FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
QUARTERLY REPORT UNDER SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For quarter ended March 31, 2000 Commission file number 0-305
NATIONAL PROPERTIES CORPORATION
(Exact name of registrant as specified in its charter)
Iowa 42-0860581
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
4500 Merle Hay Road, Des Moines, Iowa 50310
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (515) 278-1132
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 requirement for the past 90 days.
Yes __X__ No _____
Indicate the number of shares outstanding of each of the issuer's classes
of common stock, as of the latest practicable date.
COMMON STOCK (PAR VALUE $1.00)
415,303 SHARES AS OF APRIL 30, 2000
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
NATIONAL PROPERTIES CORPORATION
BALANCE SHEETS
ASSETS
March 31, December 31,
2000 1999
CURRENT ASSETS
Cash 230,309 287,310
Accounts receivable - -
Other 14,238 16,127
---------- ----------
Total current assets 244,547 303,437
---------- ----------
PROPERTY AND EQUIPMENT, AT COST
Land 4,361,043 4,367,365
Buildings and improvements 26,584,674 27,013,359
Furniture and equipment 98,712 98,712
---------- ----------
31,044,429 31,479,436
Less - accumulated depreciation 9,948,713 10,092,823
---------- ----------
Property and equipment - net 21,095,716 21,386,613
---------- ----------
OTHER ASSETS
Marketable securities 1,777,416 1,997,094
Deferred charges and other assets 13,431 13,786
---------- ----------
Total other assets 1,790,847 2,010,880
---------- ----------
23,131,110 23,700,930
========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable 25,367 4,792
Notes payable 1,900,000 1,900,000
Accrued liabilities 297,680 401,496
Current maturities of long-term debt - 10,482
Federal and state income taxes 233,788 101,571
---------- ----------
Total current liabilities 2,456,835 2,418,341
---------- ----------
LONG-TERM DEBT 3,200,000 4,025,000
---------- ----------
DEFERRED INCOME TAXES 923,461 981,687
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STOCKHOLDERS' EQUITY
Common stock - $1 par value
Authorized - 5,000,000 shares
Issued
(2000-415,303 shares; 1999-416,353 shares) 415,303 416,353
Retained earnings 15,446,944 15,030,319
Accumulated other comprehensive income 688,567 829,230
---------- ----------
Total stockholders' equity 16,550,814 16,275,902
---------- ----------
23,131,110 23,700,930
========== ==========
NATIONAL PROPERTIES CORPORATION
STATEMENTS OF INCOME
For Quarter Ended
March 31,
2000 1999
Income
Lease rental income 1,204,726 1,129,612
Dividend and interest income 12,399 16,902
Gain on sale of securities - 46,029
Gain on sale of real estate 92,861 -
------- -------
Total income 1,309,986 1,192,543
------- -------
Expenses
Depreciation 198,837 219,297
Interest 122,138 144,816
Salaries and wages 58,724 52,383
Property, payroll
and misc. taxes 13,820 13,824
Other expenses 196,408 50,961
------- -------
Total expenses 589,927 481,281
------- -------
Income before income taxes 720,059 711,262
Federal and State income taxes 266,421 263,200
------- -------
Net income 453,638 448,062
======= =======
Other comprehensive income (Losses):
Unrealized holding gains (losses) on
marketable securities arising
during the period (221,169) (14,838)
Less reclassification adjustment for
gains included in net income - (46,029)
Less income tax expense related
to unrealized holding gains 80,505 22,156
------- -------
Other comprehensive income, (losses)
net of tax (140,664) (38,711)
------- -------
Comprehensive income 312,974 409,351
======= =======
Net income per share of common stock $1.09 $1.07
Weighted average shares
outstanding 415,453 418,536
Dividends per share None None
<FN>
NATIONAL PROPERTIES CORPORATION
STATEMENTS OF CASH FLOWS
For Quarter Ended
March 31,
2000 1999
CASH FLOW FROM OPERATING ACTIVITIES
Net income 453,638 448,062
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization 200,334 221,079
Charitable contributions 135,000 -
Deferred income taxes 22,279 21,283
Gain on sale of securities - (46,029)
Gain on sale of real estate (92,861) -
Changes in assets and liabilities:
Accounts receivable - (2,704)
Prepaid expenses and deferred charges 746 3,426
Accounts payable and accrued expenses (83,241) 2,234
Federal and State income taxes 132,217 150,464
-------- --------
Net cash provided by operations 768,112 797,815
-------- --------
CASH FLOW FROM INVESTING ACTIVITIES
Proceeds from sale of securities - 55,591
Purchased marketable securities (1,490) -
-------- --------
Net cash provided by (used in) investing activities (1,490) 55,591
-------- -------
CASH FLOW FROM FINANCING ACTIVITIES
Repayments - credit line borrowings (825,000) (700,000)
Principal payments on mortgage notes (10,482) (28,470)
Purchase of treasury stock (38,062) (2,680)
Proceeds from sale of real estate 49,921 -
-------- --------
Net cash provided by (used in) financing activities(823,623) (731,150)
-------- --------
Net increase in cash (57,001) 122,256
Cash at beginning of period 287,310 139,993
-------- --------
Cash at end of period 230,309 262,249
======== ========
SUPPLEMENTAL CASH FLOW INFORMATION
Cash paid during the period for
Interest expense 122,138 98,124
Income tax payments 111,925 91,453
NATIONAL PROPERTIES CORPORATION
NOTES TO THE FINANCIAL STATEMENTS
The Company has adopted effective January 1, 1998 the Statement of
Financial Accounting Standard No. 130, "Reporting Comprehensive
Income," which establishes standards for the reporting and display
of comprehensive income and its components in a full set of
general purpose financial statements. The effect of FAS No. 130 on
the Company's interim financial statements is to present in the
statement of income, unrealized gains and losses on marketable
securities net of income taxes, which in periods prior to 1998 had
been reported as an annual adjustment directly to stockholders'
equity.
