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 March 31, 2002
[ ]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 May 9, 2002:
No Par Value Common: 714,547
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)
March 31, 2002
ASSETS
Cash and cash equivalents ........................ $ 1,714,338
Short-term investments ........................... 761,460
Receivables:
Real estate contracts ......................... $ 497,136
Note receivable - related party ............... 97,076
Other receivables ............................. 38,265 632,477
------------
Land and improvements held for
future development ............................ 8,121,994
Income producing properties, net ................. 11,623,231
Property and equipment, net of accumulated
depreciation of $578,968 ...................... 336,394
Investment in Partnerships and joint ventures .... 193,432
Income taxes receivable .......................... 14,257
Other ............................................ 274,357
------------
$ 23,671,940
============
LIABILITIES AND STOCKHOLDERS' EQUITY
Accounts payable, accrued expenses
and other liabilities ......................... $ 399,894
Deferred income taxes ............................ 5,616,423
Notes, bonds, mortgages and assessments payable .. 8,877,869
------------
Total liabilities ............... 14,894,186
Stockholders' equity
Common stock - no par value;
authorized, 736,668 shares;
issued and outstanding,
714,547 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 ............................. 8,091,343 8,777,754
------------ ------------
$ 23,671,940
============
WESTLAND DEVELOPMENT CO., INC.
STATEMENTS OF OPERATIONS
(unaudited)
For the three months ended
March 31,
2002 2001
----------- -----------
Revenues
Land ...................................... $ 1,717,221 $ 24,377
Rentals ................................... 318,123 292,963
----------- -----------
2,035,344 317,340
Costs and expenses
Cost of land revenues ..................... 783,999 --
Cost of rentals ........................... 75,330 79,145
General and administrative ................ 386,185 414,875
----------- -----------
1,245,514 494,020
----------- -----------
Income (loss) from operations .......... 789,830 (176,680)
Other (income) expense
Interest income ........................... (52,599) (28,830)
Other income .............................. 2,707 (9,121)
Interest expense .......................... 195,051 219,070
----------- -----------
145,159 181,119
----------- -----------
Earnings (loss) before income taxes .... 644,671 (357,799)
Income tax expense (benefit) ................. 258,000 (141,000)
----------- -----------
NET EARNINGS (LOSS) .................... $ 386,671 $ (216,799)
=========== ===========
Weighted average common shares
outstanding ............................... 800,892 800,994
=========== ===========
Earnings (loss) per common share ............. $ .48 $ (.27)
=========== ===========
WESTLAND DEVELOPMENT CO., INC.
STATEMENTS OF OPERATIONS
(unaudited)
For the nine months ended
March 31,
2002 2001
----------- -----------
Revenues
Land ...................................... $ 6,986,645 $ 492,624
Rentals ................................... 917,072 810,210
----------- -----------
7,903,717 1,302,834
Costs and expenses
Cost of land revenues ..................... 2,335,601 296,126
Cost of rentals ........................... 215,802 221,392
General and administrative ................ 1,533,195 1,544,143
----------- -----------
4,084,598 2,061,661
----------- -----------
Income (loss) from operations .......... 3,819,119 (758,827)
Other (income) expense
Interest income ........................... (90,613) (116,901)
Gain on sale of assets .................... -- (90)
Other income .............................. (16,381) (20,689)
Interest expense .......................... 595,975 558,208
----------- -----------
488,981 420,528
----------- -----------
Earnings (loss) before income taxes .... 3,330,138 (1,179,355)
Income tax expense (benefit) ................. 1,332,000 (470,000)
----------- -----------
NET EARNINGS (LOSS) .................... $ 1,998,138 $ (709,355)
=========== ===========
Weighted average common shares
outstanding ............................... 800,925 801,165
=========== ===========
Earnings (loss) per common share ............. $ 2.49 $ (.89)
=========== ===========
WESTLAND DEVELOPMENT CO., INC.
