Form 10-QSB
U.S. Securities and Exchange Commission
Washington, D.C. 20549
(Mark One)
[XX]QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For Quarter Ended December 31, 2001
[ ]TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE
EXCHANGE ACT
For the transition period from to
Commission File Number: 0-7775
WESTLAND DEVELOPMENT CO., INC.
------------------------------
(Exact name of small business issuer as
specified in its charter)
NEW MEXICO 85-0165021
- ------------------------------- -------------------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
401 Coors Blvd., N.W.,
Albuquerque, New Mexico 87121
- -------------------------------------------------------------------------------
(Address of principal executive offices)
(505)831-9600
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(Issuer's telephone number)
N/A
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(Former name, former address and former fiscal year, if changed since last
report)
Check whether the issuer (1) filed all reports required to be filed by
Section 13 or 15(d) of the Securities Exchange Act during the past 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 [ ]
State the number of shares outstanding of each of the issuer's classes of
common equity as of February 11, 2001:
No Par Value Common: 714,841
Class B $1.00 Par Value Common: 86,100
Transitional Small Business Format (check one) Yes [ ] No [ X ]
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
WESTLAND DEVELOPMENT CO., INC.
BALANCE SHEET
(unaudited)
December 31, 2001
ASSETS
Cash and cash equivalents ........................ $ 1,420,854
Short-term investments ........................... 302,193
Receivables:
Real estate contracts ......................... $ 2,482,644
Note receivable - related party ............... 97,803
Other receivables ............................. 29,227 2,609,674
------------
Land and improvements held for
future development ............................ 7,941,175
Income producing properties, net ................. 11,696,298
Property and equipment, net of accumulated
depreciation of $603,988 ...................... 317,824
Investment in Partnerships and joint ventures .... 224,789
Income taxes receivable .......................... 14,257
Other ............................................ 242,477
------------
$ 24,769,541
============
LIABILITIES AND STOCKHOLDERS' EQUITY
Accounts payable, accrued expenses
and other liabilities ......................... $ 1,551,327
Deferred income taxes ............................ 5,416,423
Notes, bonds, mortgages and assessments payable .. 9,410,709
------------
Total liabilities ............... 16,378,459
Stockholders' equity
Common stock - no par value;
authorized, 736,668 shares;
issued and outstanding,
714,841 shares ............................. 8,500
Class B common stock - $1.00 par
value; authorized, 491,112
shares; issued and outstanding,
86,100 shares .............................. 86,100
Additional paid-in capital .................... 591,811
Retained earnings ............................. 7,704,671 8,391,082
------------ ------------
$ 24,769,541
============
WESTLAND DEVELOPMENT CO., INC.
STATEMENTS OF OPERATIONS
(unaudited)
For the three months ended
December 31,
2001 2000
----------- -----------
Revenues
Land ...................................... $ 4,337,035 $ 136,710
Rentals ................................... 299,224 298,063
----------- -----------
4,636,259 434,773
Costs and expenses
Cost of land revenues ..................... 1,063,275 110,693
Cost of rentals ........................... 72,968 81,632
General and administrative ................ 730,627 465,072
----------- -----------
1,866,870 657,397
----------- -----------
Income (loss) from operations .......... 2,769,389 (222,624)
Other (income) expense
Interest income ........................... (16,270) (31,083)
Other income .............................. (10,130) (5,737)
Interest expense .......................... 209,015 192,851
----------- -----------
182,615 156,031
----------- -----------
Earnings (loss) before income taxes .... 2,586,774 (378,655)
Income tax expense (benefit) ................. 1,034,500 (152,000)
----------- -----------
NET EARNINGS (LOSS) .................... $ 1,552,274 $ (226,655)
=========== ===========
Weighted average common shares
outstanding ............................... 800,941 801,103
=========== ===========
Earnings (loss) per common share ............. $ 1.94 $ (.28)
=========== ===========
WESTLAND DEVELOPMENT CO., INC.
STATEMENTS OF OPERATIONS
(unaudited)
For the six months ended
December 31,
2001 2000
----------- -----------
Revenues
Land ...................................... $ 5,269,425 $ 468,247
Rentals ................................... 598,949 517,247
----------- -----------
5,868,374 985,494
Costs and expenses
Cost of land revenues ..................... 1,551,602 296,126
Cost of rentals ........................... 140,472 142,247
General and administrative ................ 1,147,011 1,129,268
----------- -----------
2,839,085 1,567,641
----------- -----------
Income (loss) from operations .......... 3,029,289 (582,147)
Other (income) expense
Interest income ........................... (38,014) (88,071)
Other income .............................. (19,087) (11,658)
Interest expense .......................... 400,924 339,138
----------- -----------
343,823 239,409
----------- -----------
Earnings (loss) before income taxes .... 2,685,466 (821,556)
Income tax expense (benefit) ................. 1,074,000 (329,000)
----------- -----------
NET EARNINGS (LOSS) .................... $ 1,611,466 $ (492,556)
=========== ===========
Weighted average common shares
outstanding ............................... 800,941 801,248
=========== ===========
Earnings (loss) per common share ............. $ 2.01 $ (.61)
=========== ===========
WESTLAND DEVELOPMENT CO., INC.
