10KSB/A 1 form10ka01.txt UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10KSB/A (Mark One) [X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 [FEE REQUIRED] For the fiscal year ended June 30, 2001 [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 [NO FEE REQUIRED] Commission File Number: 0-7775 WESTLAND DEVELOPMENT CO., INC. (Exact name of Westland as specified in its charter) New Mexico 85-0165021 (State or other jurisdiction of (I.R.S. Employer incorporation or other organization) Identification No.) 401 Coors Boulevard, N.W., Albuquerque, New Mexico, 87121 (Address of principal executive offices) (Zip Code) Westland's telephone number, including area code: 505-831-9600 Securities registered pursuant to Section 12(b) of the Act: None Securities registered pursuant to Section 12(g) of the Act: No Par Value Common Stock (Title of Class) Check whether the issuer (1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter period that Westland was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes [X] No [ ] Check if disclosure of delinquent filers in response to Item 405 of Regulation S-B is not contained in this form, and no disclosure will be contained, to the best of Westland's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-KSB or any amendment to this Form 10-KSB. [X] State issuer's revenues for its most recent fiscal year: $ 3,129,167 State the aggregate market value of the voting stock held by non-affiliates computed by reference to the price at which the stock was sold, or the average bid and asked prices of such stock, as of a specified date within the past 60 days. On September 15, 2001, there were 704,838 No Par Value Common shares and 31,700 Class B shares owned by non-affiliates. The stock was sold on September 1, 2001 for $22 per share. Thus the aggregate market value of the voting stock held by non-affiliates was $16,203,836. The number of shares outstanding of each of Westland's classes of common stock, as of September 15, 2000, was: No Par Value Common: 714,841 shares. Class B $1.00 Par Value: 86,100 shares. PART I ITEM 1: DESCRIPTION OF BUSINESS I. General Development of Business Westland Development Co., Inc., a New Mexico for-profit corporation ("Westland"), is the successor to a community land grant corporation named Town of Atrisco, which itself was a successor to a Spanish community land grant named the Atrisco Land Grant. Information concerning the historical background of these predecessor organizations and the conversion in 1967 from a community land grant corporation into a business corporation can be found in Westland's Form 10 and its Form 10-K for the fiscal year ended June 30, 1974. With limited exceptions, only lineal descendants of the incorporators of the Town of Atrisco may own shares of Westland's Common Stock. Westland's executive offices are located in its own building at 401 Coors Boulevard, NW, Albuquerque, New Mexico, 87121, telephone (505) 831-9600, on land which was originally part of the Atrisco Land Grant. Westland is the owner of approximately 56,000 acres of land located on the west side of Albuquerque, New Mexico. Most of its property is held for long term investment and is leased for cattle grazing. Westland derives revenues through commercial and land leases, partnerships formed for various development projects, lot development sales to homebuilders and bulk land sales to other land developers. In 1998 the City of Albuquerque and the County of Bernalillo finalized the approval of a 6,400 acre master plan. For Westland to begin developing or selling land within this planned area (Master Plan), the City must make available the required utilities. In 2000, the City annexed an initial 1,665 acres per the terms of a Pre-Annexation Agreement executed by the Company and the City of Albuquerque in November 1998. Westland is to furnish sewer and water utilities to the initial 1,665 acres within the Master Plan area. Westland has segregated the lands within the master plan area for development. Utilities do not presently exist on any of the Master Planned lands. Per the Pre-Annexation Agreement, Westland has agreed that it will finance or bear the initial cost of the major water and sewer infrastructure to the initial 1,665 acres, which are now estimated to be as much as $10,000,000. When completed, Westland will convey the utilities to the City. Although for the initial phase Westland must advance the cost of the utilities, it will recover those costs through a "hook-up" fee that will be charged to each lot sold in the annexed area. An additional $5,000,000 to $10,000,000 will also be financed or borne by Westland for additional water and sewer distribution and collection lines and roads with no reimbursement. Depending upon the growth of development in this area, it may take 10 to 15 years for Westland to recover these costs. Westland has put the major water system out to bid and is currently soliciting financing for the construction of the initial phase of the Master Plan infrastructure. The method being pursued is the recently legislated Public Improvement District that allows bond financing at favorable rates. Although no commitments have yet been received, Management believes that Westland will obtain the required financing and begin construction of improvements within the next fiscal year. Management remains committed to begin the construction of residential, industrial and commercial developments for lease or sale. Westland's long term business philosophy is to create revenues by enhancing the value of Westland's land through careful planning and development, while retaining ownership of a major portion of the land in perpetuity and to provide dividends for its shareholders, when consistent with Westland's need for a sufficient cash flow to meet current operating expenses. II. Status of Westland's Business Over the past 20 years, Westland developed six master plans and sold all of the acreage included in them. Those master plans are identified as Atrisco Urban Center and El Rancho Atrisco, Phases I through V. These lands, except for the Phase V master plan which was abandoned due the introduction of the Petroglyph National Monument, have now