STATEMENTS OF CASH FLOWS
(unaudited)
For the nine months ended
March 31,
2002 2001
------------ -------------
Cash flows from operating activities
Cash received from land sales
and collections on real
estate contracts receivable ................. $ 7,114,605 $ 509,488
Development and closing costs paid
on land sales ............................... (2,258,809) (1,468,587)
Cash received from rental operations .......... 921,961 806,618
Cash paid for rental operations ............... -- (55,896)
Cash paid for property taxes .................. (52,547) 48,129
Interest received ............................. 54,055 116,155
Interest paid ................................. (732,620) (540,178)
Income taxes paid ............................. (1,183,513) (50,000)
General and administrative costs paid ......... (1,449,238) (1,415,334)
Other ......................................... 14,150 100
------------ ------------
Net cash provided (used) by
operating activities ........................ 2,428,044 (2,049,505)
------------ ------------
Cash flows from investing activities
Capital expenditures for income
producing and other properties .............. (29,033) (3,910,915)
Distributions from partnerships
and joint ventures ........................... 37,250 24,250
Change in short-term investments .............. 735,815 (1,371,036)
Proceeds from note receivable-related party ... 2,631 2,499
Proceeds from sale of assets .................. -- 90
------------ ------------
Net cash provided (used) in
investing activities ........................ 746,663 (5,255,112)
------------ ------------
Cash flows from financing activities
Borrowing on notes, mortgages and
assessments payable ......................... 1,713,053 5,294,617
Repayments of bonds, mortgages,
notes and assessments payable ............... (3,937,423) (499,496)
Payment of dividends .......................... -- (1,003,623)
Purchase/retirement of common stock, net ...... -- 4,434
------------ ------------
Net cash (used) provided by
financing activities ....................... (2,224,370) 3,795,932
------------ ------------
NET INCREASE (DECREASE) IN CASH
AND CASH EQUIVALENTS ......................... 950,337 (3,508,685)
Cash and cash equivalents at
beginning of period .......................... 764,001 3,882,560
------------ ------------
Cash and cash equivalents at
end of period ................................ $ 1,714,338 $ 373,875
============ ============
Reconciliation of net earnings (loss)
to net cash provided (used) in
operating activities
Net earnings (loss) ............................ $ 1,998,137 $ (709,355)
Adjustments to reconcile net earnings
(loss) to net cash provided
(used in) by operating activities
Depreciation .............................. 251,185 240,854
Gain on sale of assets .................... -- (90)
Change in
Rents receivable, accrued interest,
property tax and other assets ........... 114,134 (20,758)
Real estate contracts ..................... (22,022) 50,492
Land and improvements held for
future development and income
producing properties .................... 69,477 (1,169,491)
Other assets .............................. (15,114) (28,540)
Accounts and retainages payable,
accrued interest and other
liabilities ............................. (116,240) 107,383
Income taxes payable ...................... 148,487 (520,000)
------------ ------------
Net cash provided by (used in)
operating activities ......................... $ 2,428,044 $ (2,049,505)
============ ============
WESTLAND DEVELOPMENT CO., INC.
NOTES TO THE FINANCIAL STATEMENTS
(unaudited)
March 31, 2002
1. The balance sheet at March 31, 2002, statements of operations for the
three and nine months ended March 31, 2002 and March 31, 2001 and statements of
cash flows for the nine month periods ended March 31, 2002 and 2001 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 nine months ended
March 31, 2002 are not necessarily indicative of operating results for the full
year.
2. The computation of earnings (loss) per common share has been based on
the weighted average number of shares of outstanding common stock and common
stock issuable without further consideration, which for the three month periods
ended March 31, 2002 and 2001 were 800,892 and 800,994, respectively, and for
the nine month periods ended March 31, 2002 and 2001 were 800,925 and 801,165,
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
March 31, 2002:
Revenues $1,717,221 $318,123 $ -- $2,035,344
Costs and expenses 783,999 75,330 386,185 1,245,514
---------- -------- ----------- ----------
Income (loss) from
operations 933,222 242,793 (386,185) 789,830
Interest income -- -- (52,599) (52,599)
Other income -- -- 2,707 2,707
Interest expense 11,825 180,641 2,585 195,051
---------- -------- ----------- ----------
Earnings (loss)
before income taxes $ 921,397 $ 62,152 $ (338,878) $ 644,671
