % Amount %
------- ---- ------- -----
<S> <C> <C> <C> <C>
Real Estate
Residential sales $ (573) (13)% $14,448 133%
Industrial and other sales 2,379 80 323 5
Commercial operations 461 5 1,897 8
Agriculture
Operations 1,087 28 2,280 34
Ranch sales 0 -- 3,243 38
------- ---- ------- ----
$ 3,354 17% $22,191 39%
======= ==== ======= ====
Contribution to income
Real Estate
Residential sales $(1,621) (154)% $ 1,205 93%
Industrial and other sales 938 55 1,392 132
Community development (88) (5) (385) (9)
Commercial operations 377 10 635 6
Agriculture
Operations 614 84 1,764 137
Ranch sales -- -- 5,243 132
Earthquake damage -- -- (3,700) (100)
------- ---- ------- ----
Operating income 220 4 6,154 42
General and administrative expense (380) (21) (645) (12)
Interest and other, net (768) (41) (2,042) (35)
------- ---- ------- ----
Net income $ (928) (51)% $ 3,467 108%
======= ==== ======= ====
Per unit:
Net income per unit $ (0.03) (60)% $0.09 100%
======= ==== ====== ====
Number of units used in computing
per unit amounts (in 000) 7 --% 12 --%
======= ==== ====== ====
</TABLE>
<PAGE> 10
Part I. Financial Information 10.
Item 2 - Management's Discussion and Analysis of Financial Condition and
Results of Operations (continued)
The decrease in results for the current quarter, compared to last year, reflect
the additional interest cost associated with the Company's $30 million private
placement which was completed last December. In addition, the Company
concluded its homebuilding operations in Valencia Northbridge in September,
1993.
RESIDENTIAL SALES
VALENCIA
A loss was recorded for the 1994 third quarter due to no residential land sales
being completed. However, the Company continues to benefit from its strategy
of selling residential lots to merchant builders and through joint ventures.
Results for the 1994 third quarter include deferred revenues of $295,000 and
income of $87,000 under percentage of completion accounting from a residential
land sale completed in the current year second quarter, and revenues of $3.4
million and income of $475,000 from 10 escrow closings in the Company's first
joint venture with EPAC Communities, Inc. Of the 79 homes in this
joint-venture project, there were 14 homes in escrow and 19 remaining to be
sold at September 30, 1994.
The 1994 nine-month period includes sales by the Company of 83 lots in Valencia
NorthPark to Beazer Homes and 95 lots in Valencia Northbridge to Del Webb Homes
which contributed an aggregate of $12.8 million to revenues and $2.4 million to
income. Deferred revenues of $2.7 million remain to be recognized from these
sales in future periods under percentage of completion accounting. The current
year nine-month period also includes 25 escrow closings from the joint venture
with EPAC Communities, Inc. contributing $8.5 million to revenues and $1.2
million to income.
There were no residential land sales completed in the prior year three and
nine-month periods. Under percentage of completion accounting, revenues of
$1.7 million and $3.8 million, and income of $211,000 and $828,000 were
recognized in the prior year three and nine-month periods, respectively, from
prior residential land sales. Also included in the 1993 nine-month period, is
cash received from prior residential land sale profit participation agreements
which contributed $100,000 to revenues and income.
Transition from the Company's own home construction operation was completed in
the third quarter of 1993 when revenues of $2.6 million and income of $558,000
were recorded from 10 residential escrow closings. Results for the prior year
nine-month period included 29 home closings which contributed $6.9 million to
revenues and $1.2 million to income.
<PAGE> 11
Part I. Financial Information 11.
Item 2 - Management's Discussion and Analysis of Financial Condition and
Results of Operations (continued)
Merchant Builder Program
Six builders are now active in Valencia with eight different residential
products that have prices appealing to a broad spectrum of buyers. Home sales
continue to increase in Valencia as merchant builders closed escrow on 50 homes
during the 1994 third quarter, compared with 48 homes in the second quarter and
31 homes in the first quarter. In the prior year, merchant builders closed
escrow on 39 homes in the third quarter, 29 homes in the second quarter and 13
homes in the first quarter. At September 30, 1994, there were 71 homes in
escrow by merchant builders. Although the Company does not directly
participate in the profits generated from escrow closings by merchant builders,
the absorption of these previously sold lots is key to the Company's success in
selling additional lots to merchant builders in future periods.
Beazer Homes opened models in August on lots purchased from the Company in the
second quarter and already is selling its second phase of homes. As a result
of this success, Beazer Homes has entered escrow with the Company to purchase
an additional 66 entitled lots in Valencia NorthPark, with some of the lots
scheduled to close during the fourth quarter of 1994.