been substantially developed and sold. As discussed above, the new Master Plan encompasses approximately 6,400 acres in an area located north of I-40, between Unser and Paseo del Volcan. Initial utility development of Phase I of the Master Planned area should begin in the next fiscal year, depending upon available funding. A. Oil and Gas and Grazing Leases Approximately 54,300 acres of Westland's land is not planned for current development and 55,063 acres are leased to non-affiliated people for cattle grazing. The leases provided revenue of approximately $22,059 in fiscal 2001. Because of the extreme drought in the area, Westland has granted rent abatements to the tenant in each of the last three fiscal years. On June 6, 2000, Westland granted an oil and gas lease on approximately 6,365 acres to an exploration corporation. The lessee paid Westland a rental bonus of $9,547 in consideration of the lease for the first year's rent. Management is not aware of any drilling or other activities having been conducted on the property by the lessee since the date of the lease. Westland also owns and leases certain commercial buildings at an aggregate annual rental of $1,229,108. (See "Revenue Producing Properties".) B. Development Properties As of June 30, 2001, Westland continued to own approximately 150 acres of developed and unsold land. The effort of Westland and its staff is being devoted to the implementation of the new Master Plan at the earliest possible date. A summary of Westland Master Plan is as follows: C. Westland Master Plan Westland's new Master Plan covers approximately 6,400 acres located north of Interstate 40 and south of the Petroglyph National Monument, west of Unser Boulevard. Westland will begin introducing water and sewer utilities to a 1,665 acre portion of the Master Plan area that will be initially developed. As discussed above, Westland has agreed to pay the cost of major water and sewer utilities to the land with said cost being recovered over time through hook-up fees. Westland anticipates paying the costs incurred to furnish these utilities through a combination of borrowing and use of portions of its income. In addition, per the Pre-Annexation Agreement with the City of Albuquerque, Westland has agreed that any water rights now owned or subsequently acquired by Westland related to the 6,400 acres of the master planned area must be assigned to the City for use only in the 1,665 acres of the master planned area to which the City supplies water and sewer service. It is anticipated that there are no insurmountable obstacles remaining, including acquiring the necessary financing, to begin the implementation of the Master Plan. Management expects that the first sale of lands in the master planned area will occur in the next one or two fiscal years, barring unforeseen delays such as a major downturn in the U. S. economy. D. Other Projects 1. Volcano Business Park Volcano Business Park consists of approximately 22 acres zoned for industrial park uses, which were platted and developed into 14 lots. Westland, through a partnership arrangement, owns 50% of a 172-unit self-storage facility on approximately 1.7 acres of this property. As of August 1, 2000, the facility was substantially occupied. During fiscal 2000, the facility was expanded to provide outdoor storage for motor vehicles and boats. At the end of fiscal 2001, the facility was approximately 85% occupied. 2. Project Development (a) Westland Master Plan The Company is currently preparing marketing information and considering financial options and the optimum timing for initiating development, marketing, and sales of land which currently has water and sewer service in the Master Plan area. The Company has undertaken the subdivision planning, design and approval process for 280 single-family lots in a six-phase project named the Painted Sky Subdivision. Construction was started on Phases 1 and 2 on June 11, 2001. KB Homes and Raylee Homes have executed letters of intent to purchase the 106 lots in Phases 1 and 2 of Painted Sky. The Company is also developing two other subdivisions in an area west of Unser Blvd. and north of I-40 east of the Master Plan area. These are Tierra Oeste Units I and II and the Crossings Units I and II. Tierra Oeste Unit I is completed and is nearly all sold. Sales of lots in one or more of these two newly developing areas are anticipated to continue during the current fiscal year. The Company obtained approval for a 27 hole golf course on approximately 250 acres adjoining the Petroglyph National Monument within the Master Plan area from the City of Albuquerque's Environmental Planning Commission. (b) South Tract During fiscal 2000 the Company sold 100 acres of land located near the proposed extension of Rio Bravo Blvd. to a manufactured housing community developer. This community called "Paakweree" is near completion on the 100 acre tract. During fiscal year 2001, Bernalillo County completed construction of the connection of Rio Bravo Blvd. from Coors S.W. to Paseo del Volcan S.W. 3. Recreation Complex Westland previously reported that in 1994 it entered into a lease/option arrangement related to approximately 100 acres located one mile north of I-40 on Paseo del Volcan. Westland took possession and ownership of the facility in 1997 as a result of default in the terms of the lease/option. The Park contains a fully developed recreation and softball complex. The property is leased to City of Albuquerque for $5,000 per year through February, 2004. 4. Education and Community Projects Westland has a continuing corporate program of donating land or otherwise assisting in projects that its management believes have a long term beneficial effect to the development and furtherance of the educational and health of the community and citizens. As previously reported, Westland has agreed to donate lands for the purpose of building schools, churches, and healthcare facilities. During fiscal 1999, Westland donated approximately fifty acres to YES Housing, Inc., a nonprofit corporation, for the purpose of construction of a facility devoted to the housing and employment of mentally ill citizens. The site of the facility has been moved to within City limits and closer to utilities and City services, and YES Housing, Inc. has conveyed the 50 acres back to the Company. During fiscal 2001, Westland received requests for assistance through the grant of land. 5. Land Sales Westland has, in the last year, completed 54 transactions (52 of which were residential lots) totaling approximately 63 acres. 