========== ======== =========== ==========
Three months ended
March 31, 2001:
Revenues $ 24,377 $292,963 $ -- $ 317,340
Costs and expenses -- 79,145 414,875 494,020
---------- -------- ----------- ----------
Income (loss) from
operations 24,377 213,818 (414,875) (176,680)
Interest income -- -- (28,830) (28,830)
Other income -- -- (9,121) (9,121)
Interest expense 24,762 170,425 23,883 219,070
---------- -------- ----------- ----------
Earnings (loss)
before income taxes $ (385) $ 43,393 $ (400,807) $ (357,799)
========== ======== =========== ==========
Nine months ended
March 31, 2002:
Revenues $6,986,645 $917,072 $ -- $7,903,717
Costs and expenses 2,335,601 215,802 1,533,195 4,084,598
---------- -------- ----------- ----------
Income (loss) from
operations 4,651,044 701,270 (1,533,195) 3,819,119
Interest income -- -- (90,613) (90,613)
Other income -- -- (16,381) (16,381)
Interest expense 44,975 546,364 4,636 595,975
---------- -------- ----------- ----------
Earnings (loss)
before income taxes $4,606,069 $154,906 $(1,430,837) $3,330,138
========== ======== =========== ==========
Nine months ended
March 31, 2001:
Revenues $ 492,624 $810,210 $ -- $ 1,302,834
Costs and expenses 296,126 221,392 1,544,143 2,061,661
---------- -------- ----------- -----------
Income (loss) from
operations 196,498 588,818 (1,544,143) (758,827)
Interest income -- -- (116,901) (116,901)
Other income -- -- (20,779) (20,779)
Interest expense 50,646 483,679 23,883 558,208
---------- -------- ----------- -----------
Earnings (loss)
before income taxes $ 145,852 $105,139 $(1,430,346) $(1,179,355)
========== ======== =========== ===========
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
WHEN USED IN THIS FROM 10-QSB, THE WORDS "BELIEVES" "ANTICIPATES" "EXPECTS"
AND SIMILAR EXPRESSIONS ARE INTENDED TO IDENTIFY FORWARD-LOOKING STATEMENTS.
SUCH STATEMENTS ARE SUBJECT TO CERTAIN RISKS AND UNCERTAINTIES MORE PARTICULARLY
DESCRIBED IN ITEM 1 OF THIS REPORT. THESE RISKS AND UNCERTAINTIES COULD CAUSE
ACTUAL RESULTS TO DIFFER MATERIALLY. READERS ARE CAUTIONED NOT TO PLACE UNDUE
RELIANCE ON THESE FORWARD-LOOKING STATEMENTS, WHICH SPEAK ONLY AS OF THE DATE
HEREOF. WE UNDERTAKE NO OBLIGATION TO PUBLICLY RELEASE THE RESULTS OF ANY
REVISIONS TO FORWARD-LOOKING STATEMENTS WHICH WE MAY MAKE TO REFLECT EVENTS OR
CIRCUMSTANCES AFTER THE DATE OF THIS FORM 10-QSB OR TO REFLECT THE OCCURRENCE OF
UNANTICIPATED EVENTS.
Management's Discussion and Analysis should be read in conjunction with our
Financial Statements and the notes to our Financial Statements.
During the nine months ended March 31, 2002, the Company's cash and cash
equivalents increased by $950,337. During this period, operations provided
$2,428,044 and investing activities provided $746,663, primarily from short-term
and joint venture investments. Also, the Company repaid debt of $2,224,370, net.
Except for short-term borrowing, the Company's primary source of cash is the
sale of land. Although rental operations generated approximately $900,000 in the
first three quarters, most of those receipts were used to service the mortgage
debt for those properties. Other than trade payables, the other significant debt
is $260,966 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 third quarter of the current fiscal year, the Company had
revenues of $2,035,344 compared to $317,340 during the same period in the prior
fiscal year. Land revenues increased significantly primarily due to a greater
amount of improved lot sales, $3,845,000 compared to $435,000 and an increase in
large parcel sales of $2,771,000. Operating expenses during the three months
ended March 31, 2002, were $1,245,514 compared to $494,020 during the comparable
period in 2001. The increase was due principally to higher cost of land revenues
of $783,999. 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 2002 were $7,903,717 compared to
$1,302,834 in 2001 for reasons stated above. Operating costs were $4,084,598
compared to $2,061,661 as cost of sales increased by $2,039,475. The cost of
rental revenues and general and administrative expenses remained relatively
constant from 2001 to 2002. Most of the improvement in revenue and income
occurred in the second quarter, due to accelerated subdivision lot sales and one
single sales 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 approximately $6,100,000 for these deferred gains.
Of the approximately $15,600,000 spent, the Company has remaining approximately
$4,585,000 of replacemant lands and property to acquire by June 30, 2005. In the
event the Company does not replace the property sold to the National Park
Service, it will 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: May 9, 2002 By: Barbara Page
---------------------------
Barbara Page, President,
Chief Executive Officer and
Chief Accounting Officer