Joint-Venture Program
In addition to the Company's first joint venture with EPAC described above, two
additional joint ventures are scheduled to start generating revenue and income
for the Company in the fourth quarter as escrows close to home buyers. Four
models, priced from $130,000 to $160,000 opened in September at Montana
Townhomes, a 138-unit project and the Company's second joint-venture with EPAC
Communities, Inc. in Valencia Northbridge. Models opened in October for a
128-home project of the most affordable detached homes offered in Valencia in
many years. The project is being developed in Valencia NorthPark by RGC, an
award-winning Orange County-based builder, under a limited partnership
agreement with the Company. These single-family homes, called the CourtHome
Collection, are clustered around a common courtyard and range in price from
$139,000 to $169,000. There were no homes in escrow from these new joint
ventures at September 30, 1994.
A second joint-venture project with RGC is for 102 townhomes in Valencia
Northbridge starting in the low $100,000's. Models featuring three floorplans
will open and escrow closings are expected to start contributing to revenue and
income in 1995.
<PAGE> 12
Part I. Financial Information 12.
Item 2 - Management's Discussion and Analysis of Financial Condition and
Results of Operations (continued)
MCDOWELL MOUNTAIN RANCH
Land development and infrastructure construction are well underway for this
4,000-home planned community in Scottsdale, Arizona. During the fourth
quarter, construction will begin on the community recreation center, paseo
system and information center. Initial models by merchant builders and the
project's grand opening are scheduled for the spring of 1995.
Results for the nine-month period include the sale of a 79-acre bulk parcel
outside the planned community which contributed $3.6 million to revenues and
$1.7 million to income. On November 5, 1994, escrow closed on 134 lots to
Coventry Homes, a division of Del Webb Corporation of Phoenix, for $5.5
million. Currently, 358 lots are in escrow for sale to merchant builders for
approximately $10 million with closings anticipated in the fourth quarter of
1994, subject to market conditions and completion of necessary infrastructure
improvements.
INDUSTRIAL AND OTHER SALES
Three commercial parcels totaling 5.6 acres closed escrow in the 1994 third
quarter for approximately $5.4 million in revenues contributing $3.3 million to
income. Also included in the 1994 nine-month period is the sale of a 1.25-acre
parcel in Valencia Auto Center which contributed $925,000 to revenues and
$624,000 to income, and a $393,000 non-refundable deposit which was taken into
income from a proposed prior year sale.
The prior year three and nine-month period results included the sale of a
1.9-acre parcel in Valencia Auto Center contributing $1.5 million to revenues
and $1.1 million to income. Also included in the prior year are revenues and
income recognized from prior land sales under percentage of completion
accounting totaling $1.5 million and $1.2 million respectively in the third
quarter and $3.9 million and $2.1 million respectively in the nine-month
period.
At September 30, 1994, three parcels totaling 6.2 acres were in escrow for $5.6
million with closings scheduled for later this year. The ability to close
these sales will depend on market conditions. Negotiations are continuing with
other companies for both land sales and build-to-suit opportunities.
<PAGE> 13
Part I. Financial Information 13.
Item 2 - Management's Discussion and Analysis of Financial Condition and
Results of Operations (continued)
COMMUNITY DEVELOPMENT
Increases in Community Development expenses from the prior year periods are
primarily attributable to planning and entitlement expenses in connection with
the Company's new 12,000-acre planned community to be called Newhall Ranch. A
general plan application was submitted to Los Angeles County in June, 1994 and
technical environmental studies are being prepared for the Environmental Impact
Report. Management is presenting to various civic and community groups the
plans for this 24,000-home new community which will be located just west of
Valencia along Highway 126 and extend from Interstate 5 to the Ventura County
line.
COMMERCIAL OPERATIONS
Commercial operations include the Company's portfolio of income-producing
properties and the Natural Resources division, consisting of Valencia Water
Company, a wholly-owned public water utility, and the Company's energy
operations.
Revenues and income from the Company's income-producing portfolio continued to
show increases for the third quarter and nine-month periods. All properties in
the portfolio are contributing to this regular source of income and cash flow.
At Valencia Town Center, the Company's regional shopping mall, The Disney Store
and two other retail shops opened during the third quarter. River Oaks
neighborhood shopping center is 100% leased and Bouquet Center is 99% leased
while constructed space at Castaic Village, the newest neighborhood shopping
center, is 93% leased. In addition, the Company's three apartment complexes
are at full occupancy.
Valencia Hilton Garden Inn continues to operate ahead of projections,
increasing its contribution to the portfolio's income. Through September,
occupancy was over 93% compared with 81% last year.
Trader Joe's, a popular specialty food retailer, opened in September 1994. The
7,000-square-foot facility in Valencia is a build-to-suit under a long-term
lease agreement with the Company. In early October, ITT Corporation began the
consolidation of two divisions into the Company's first build-to-suit in
Valencia Commerce Center. Over 400 employees will be relocated into the
199,000-square-foot facility. A third-party offer for purchase of the building
is under consideration by the Company.