The balance sheets, statements of income and comprehensive income,
and statements of cash flow at March 31, 2000 and 1999 and the
periods then ended are not audited but reflect all adjustments
which are of a normal recurring nature and are, in the opinion of
management, necessary to a fair statement of the results of the
periods shown.
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
General
The Company, an Iowa corporation, is engaged principally in the
development of commercial real estate for lease to qualified
tenants.
On March 20, 2000 the Company sold its Fayette, Iowa GTE Telephone
Service Center Building to Upper Iowa University. The GTE lease
expired April 30, 2000 and the Company retained the monthly rental
through lease expiration. The property's fair market value of
$185,000 was determined by MAI appraisal dated March 1, 2000. The
property was sold for $50,000 cash, and the remaining $135,000
fair market value was gifted to the University.
On May 1, 2000 the Company sold its Chariton, Iowa GTE Telephone
Service Center Building to Chariton Community School District.
The GTE lease expired April 30, 2000. The property's fair market
value of $320,000 was determined by MAI appraisal dated March 27,
2000. The property was sold for $150,000 cash, and the remaining
$170,000 fair market value was gifted to the School District.
Operating Results
Lease revenues in the first quarter 2000 were $1,205,000 up
$75,000 or 6.6% over the corresponding period in 1999. The
company's convenience stores accounted for approximately $60,000
of the increase with the addition of the Olathe, Kansas and Lee's
Summit, Missouri stores in December 1999. Lease revenues from two
of the Company's three garden center buildings declined
approximately $10,000 in the first quarter from their first
quarter 1999 level after releasing them to a new tenant in October
1999. Contingent rentals based on sales overages increased
$28,000 in the first quarter over the same period in 1999.
Investment income including gains on sale of marketable securities
was approximately $12,000 in the first quarter 2000 compared to
$63,000 in the first quarter 1999.
The Company realized a gain of $93,000 on the sale of its GTE
telephone service center building in March 2000. The gain was
based on a fair market value of $185,000 as determined by MAI
appraisal. The property was sold for $50,000 cash with the
remaining $135,000 fair market value gifted to a university.
Total expenses for the first quarter 2000 were $590,000 compared
to $481,000 in the first quarter 1999. The increase was primarily
due to the $135,000 donation to a university referred to above.
Depreciation and interest expense, two key figures for the
Company, declined $43,000 in the first quarter 2000 from the same
period in 1999. Although interest rates were higher during the
first quarter 2000 than the same period in 1999 (8.4% compared to
7.5%), the Company had an average of $2,160,000 less borrowed on
its three credit lines in the first quarter 2000 than it did
during the first quarter 1999.
Other general and administrative expenses led by compensation
increased $17,000 or 14.5% in the first quarter 2000 over the
first quarter 1999.
Liquidity
As of March 31, 2000, the Company's main sources of liquidity
consisted of $230,000 in cash, marketable securities having a
market value of approximately $1,777,000 and a $3,600,000
remaining loan balance available on three lines of credit with a
local bank. In addition, the Company owns unencumbered real
estate having an aggregate depreciated cost of approximately
$14,000,000. Management believes that its cash flow from
operations and other potential sources of cash will be sufficient
to finance current and projected operations.
PART II. OTHER INFORMATION.
No applicable items.
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.
NATIONAL PROPERTIES CORPORATION
Date __5/5/00__ By _____/S/__Raymond_Di_Paglia_________
Raymond Di Paglia, President and
Chief Executive Officer
Date __5/5/00__ By _____/S/__Kristine_M. Fasano________
Kristine M. Fasano, Vice President,
Secretary, Treasurer