SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2000
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 1-9900
ARIZONA LAND INCOME CORPORATION
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(Exact name of registrant as specified in its charter)
Arizona 86-0602478
- ------------------------------- -------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
2999 N. 44th Street, Suite 100, Phoenix, Arizona 85018
------------------------------------------------------
(Address of principal executive offices) (Zip Code)
(602) 952-6800
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(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 N/A 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.
As of May 10, 2000, there were 2,169,280 shares of Class A common stock and
100 shares of Class B common stock issued and outstanding.
<PAGE>
Table of Contents
Page
----
Part I
Item 1. Financial Statements................................................ 3
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations..................... 7
Part II
Item 1. Legal Proceedings................................................... 8
Item 2. Changes in Securities............................................... 8
Item 3. Defaults upon Senior Securities..................................... 8
Item 4. Submission of Matters to a Vote of
Security Holders.................................................. 8
Item 5. Other Information................................................... 8
Item 6. Exhibits and Reports on Form 8-K.................................... 8
Signatures................................................................... 8
2
<PAGE>
ARIZONA LAND INCOME CORPORATION
Balance Sheets
<TABLE>
<CAPTION>
March 31, 2000 December 31, 1999
-------------- -----------------
(Unaudited)
<S> <C> <C>
Assets
Cash and temporary investments $ 1,391,318 $ 1,907,438
------------ ------------
Investments -
Accrued interest receivable 205,446 282,406
Mortgages receivable 7,142,561 7,247,564
Investment in partnership 333,538 325,538
Land held for sale 3,182,034 3,182,034
------------ ------------
10,863,579 11,037,542
Less - Reserve for losses (618,769) (618,769)
------------ ------------
Total investments, net 10,244,810 10,418,773
------------ ------------
Total assets $ 11,636,128 $ 12,326,211
============ ============
Liabilities
Accounts payable and other liabilities $ 20,839 $ 25,362
Accrued property taxes 10,172 7,671
Dividends payable 216,993 233,533
------------ ------------
Total liabilities 248,004 266,566
------------ ------------
Stockholders' Equity
Common stock-Class A 216,928 230,848
Common stock-Class B 10 10
Additional paid-in capital 22,965,911 23,551,348
Distributions in excess of income (11,794,725) (11,722,561)
------------ ------------
Total stockholders' equity 11,388,124 12,059,645
------------ ------------
Total liabilities and stockholders' equity $ 11,636,128 $ 12,326,211
============ ============
</TABLE>
The accompanying notes are an integral part of these statements.
3
<PAGE>
ARIZONA LAND INCOME CORPORATION
Statements of Operations
(Unaudited)
Three months ended
---------------------------------
March 31, 2000 March 31, 1999
-------------- --------------
Income
Interest on mortgages $ 169,110 $ 154,750
Interest on temporary investments 17,153 47,083
Farm lease income 3,000 3,400
---------- ----------
Total income before sale of properties 189,263 205,233
---------- ----------
Expenses
Professional services 17,100 25,230
Advisory fees 8,091 9,859
Administration and general 13,450 7,663
Directors' fees 5,978 5,800
Property taxes 2,500 --
---------- ----------
Total expenses before sale of properties 47,119 48,552
---------- ----------
Income before gain on sale of properties 142,144 156,681
Gain on sale of properties -- 2,418
---------- ----------
Net income $ 142,144 $ 159,099
========== ==========
Earnings per common share $ 0.06 $ 0.07
Dividends declared per share $ 0.10 $ 0.10
Weighted average number of shares
of common stock outstanding 2,187,779 2,360,080
The accompanying notes are an integral part of these statements.
4
<PAGE>
ARIZONA LAND INCOME CORPORATION
Statements of Cash Flows
(Unaudited)
<TABLE>
<CAPTION>
Three months ended
--------------------------------
March 31, 2000 March 31, 1999
-------------- --------------
<S> <C> <C>
Cash Flows from operating activities:
Net income $ 142,144 $ 159,099
Adjustments to reconcile net income to net cash
provided by operating activities-
Gain on sale of properties -- (2,418)
Decrease in accrued interest receivable 76,960 90,243
Decrease in accounts payable and other liabilities (2,022) (1,498)
----------- -----------
Net cash provided by operating activities 217,082 245,426
----------- -----------
Cash flows from investing activities:
Cash proceeds from land sales -- 5,877
Principal payments received under mortgages 105,003 716,790
Cash payments to purchase mortgage interest -- (562,500)
----------- -----------
Net cash provided by investing activities 105,003 160,167
----------- -----------
Cash flows from financing activities:
Additional investment in partnership (8,000) --
Payments of dividends (230,848) --
Repurchase of Class A Common Stock (599,357) --
----------- -----------
Net cash used for financing activities (838,205) --
----------- -----------
Increase in cash and temporary investments (516,120) 405,593
Cash and temporary investments - beginning of period 1,907,438 4,105,346
----------- -----------
Cash and temporary investments - end of period $ 1,391,318 $ 4,510,939
=========== ===========
Schedule of Non-Cash Investing and Financing Activities:
Dividends declared in excess of dividends paid 214,308 236,008
</TABLE>
The accompanying notes are an integral part of these statements.