6. Reinvestment Properties As part of Westland's plans to defer the tax burden arising from the sale of its lands to the National Park Service under threat of condemnation for inclusion in the Petroglyph National Monument, it reinvested the sale proceeds in the properties discussed below and two vacant land parcels. As a result of these purchases, Westland believes that it has deferred payment of taxes on the gain on sales of land to the National Park Service. The Commercial properties are the following: a) A commercial building at Coors Boulevard and Sequoia Road in Albuquerque at a cost of $2,630,000, $1,673,491 of which is subject to a Mortgage upon which Westland must pay monthly payments of $17,970. This building has been leased to Walgreen Co. for 20 years at a fixed rent of $19,173 per month plus additional rent based upon a formula of gross sales up to a maximum rent of $460,161 in any one year. b) A commercial building in Albuquerque's Midway Industrial Park at a cost of $1,074,000, $670,405 of which is subject to a Mortgage upon which Westland must make monthly payments of $6,893. This building has been leased to Circuit City Stores for a term of 10 years at an escalating rental beginning at $4.25 per square foot the first year and increasing in stages to $5.55 per square foot in the tenth year. The lessee has also been granted the right to extend the lease for two additional 5 year terms at escalating rental rates during each of the years of any extended term. The current rent is $10,091 per month. c) A commercial building located at Coors Boulevard and Central Avenue at a cost of $3,593,000, which is subject to a mortgage of $2,537,296 requiring payments of $24,682 per month. The building has been leased to Walgreen Co. on a minimum 20 year lease at a fixed rent of $26,122 per month plus a percentage of gross sales, with the maximum annual rent being capped at $626,922. Walgreen Co. may continue the term of the lease for an additional 40 years. d) A commercial building located at the SE corner of Eubank and Spain, N.E., at a cost of approximately $1,331,000, which is subject to a mortgage of $878,804 requiring payments of $9,079 per month. The building has been leased to Marie Callender Pie Shops, Inc., on a minimum 10-year lease at a fixed rent of $11,000, plus a Percentage Rent in the amount of 6% of Annual Gross Sales in excess of $132,000. The tenant has the right to renew the lease for as many as three 5 year terms. e) A commercial building located in El Paso, Texas at cost of approximately $3,907,000, which is subject to a mortgage of $3,004,347 requiring payments of $25,403 per month. The building is leased to Walgreen Company on a minimum 20 year lease at a fixed rent of $28,167 per month, plus a percentage of gross sales with a maximum annual rent of $676,000. Current Real Estate Market Conditions The market conditions for the development and sale of properties in Albuquerque have slowed but remain positive at the present time. Westland has been able to sell the residential properties it has developed and is hopeful that these sales will increase next year due to the introduction of Painted Sky and additional Tierra Oeste subdivisions. Management believes that for the foreseeable future, residential, commercial and industrial construction will continue at a moderate pace. Competition Westland's industrial parks - The Atrisco Urban Center, Volcano Business Park and Ladera Industrial Park compete with other business and industrial parks in the Albuquerque area, including some that are more established and some that are located nearer the major population centers of Albuquerque. Residential subdivisions on Westland's land compete with other areas in the Albuquerque housing market (essentially Bernalillo County and portions of Sandoval County and Valencia County), as well as with other subdivisions on the western side of the City of Albuquerque. A number of large subdivisions to the north of Westland's land are not fully sold. These include Rio Rancho (about six miles north of Westland's land), Paradise Hills and Ventana Ranch (about five miles north of Westland's land), and Taylor Ranch (about two to three miles north of Westland's land). The implementation of certain mandated impact fees may have an as yet undetermined effect on Westland's ability to sell property in competition with developers of land located in neighboring counties. (See "Governmental Regulations".) Employees As of September 15, 2001, Westland had nine full-time and five part-time employees. Westland's president, who is also a director, is a full time employee. Westland also had contractual relationships with other individuals, including two of Westland's officers and directors, who provided various services to the Company. Government Regulations Westland's ability to undertake an active program of development of its land and management of its rental properties (whether such development is performed by Westland itself or by sale of Westland's land to others for development) is dependent on Westland's ability to comply with laws and regulations of the State of New Mexico, Bernalillo County, and the City of Albuquerque, applicable to general environmental protection, land-use planning, annexation, zoning and subdivisions. Both County and City regulate the subdivision of land and impose zoning and building permit requirements. The subdivision regulations of both Bernalillo County and the City of Albuquerque require, as a condition of approval of proposed subdivisions, that adequate provision be made by the developer for land use planning, water (both to quantity and quality), liquid waste disposal, solid waste disposal, sufficient and adequate roads and storm drain management. Although the compliance with federal, state, and local provisions relating to the protection