STATEMENTS OF CASH FLOWS
(unaudited)
For the six months ended
December 31,
2001 2000
------------ -------------
Cash flows from operating activities
Cash received from land sales
and collections on real
estate contracts receivable ................. $ 3,448,635 $ 499,906
Development and closing costs paid
on land sales ............................... (1,297,559) (891,328)
Cash received from rental operations .......... 598,949 486,685
Cash paid for rental operations ............... 7,152 (20,349)
Cash paid for property taxes .................. (49,664) (33,880)
Interest received ............................. 13,651 87,314
Interest paid ................................. (454,230) (324,959)
Income taxes paid ............................. (9,200) (50,000)
General and administrative costs paid ......... (1,037,181) (651,095)
Other ......................................... -- 100
------------ ------------
Net cash provided (used) by
operating activities ........................ 1,220,553 (897,606)
------------ ------------
Cash flows from investing activities
Capital expenditures for income
producing and other properties .............. -- (3,956,389)
Investment in partnerships and joint ventures . 22,750 14,000
Change in short-term investments .............. 1,195,082 (1,500,007)
Proceeds from note receivable-related party ... 1,904 1,649
Proceeds from sale of assets .................. -- 90
------------ ------------
Net cash provided (used) in
investing activities ........................ 1,219,736 (5,440,657)
------------ ------------
Cash flows from financing activities
Borrowing on notes, mortgages and
assessments payable ......................... 926,928 4,247,109
Repayments of bonds, mortgages,
notes and assessments payable ............... (2,710,364) (255,066)
Payment of dividends .......................... -- (1,003,623)
Purchase/retireentof common stock, net ........ -- 4,434
------------ ------------
Net cash (used) provided by
financing activities ....................... (1,783,436) 2,992,854
------------ ------------
NET INCREASE (DECREASE) IN CASH
AND CASH EQUIVALENTS ......................... 656,853 (3,345,409)
Cash and cash equivalents at
beginning of period .......................... 764,001 3,882,560
------------ ------------
Cash and cash equivalents at
end of period ................................ $ 1,420,854 $ 537,151
============ ============
Reconciliation of net earnings (loss)
to net cash provided (used) in
operating activities
Net earnings (loss) ............................ $ 1,611,466 $ (492,556)
Adjustments to reconcile net earnings
(loss) to net cash provided
(used in) by operating activities
Depreciation .............................. 167,655 154,249
Gain on sale of assets .................... -- (90)
Change in
Rents receivable, accrued interest,
property tax and other assets ........... 123,172 11,921
Real estate contracts ..................... (2,007,530) 49,271
Land and improvements held for
future development and income
producing properties .................... 250,296 (600,900)
Other assets .............................. (91) (46,698)
Accounts and retainages payable,
accrued interest and other
liabilities ............................. 10,785 (379,000)
Income taxes payable ...................... 1,064,800 406,197
------------ ------------
Net cash provided by (used in)
operating activities ......................... $ 1,220,553 $ (897,606)
============ ============
WESTLAND DEVELOPMENT CO., INC.
NOTES TO THE FINANCIAL STATEMENTS
(unaudited)
December 31, 2001
1. The balance sheet at December 31, 2001, statements of operations for the
three and six months ended December 31, 2001 and December 31, 2000 and
statements of cash flows for the six month periods ended December 31, 2001 and
2000 have been prepared by the Company without audit. In the opinion of
management, all adjustments, including normal recurring adjustments necessary to
present fairly the financial position, results of operations and cash flows,
have been made. Certain information and footnote disclosures normally included
in financial statements prepared in accordance with generally accepted
accounting principles have been condensed or omitted. It is suggested that these
financial statements be read in conjunction with the Company's audited financial
statements at June 30, 2001. The results of operations for the three months and
six months ended December 31, 2001 are not necessarily indicative of operating
results for the full year.
2. The computation of earnings (loss) per common share has been based upon
the weighted average number of shares of outstanding common stock and common
stock issuable without further consideration, which for the three and six month
periods ended December 31, 2001 was 800,941 and for the three and six month
periods ended December 31, 2000 were 801,103 and 801,248, respectively.