5
<PAGE>
Arizona Land Income Corporation
Notes to Financial Statements
March 31, 2000
Note 1 BASIS OF PRESENTATION - The financial statements have been prepared by
Arizona Land Income Corporation (the "Company") without audit,
pursuant to the rules and regulations of the Securities and Exchange
Commission and the instructions to Form 10-QSB. In the opinion of the
Company, the unaudited financial statements contain all adjustments
(consisting of only normal recurring adjustments) necessary to present
fairly the financial position, the results of operations and cash
flows for the periods presented.
Note 2 The results of operations for the three months ended March 31, 2000,
are not necessarily indicative of the results to be expected for the
full year.
Note 3 See Item 2, Management's Discussion and Analysis of Financial
Condition and Results of Operations for a discussion of mortgages in
default. It is the Company's normal policy to discontinue the accrual
of interest for notes in default as of the default date.
Note 4 Subsequent Events. In April and May 2000, the Company received payment
in full on mortgage receivable Loan No. 10 of approximately
$1,055,000, and on mortgage receivable Loan No. 5 of approximately
$496,000, respectively.
6
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS.
Arizona Land Income Corporation (the "Company") is an Arizona corporation
which has elected to be treated as a real estate investment trust (a "REIT")
under the Internal Revenue Code of 1986. The statements of operations filed
herewith cover the periods from January 1, 2000 through March 31, 2000, and
January 1, 1999 through March 31, 1999.
For the quarter ended March 31, 2000, the Company had total income of
approximately $189,000 compared to $205,000 for the quarter ended March 31,
1999. This decrease was primarily attributable to a decrease in interest on
temporary investments from approximately $47,000 to $17,000.
The Company's expenses for the quarter ended March 31, 2000 was
approximately $47,000 compared to $49,000 for the quarter ended March 31, 1999.
The Company's professional services expense decreased to approximately $17,000
for the quarter ended March 31, 2000, compared to $25,000 for the quarter ended
March 31, 1999.
The Company reported income before gain on sale of properties of
approximately $142,000 for the quarter ended March 31, 2000, compared to
$157,000 for the quarter ended March 31, 1999. The Company reported net income
of approximately $142,000 for the quarter ended March 31, 2000, compared to
$159,000 for the quarter ended March 31, 1999.
For the operating period of January 1, 2000 through March 31, 2000, the
Company reported a decrease in cash and temporary investments of approximately
$516,000. This decrease resulted primarily from the distribution of $230,848 in
cash dividends and from the repurchase of Class A Common Stock of $599,357.
Adverse market conditions negatively affected real estate values in Arizona
and in the metropolitan Phoenix area during the early 1990's resulting in a
decline in real estate values and an increase in mortgage defaults. The Phoenix
real estate market has improved and land values have stabilized and improved in
certain instances. The Company believes that such improvements will reduce the
number of loan defaults or modifications; however, there can be no assurances in
this regard. Nonetheless, the Company will continue to vigorously assert any and
all its legal rights in the event of a default.
In April of 2000, the Company received a cash payoff of approximately
$1,055,000 on Loan No. 10. In May 2000, the Company received a cash payoff of
approximately $496,000 on Loan No. 5. These collections were in addition to
periodic collections of principal on other notes.
On March 7, 2000, the Company declared a dividend of $.10 per share,
payable April 14, 2000 to shareholders of record on April 4, 2000.
The Company believes that funds generated from operations will be
sufficient to meet its capital requirements. No other arrangements, such as
lines of credit, have been made to obtain external sources of capital. While no
assurance can be given, the Company believes that such arrangements could be
obtained by the Company, if necessary.
As disclosed in the Company's prospectus used in connection with the
Company's 1988 initial public offering, the Company intended to dissolve within
approximately eight years from the date of such public offering. The precise
date on which the Company will dissolve will be determined by the Company's
Board of Directors and will depend upon market conditions and other pertinent
factors. The Board of Directors also has the discretion to indefinitely continue
the operation of the Company. As of May 10, 2000, the Board has not made a
decision regarding the dissolution of the Company.
The mortgage loan numbers referred to in the above paragraphs are
identifiers for those loans on the books and records of the Company.
Additionally, these numbers are identified in the Company's initial offering
prospectus dated June 6, 1988.
7
<PAGE>
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
Not Applicable
ITEM 2. CHANGES IN SECURITIES
Not Applicable
ITEM 3. DEFAULTS UPON SENIOR SECURITIES.
Not Applicable
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
Not Applicable
ITEM 5. OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
27 Financial Data Schedule
(b) Reports of Form 8-K
None
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.
ARIZONA LAND INCOME CORPORATION
May 10, 2000 /s/ Thomas R. Hislop
- ------------ ----------------------------------------
Date Thomas R. Hislop
Vice President and
Chief Financial Officer
8
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<ARTICLE> 5
<CIK> 830748
<NAME> ARIZONA LAND INCOME CORPORATION
<MULTIPLIER> 1,000
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-2000
<PERIOD-END> MAR-31-2000
<EXCHANGE-RATE> 1
<CASH> 1,391
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 619
<INVENTORY> 10,245
<CURRENT-ASSETS> 11,636
<PP&E> 0
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<TOTAL-ASSETS> 11,636
<CURRENT-LIABILITIES> 248
<BONDS> 0
0
0
<COMMON> 217
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 11,636
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<INCOME-PRETAX> 142
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<NET-INCOME> 142
<EPS-BASIC> .06
<EPS-DILUTED> .06
</TABLE>