of the environment, including laws regulating subdivisions and land-use planning and endangered species, has in recent years had no material effect upon the capital expenditures, earnings and competitive position of Westland, no assurance can be given that this situation will continue. Requests relating to drainage, traffic flow and similar matters from the City of Albuquerque have occasionally delayed the receipt of necessary approvals and required modification of development proposals. The opening of the Double Eagle II Municipal Airport by the City of Albuquerque to the north of Westland's land on Paseo del Volcan may have an impact on the use of and planning for Westland's land in the vicinity of the airport as well as the creation of the Petroglyph National Monument, although Management believes both facilities will favorably impact the Company's lands. At Westland's request, the City of Albuquerque created Special Assessment Districts affecting the Atrisco Urban Center and the El Rancho Atrisco areas for the financing of water, sewer, paving and other street improvements, and levied assessment liens on them. This has provided a mechanism for financing these improvements, and SAD's may be available for future development of Westland's property. A mandate by the State Legislature for implementation of Impact Fees may result in Westland's lands being disadvantaged because the fees that surrounding counties charge may be less than those that will be charged by Albuquerque and Bernalillo County. Bernalillo County began the assessment of such fees on January 1, 1996, but Albuquerque has not yet implemented the fees. Westland does not believe that these fees will fees adversely impact its business in any material way. Availability of Water and Municipal Services The unavailability of sufficient water has often been a major inhibiting factor in the land development business in the Southwest. The extent of Westland's water rights has not been determined, however, Westland has retained the services of a water law specialist to investigate the existence of any Westland water rights and to otherwise consult with Westland on matters involving availability of water. As a result of these services, Westland has declared a certain amount of water rights but said declared rights have not been adjudicated to fully determine their validity. However, lack of ownership of water rights by Westland would not be an inhibiting factor to the development of Westland's land if adequate water were to be made available through the City of Albuquerque, Bernalillo County and/or other water sources or by purchase by Westland or by a developer that might purchase and develop land. For example, Tierra West Mobile Home Park sold by Westland near Nine Mile Hill and the recreation complex leased or purchased water rights and drilled wells to meet their water needs. Under present annexation policies of the City of Albuquerque, annexation to the City of Albuquerque is a requirement by the City before it will extend water and sewer services within a reasonable period of time after annexation. However, the cost of water distribution and sewer lines would have to be borne by the developer, or by subsequent purchasers of the annexed portions. The City and Westland have now reached the agreement discussed above relating to provisions for utility services to a portion of the Master Plan lands and annexation by the City. Most of Westland's land lies outside the municipal limits of the City of Albuquerque and are not furnished with City water or other City services. Westland experienced little difficulty in having its other Master Plan area furnished with services, but the same cannot be assumed for other areas of Westland's land. Other Factors Affecting Development of Westland's Land Various activist groups, as well as neighborhood organizations occasionally take actions that have, to some extent, delayed Westland's plans for the development of some of its lands. ITEM 2: DESCRIPTION OF PROPERTIES The major physical assets owned by Westland are its land which is owned in fee simple. The land is mostly comprised of approximately 56,000 acres of undeveloped land held for long-term investment. Approximately 6,400 acres are located in Westland's Master Plan area. Westland also owns the Atrisco Urban Center office building, comprising approximately 11,097 square feet, 4,166 of which is leased to Bank of America at a monthly rental of $5,022, while the remainder is used by Westland for its executive offices. This building is not mortgaged. Westland also owns five commercial buildings that are leased to others and is a 50% owner of a self storage facility. (See "Item 1. Business - Reinvestment Properties.") Westland's land is crossed by Interstate Highway I-40, the main east-west highway through Albuquerque. Access to Westland's land from Interstate 40 is provided by the Coors Boulevard interchange near the eastern edge of Westland's land, by the Unser Boulevard interchange at the western edge of the Atrisco Urban Center, by the 98th Street interchange to the west of the Atrisco Urban Center and by the Paseo del Volcan interchange where I-40, Paseo del Volcan and Central Avenue meet. Running north from the I-40 interchange, Paseo del Volcan transverses about 4 1/2 miles of Westland's land to the Double Eagle II Airport. Bernalillo County has extended Paseo del Volcan south of the I-40 interchange to the point at which it intersects Dennis Chavez Blvd. (aka Rio Bravo) to form an inner loop for the City's southwest quadrant. Westland and other landowners and developers (the Northwest Loop Association) dedicated land and have paid a portion of the design costs for the Northwest Loop, which has been approved by the New Mexico State Highway Commission. The Northwest Loop will extend for approximately 39 miles and will connect I-40 and 1-25, through New Mexico State Highway 44, and will cross the western portion of Westland's land within the Rio Puerco Valley. In 1995 Westland donated 169 acres for development of the Northwest Loop. Completion of the Northwest Loop is not expected for 15 to 20 years. Most of Westland's land is remote and not readily accessible, not