3. Financial information for the two industry segments, land sales and
rental operations, are as follows:
General
Land Rentals corporate Total
---- ------- --------- -----
Three months ended
December 31, 2001:
Revenues $4,337,035 $299,224 $ - $4,636,259
Costs and expenses 1,063,275 72,968 730,627 1,866,870
---------- -------- ----------- ----------
Income (loss) from
operations 3,273,760 226,256 (730,627) 2,769,389
Interest income (16,270) (16,270)
Other income (10,130) (10,130)
Interest expense 17,282 190,664 1,069 209,015
---------- -------- ----------- ----------
Earnings (loss)
before income taxes $3,256,478 $ 35,592 $ (705,296) $2,586,774
========== ======== =========== ==========
Three months ended
December 31, 2000:
Revenues $ 136,710 $298,063 $ - $ 434,773
Costs and expenses 110,693 81,632 465,072 657,397
---------- -------- ----------- ----------
Income (loss) from
operations 26,017 216,431 (465,072) (222,624)
Interest income (31,083) (31,083)
Other income (5,737) (5,737)
Interest expense 25,810 157,970 9,071 192,851
---------- -------- ----------- ----------
Earnings (loss)
before income taxes $ 207 $ 58,461 $ (437,323) $ (378,655)
========== ======== =========== ==========
Six months ended
December 31, 2001:
Revenues $5,269,425 $598,949 $ - $5,868,374
Costs and expenses 1,551,602 140,472 1,147,011 2,839,085
---------- -------- ----------- ----------
Income (loss) from
operations 3,717,823 458,477 (1,147,011) 3,029,289
Interest income (38,014) (38,014)
Other income (19,087) (19,087)
Interest expense 33,150 365,724 2,050 400,924
---------- -------- ----------- ----------
Earnings (loss)
before income taxes $3,684,673 $ 92,753 $(1,091,960) $2,685,466
========== ======== =========== ==========
Six months ended
December 31, 2000:
Revenues $ 468,247 $517,247 $ - $ 985,494
Costs and expenses 296,126 142,247 1,129,268 1,567,641
---------- -------- ----------- ----------
Income (loss) from
operations 172,121 375,000 (1,129,268) (582,147)
Interest income (88,071) (88,071)
Other income (11,658) (11,658)
Interest expense 45,388 277,797 15,953 339,138
---------- -------- ----------- ----------
Earnings (loss)
before income taxes $ 126,733 $ 97,203 $(1,045,492) $ (821,556)
========== ======== =========== ==========
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
During the six months ended December 31, 2001, the Company's cash and cash
equivalents increased by $656,853. During this period, operations provided
$1,220,553 and investing activities provided $1,219,736, primarily from
short-term and joint venture investments. Also, the Company repaid debt of
$1,783,436, net. Except for short-term borrowing, the Company's primary source
of cash is the sale of land. Although rental operations generated approximately
$600,000 in the first two quarters, most of those receipts were used to service
the mortgage debt for those properties. Other than trade payables, the other
significant debt is $784,802 on lines of credit used for operations. This amount
fluctuates, and is paid from receipts from lot sales. The Company will continue
to improve its land projects to create saleable products, and management
believes that receipts from those sales will sustain the Company for the balance
of the year.
During the second quarter of the current fiscal year, the Company had
revenues of $4,636,259 compared to $434,773 during the same period in the prior
fiscal year. Land revenues increased significantly primarily due to a greater
amount of improved lot sales, $2,214,600 compared to $435,000 and an increase in
large parcel sales of $2,725,000. Operating expenses during the three months
ended December 31, 2001, were $1,866,870 compared to $657,397 during the
comparable period in 2000. The increase was due principally to higher cost of
land revenues by $952,582, and an increase in general and administrative
expenses of $265,555, which is primarily due to increased uncollectible accounts
of $183,000. As the Company sells the remaining lots in its Tierra Oeste units
this year, it has begun sales of lots in the Painted Sky divisions, which should
continue into the next fiscal year.
For the year to date, revenues in 2001 were $5,868,374 compared to
$985,494, for reasons stated above. Operating costs were $2,839,085 compared to
$1,567,641 as cost of sales increased by $1,255,476. The cost of rental revenues
and general and administrative expenses remained relatively constant from 2000
to 2001. Most of the improvement in revenue and income occurred in the second
quarter, due to accelerated subdivision lot sales and one single transaction
of $2,225,000. Management expects increased sales of land to continue.
For the past nine years, the National Park Service has been buying land
from Westland for its Petroglyph National Park pursuant to condemnation. The
Company is allowed to defer federal and state income tax on the gain from these
sales if it reinvests the proceeds within a specified time. The result has been
a deferred tax liability of $5,416,423. Of the approximately $15,600,000 spent,
the Company has remaining approximately $3,585,000 of replacemant lands and
property to acquire by June 30, 2004. In the event the Company does not
replace the property sold to the National Park Service, it may need to utilize a
substantial portion of its liquid investments for the payment of these taxes.
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.
WESTLAND DEVELOPMENT CO., INC.
DATE: February 11, 2002 By: Barbara Page
---------------------------
Barbara Page, President,
Chief Executive Officer and
Chief Accounting Officer