<PAGE> 14
Part I. Financial Information 14.
Item 2 - Management's Discussion and Analysis of Financial Condition and
Results of Operations (continued)
Valencia Marketplace, a high-volume retail complex was approved by the Los
Angeles County Board of Supervisors in July, 1994. Subsequently, local
environmental groups filed a lawsuit challenging the County's approval. As a
result, construction is likely to be delayed on this 760,000-square-foot
project.
Expiration of a 12-month drought recovery surcharge approved by the California
Public Utilities Commission for Valencia Water Company beginning in May, 1993,
contributed to decreases in revenues and income from the comparable prior year
third quarter. For the nine-month period, revenues and income from Valencia
Water Company are approximately the same as the prior year period while results
from the energy operations were impacted by reductions in oil production and
market price.
AGRICULTURAL OPERATIONS
Increases in revenues and income from agricultural operations from the prior
year third quarter are due to the early harvest of lemons and an excellent crop
of tomatoes. Also contributing to increases from the comparative prior year
nine-month period are expense reductions from streamlined administrative
functions and transition to leasing grazing land to livestock operators.
RANCH SALES
There were no sales of farm land in the current or prior year third quarters.
The sale of the 5,370-acre Meridian Ranch in the current year second quarter
for $11.8 million contributed $9.2 million to income. Prior year nine-month
results include sale of the Capay and Wheatland Ranches for $7.3 million
contributing $3.0 million to income and sale of 1,990 acres on the Merced and
Meridian Ranches for $1.2 million contributing $972,000 to income.
The Company plans to market for sale its remaining 9,440 acres of non-strategic
farm land. At September 30, 1994, no agricultural parcels were in escrow.
<PAGE> 15
Part I. Financial Information 15.
Item 2 - Management's Discussion and Analysis of Financial Condition and
Results of Operations (continued)
EARTHQUAKE DAMAGE
As a result of the earthquake which struck the San Fernando Valley on January
17, 1994, a $3.7 million charge was taken in the first quarter for damages to
the Company's properties not covered by insurance. This does not include
estimated damages of $5 million incurred by Valencia Water Company, the
Company's wholly-owned public water utility. While Valencia Water Company is
liable for deductible amounts on three storage tanks which were lost and
damages to underground water facilities, which are not insurable, the
California Public Utilities Commission has approved a $785,000 disaster
recovery surcharge over 22 months commencing in October, 1994. The Company
anticipates recovering additional earthquake damage for Valencia Water Company
through future rate adjustments, subject to approval by the California Public
Utilities Commission.
GENERAL AND ADMINISTRATIVE EXPENSE
The primary contributors to increases of 21% and 12% from the prior year three
and nine-month periods, respectively, are professional fees in connection with
employee benefit programs, reduced expense recoveries for tax accounting fees
billed to outside partnerships and an additional board meeting due to the
January 17, 1994 earthquake.
INTEREST AND OTHER, NET
Increases in interest expense from the prior year periods are attributable to a
$30 million unsecured loan obtained from a major insurance company in December,
1993 and rate increases on variable rate project financing. Also, contributing
to the increase in Interest and Other, net is a reduction in interest income
due to collection of notes receivable partially offset by income from
additional cash available for investment.
<PAGE> 16
Part II. Other Information 16.
Item 6 - Exhibits and Reports on Form 8-K
(a) Exhibits (listed by numbers corresponding to the Exhibit Table of Item 601
in Regulation S-K):
10 The Newhall Land and Farming Company Employee Unit Purchase Plan
incorporated by reference to the Company's Registration Statement
on Form S-8 dated May 24, 1994
27 Financial Data Schedule
(b) No report was filed on Form 8-K in the third quarter ended
September 30, 1994.
<PAGE> 17
SIGNATURES 17.
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.
THE NEWHALL LAND AND FARMING COMPANY
(a California Limited Partnership)
-----------------------------------
Registrant
By Newhall Management Limited Partnership,
Managing General Partner
By Newhall Management Corporation,
Managing General Partner
Date: November 7, 1994 By / S / THOMAS L. LEE
-----------------------------------
Thomas L. Lee, Chairman
and Chief Executive Officer of
Newhall Management Corporation
(Principal Executive Officer)
Date: November 7, 1994 By / S / ROBERT D. WILKE
-----------------------------------
Robert D. Wilke, Vice Chairman and
Chief Financial Officer of
Newhall Management Corporation
(Principal Financial Officer)
Date: November 7, 1994 By / S / DONALD L. KIMBALL
-----------------------------------
Donald L. Kimball, Vice President -
Controller of Newhall
Management Corporation
(Principal Accounting Officer)
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<FISCAL-YEAR-END> DEC-31-1994
<PERIOD-END> SEP-30-1994
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0
0
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