serviced by utilities, and Westland believes that the bulk of its land will not be available for development in the foreseeable future. A large portion of the undeveloped land is leased for agricultural uses. (See "Item 1. Business."). The bulk of Westland's undeveloped land is held for long term investment. In the opinion of the Company's Management, its developed property is adequately covered by insurance. ITEM 3: LEGAL PROCEEDINGS Other than ordinary routine litigation incidental to the Company's business, neither the Company nor any member of management is the subject of any pending or threatened legal proceedings: ITEM 4: SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS No matters were submitted to a vote of security holders during the fourth quarter of the fiscal year ended June 30, 2001. PART II ITEM 5: MARKET FOR WESTLAND'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS Because ownership of Westland's stock is restricted in the manner discussed below, no established public trading market exists for Westland's outstanding shares and, to the best of Westland's knowledge, no dealer has made, is making, or is attempting to create such a market from which to determine an aggregate market value of any of Westland's stock. In 1989, Westland entered into an arrangement with an independent stockbroker to broker transactions in Westland's stock between shareholders. The broker has informed Westland that the price at which Westland's common stock had been bought and sold by Westland's shareholders during the ninety (90) days preceding this date of this report has been $22 per share. Since 1982, the outstanding shares have been subject to restrictions imposed by a majority of Westland's shareholders who amended Westland's Articles of Incorporation. Those Articles prohibit (with certain limited exceptions) transfer of Westland stock to persons other than lineal descendants of the original incorporators of the Town of Atrisco (a New Mexico Community Land Grant Corporation). The following table sets forth the approximate number of holders of record of each class of Westland's common stock as of September 15, 2001: Number of Title of Class Record Holders No Par Value Common 5731 $1.00 Par Value Common Class A 0 $1.00 Par Value Common Class B 26 Dividends: During each of the two (2) fiscal years ended June 30, 2000 and June 30, 2001, Westland paid cash dividends to shareholders, aggregating a total during those two years of $1,806,331. ITEM 6: MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS During fiscal 2001, Albuquerque continued a significant pattern of growth and continues to be one of the fastest growing cities in the Southwest. Because of certain geographical and other limitations on its growth, Westland's lands lie directly in the path of future predictable growth patterns of Albuquerque. Westland's future revenues will continue to be largely dependent upon the sale of land. The Company's assets are illiquid, comprising principally undeveloped land. Sales are dependent upon the market conditions in Albuquerque, New Mexico. Westland anticipates making capital commitments for land development projects over the next few years as the economy and opportunities dictate that such expenditures would be warranted. Capital commitments may include special assessment districts for roads and water and sewer lines on its land. In some cases infrastructure improvements are paid for by assessments, which increase the value of Westland's land and make further development possible. Westland intends to incur capital expenditures when management determines such investments will increase the value of the land and generate future revenue. Land is Westland's principal capital resource, and is valued, for financial accounting purposes, at its 1907 value plus the cost of improvements. Westland's balance sheet does not reflect the actual current value of this asset. The Company has no current appraisals of the land and, therefore, the actual value of the land is not known. The carrying value of the land was increased during both fiscal years ended June 30, 2001 and 2000, primarily reflecting increased investment. The carrying value will be increased or decreased regularly as Westland acquires, sells or develops parcels of land. Management believes the June 30, 2001 carrying value of the land is substantially less than its current market value. Westland's balance sheet also segregates income-producing properties which consist of commercial real estate and improvements. The actual value of Westland's land varies depending on national and local market conditions and the amount and proximity of roads, utilities and other amenities to the land under development. As Albuquerque continues to grow, the land value of both developed and undeveloped land should increase. As reported last year, after some delay, Westland received approval of its Master Plan by both the City of Albuquerque and Bernalillo County. The Master Planned land includes the area north of Interstate 40 and south of the area designated for the Petroglyph National Monument between Unser Boulevard and Paseo del Volcan Road. The Master Plan area encompasses approximately 6,400 acres, but does not include any land located within the Monument and will have no adverse impact on the Monument. During the fiscal year the City of Albuquerque annexed the initial 1,600 acres of the master planned area, which will permit sewer and water services to be extended in an orderly manner to that number of acres as they are developed. Westland has agreed with the City that it will pay the cost of the infrastructure normally paid for by the city for new development in the master planned area and will recover those costs through a fee charged by the city as each lot is connected to the services. Management still anticipates that development and sale of the initial parcels of land within the Master Planned area will occur in the year 2002, however, foreseeable delays in getting utilities to the lands may cause this period to be extended beyond that anticipated date. Westland is currently preparing marketing information and considering financial options and the optimum timing for initiating development, marketing, and sales of land in the Sector Plan area. The Company and Mesa Golf of Dallas, Texas, during fiscal 2000 obtained approval for a 27 hole golf course community located on 500 acres adjoining the Petroglyph National Monument within the Sector Plan area from the City of Albuquerque's Environmental Planning Commission. The project was delayed because an appeal was filed by Mr. Jaime Chavez on behalf of Water Information Network, a local group, which was subsequently denied. Management remains committed to begin the construction of residential, industrial and commercial developments for lease or sale. Westland's long term business philosophy is to enhance the value of Westland's land through careful planning and development, while retaining ownership of a major portion of the land in perpetuity and simultaneously increasing the value of Westland's stock and to provide dividends for its shareholders, when consistent with Westland's need for a sufficient cash flow to meet current operating expenses. Financial Condition, Liquidity and Capital Resources During fiscal 2001, total assets increased to $23,865,926 from $20,237,662, and liabilities increased from $12,060,545 to $17,086,310. The increase in assets is occurred primarily in Land and improvements and Income producing properties, which increased by $4,861,392 together, and Cash and equivalents, which decreased by $3,118,559. This is the effect of increased investment in current projects and the addition of the El Paso Walgreens store. Receivables increased by $463,692 because of a year-end land sale the proceeds of which were not received in 2001. The increase in liabilities is the result of the added mortgage in the amount of $3,004,348 for the new Walgreens property and increases in revolving lines of credit of $2,309,681, drawn primarily to fund increased property investment. In fiscal 2001, the Company maintained lines of credit with local banks aggregating approximately $3,600,000, collateralized by certain real property. The purpose of these lines is to provide funds necessary for its continued expansion. At June 30, 2001, the lines had outstanding balances of $2,309,681. During fiscal 2002, the Company will be obligated to pay income tax of approximately $800,000 should replacement properties totaling $2,007,000 for the involuntary conversion of land by the National Park Service not be acquired. Management diligently seeks income producing properties for acquisition as replacement properties and fully expects to offset this tax obligation. Because the Company has deferred gains of approximately $15,700,000 for tax reporting, deferred income tax liabilities of approximately $6,100,000 are recorded in the Company's financial statements. In the event replacement properties are sold, deferred income taxes will become currently payable. Management is not certain that the uncommitted balance of cash, cash equivalents, investments and its borrowing capacity are sufficient to meet all of the Company's obligations during 2002 without considering additional revenues that may be generated during that period. Results of Operations In fiscal 2001, land revenues decreased by $4,490,929 from $6,511,919 in 2000 to $2,020,990. The related cost of land revenues decreased to $831,029, or $422,841 from $1,253,870 in fiscal 2000. Rental revenue increased from $843,105 to $1,108,177 and the related costs increased from $258,572 to $293,727. These increases are expected to continue as the Company expands its activities in this area. In the past fiscal year, land sales were less than the prior year as the Company experienced diminished sales of improved residential lots and fewer large parcel sales. Sales of improved residential lots in fiscal 2000 were approximately $1,148,000, and large parcel sales were approximately $4,810,000. In fiscal 2001, the Company's sales of improved lots declined to $1,102,000 and large parcel sales decreased to $830,000, primarily because the Company's sales effort for the year included several large parcels which did not close in 2001.Gross profits on land revenues decreased from 81% in 2000 to 59% in 2001, because of the decreased amount of large parcel sales, which have a higher gross profit ratio, in 2001. Gross profits on rental operations increased slightly in 2001, from 69% to 73%, primarily from the addition of the new Walgreens unit in El Paso. General and administrative expenses remained relatively constant from 2000 to 2001, but interest income decreased from $234,872 to $141,122, as the Company reduced its holdings of interest bearing investments, and interest expense increased from $605,277 to $816,357 from added debt incurred in 2001. Cash Flow During fiscal 2001 Westland invested $5,291,417 in income producing and other assets and had net borrowing of $4,978,715. Including these uses of cash and payment of cash dividends of $1,003,623, cash equivalents and short-term investments decreased by $3,118,559, as operations used $1,806,668. In 2000, operating and investing activities provided $2,407,033 and $2,183,749, respectively, while financing activities used $2,008,404, including net debt repayment of $1,161,221, resulting in an increase in cash and equivalents of $2,582,378. ITEM 7: FINANCIAL STATEMENTS Report of Independent Certified Public Accountants Stockholders Westland Development Co., Inc. We have audited the accompanying balance sheet of Westland Development Co., Inc., as of June 30, 2001, and the related statements of operations, stockholders' equity and cash flows for each of the two years in the period ended June 30, 2001. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Westland Development Co., Inc., as of June 30, 2001, and the results of its operations and its cash flows for each of the two years in the period ended June 30, 2001 in conformity with accounting principles generally accepted in the United States of America. GRANT THORNTON LLP Oklahoma City, Oklahoma August 24, 2001 Westland Development Co., Inc. BALANCE SHEET June 30, 2001 ASSETS Cash and cash equivalents .......................... $ 764,001 Short-term investments ............................. 1,497,275 Receivables Real estate contracts (note B) ................. $ 475,114 Note receivable - related party (note L) ....... 99,707 Other receivables .............................. 152,399 727,220 ----------- Land and improvements held for future development (notes C and E) ...................... 8,191,471 Income-producing properties, net (notes D and E) ... 11,843,922 Property and equipment, net of accumulated depreciation of $583,957 (note E) ................ 337,855 Investments in partnerships and joint ventures ..... 228,452 Income taxes receivable ............................ 14,257 Other assets ....................................... 261,473 ----------- $23,865,926 =========== LIABILITIES AND STOCKHOLDERS' EQUITY Accounts payable, accrued expenses and other liabilities ................................ $ 475,742 Deferred income taxes (note F) ..................... 5,416,423 Notes, mortgages and assessments payable (note E) ................................. 11,194,145 ----------- Total liabilities ................ 17,086,310 Commitments and contingencies (notes E and K) ...... -- Stockholders' equity (note G) Common stock - no par value; authorized, 736,668 shares; issued and outstanding, 714,841 shares .................. $ 8,500 Class B common stock - $1 par value; authorized, 491,112 shares; issued and outstanding, 86,100 shares ........ 86,100 Additional paid-in capital ..................... 591,811 Retained earnings .............................. 6,093,205 6,779,616 ----------- ----------- $23,865,926 =========== The accompanying notes are an integral part of this statement. Westland Development Co., Inc. STATEMENTS OF OPERATIONS Year ended June 30, 2001 2000 ----------- ----------- Revenues Land ..................................... $ 2,020,990 $ 6,511,919 Rentals .................................. 1,108,177 843,105 ----------- ----------- 3,129,167 7,355,024 Costs and expenses Cost of land revenues .................... 831,029 1,253,870 Cost of rentals .......................... 293,727 258,572 Other general, administrative and operating .......................... 1,835,303 1,802,016 ----------- ----------- 2,960,059 3,314,458 ----------- ----------- Operating income ........... 169,108 4,040,566 Other (income) expense Interest income .......................... (141,122) (234,872) Gain on sale or disposition of property and equipment ................. (100) (280) Other income ............................. (26,993) (16,223) Interest expense ......................... 816,357 605,277 ----------- ----------- 648,142 353,902 ----------- ----------- Earnings (loss) before income taxes ...... (479,034) 3,686,664 Income tax expense (benefit) (note F) ........ (80,722) 1,354,464 ----------- ----------- NET EARNINGS (LOSS) ........ $ (398,312) $ 2,332,200 =========== =========== Weighted average common shares outstanding, basic and diluted ............. 801,116 802,626 =========== =========== Earnings (loss) per common share, basic and diluted .......................... $ (.50) $ 2.91 =========== =========== The accompanying notes are an integral part of these statements. Westland Development Co., Inc. STATEMENT OF STOCKHOLDERS' EQUITY Years ended June 30, 2001 and 2000
Class B Common stock Common stock no par value $1 par value Additional -------------------------- ------------------------- paid-in Retained Shares Amount Shares Amount capital earnings Total ----------- ----------- ----------- ----------- ----------- ----------- ----------- Balances at July 1, 1999 ...... 716,608 $ 8,500 86,100 $ 86,100 $ 581,527 $ 6,015,973 $ 6,692,100 Net earnings .................. -- -- -- -- -- 2,332,200 2,332,200 Cash dividends paid - $1 per share ................ -- -- -- -- -- (802,708) (802,708) Purchase/retirement of common stock ............. (1,315) -- -- -- -- (44,475) (44,475) ----------- ----------- ----------- ----------- ----------- ----------- ----------- Balances at June 30, 2000 ..... 715,293 8,500 86,100 86,100 581,527 7,500,990 8,177,117 Net loss ...................... -- -- -- -- -- (398,312) (398,312) Cash dividends paid - $1.25 per share ............ -- -- -- -- -- (1,003,623) (1,003,623) Purchase/retirement of common stock ............. (452) -- -- -- -- (5,850) (5,850) Insurance reimbursement for common stock purchases ...... -- -- -- -- 10,284 -- 10,284 ----------- ----------- ----------- ----------- ----------- ----------- ----------- Balances at June 30, 2001 ..... 714,841 $ 8,500 86,100 $ 86,100 $ 591,811 $ 6,093,205 $ 6,779,616 =========== =========== =========== =========== =========== =========== ===========
The accompanying notes are an integral part of this statement. Westland Development Co., Inc. STATEMENTS OF CASH FLOWS Year ended June 30,
2001 2000 ----------- ------------ Increase (Decrease) in Cash and Cash Equivalents Cash flows from operating activities Cash received from land sales and collections on real estate contracts receivable .......................................... $ 1,464,566 $ 6,415,088 Development and closing costs paid ............................... (2,051,178) (1,179,963) Cash received from rental operations ............................. 1,089,983 915,206 Cash paid for rental operations .................................. (28,299) (70,535) Cash paid for property taxes ..................................... (20,303) (135,736) Interest received ................................................ 140,382 234,872 Interest paid .................................................... (765,429) (604,029) Income tax refunds (paid) ........................................ 136,424 (1,315,000) Other general and administrative costs paid ...................... (1,799,707) (1,871,536) Other ............................................................ 26,893 18,666 ----------- ----------- Net cash provided by (used in) operating activities (1,806,668) 2,407,033 Cash flows from investing activities Capital expenditures ............................................. (3,913,681) (238,281) Investments in partnerships and joint ventures ................... 6,257 (2,808) Change in short-term investments ................................. (1,387,361) 2,468,105 Change in note receivable - related party ........................ 3,368 (43,267) ----------- ----------- Net cash provided by (used in) investing activities (5,291,417) 2,183,749 Cash flows from financing activities Borrowings on notes, mortgages and assessments payable ........... 5,625,062 990,698 Repayments of notes, mortgages and assessments payable ........... (646,347) (2,151,919) Payment of dividends ............................................. (1,003,623) (802,708) Purchase of common stock ......................................... (5,850) (44,475) Insurance reimbursement for common stock purchases ............... 10,284 -- ----------- ----------- Net cash provided by (used in) financing activities 3,979,526 (2,008,404) ----------- ----------- NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS (3,118,559) 2,582,378 Cash and cash equivalents at beginning of year ....................... 3,882,560 1,300,182 ----------- ----------- Cash and cash equivalents at end of year ............................. $ 764,001 $ 3,882,560 =========== ===========
Westland Development Co., Inc. STATEMENTS OF CASH FLOWS - CONTINUED Year ended June 30,
2001 2000 ----------- ------------ Reconciliation of Net Earnings (Loss) to Net Cash Provided by (Used in) Operating Activities Net earnings (loss) ................................................. $ (398,312) $ 2,332,200 Adjustments to reconcile net earnings (loss) to net cash provided by (used in) operating activities Depreciation ................................................. 323,257 259,253 Gain on sale of property and equipment ....................... (100) (280) Deferred income taxes ........................................ 47,374 57,049 Proceeds from sale of property and equipment ................. -- 280 Change in Income taxes recoverable/payable ......................... 8,328 (17,585) Other receivables ........................................ (58,803) (54,265) Land and improvements held for future development ........ (1,220,149) (73,907) Other assets ............................................. (99,682) (9,744) Accounts payable, accrued expenses and other liabilities . (51,252) (44,649) Accrued interest payable ................................. 50,928 1,247 Real estate contracts receivable ......................... (408,257) (42,566) ----------- ----------- Net cash provided by (used in) operating activities $(1,806,668) $ 2,407,033 =========== ===========
The accompanying notes are an integral part of these statements. Westland Development Co., Inc. NOTES TO FINANCIAL STATEMENTS June 30, 2001 and 2000 NOTE A - NATURE OF OPERATIONS AND SUMMARY OF ACCOUNTING POLICIES 1. History of Company and Beginning Basis of Financial Reporting ------------------------------------------------------------- In 1892, the descendants of the owners of a land grant deeded in 1692 by the Kingdom of Spain became incorporators of a land grant corporation named Town of Atrisco. Ownership of the Town of Atrisco was based on proportionate ownership of the land grant. In 1967, the Town of Atrisco was reorganized and became Westland Development Co., Inc. (the "Company"), with the heirs receiving shares in the Company in proportion to their ancestors' interests in the Town of Atrisco corporation. The net assets of $232,582 at the date of reorganization were assigned as follows: Value of no par common stock as stated in the Articles of Incorporation $ 8,500 Additional paid-in capital 224,082 -------- $232,582 ======== The Company estimated that it owned approximately 49,000 acres of land at the date of incorporation as Westland Development Co., Inc. Such acreage was used as the beginning cost basis for financial reporting purposes and was valued at $127,400 ($2.60 per acre) based on an appraisal in 1973 which determined the approximate value of the land in 1907. This date approximates the date that the Patent of Confirmation covering the land comprising the Atrisco Land Grant was given to the Town of Atrisco by the United States of America. Since the date of the Patent of Confirmation, the Company's acreage has increased in market value, but a full determination of such value has not been made. 2. Nature of Operations -------------------- The Company develops, sells or leases its real estate holdings, most of which are located near Albuquerque, New Mexico. The Company may use joint ventures or participation in limited partnerships to accomplish these activities. Revenue sources for the years ended June 30, 2001 and 2000 consist primarily of proceeds from land sales and rentals from developed properties, such as single-tenant retail stores and office space. Land sales are primarily to commercial developers and others in the Albuquerque area and certain governmental agencies, and the terms of sale include both cash and internal financing by the Company. Such sales are collateralized by the land. The Company has relied primarily upon cash land sales over the past several years due to the collection risk associated with real estate contracts. 3. Cash and Cash Equivalents ------------------------- Cash and cash equivalents are considered to include highly liquid investments with maturities of three months or less and money market funds. The Company maintains its cash in bank deposit accounts which, at times, may exceed federally insured limits and in certain other funds which are not federally insured. The Company has not experienced any losses in such accounts and believes it is not exposed to any significant credit risk on cash and cash equivalents. NOTES TO FINANCIAL STATEMENTS - CONTINUED June 30, 2001 and 2000 NOTE A - NATURE OF OPERATIONS AND SUMMARY OF ACCOUNTING POLICIES - CONTINUED 4. Investments ----------- Short-term investments include treasury bills carried at fair value. Such investments generally have maturities of more than three months and less than one year. Investments in partnerships and joint ventures owned 20% to 50% are accounted for by the equity method. Accordingly, the financial statements include the Company's share of the investees' net earnings. 5. Land and Improvements Held for Future Development ------------------------------------------------- Land and improvements held for future development are recorded at cost not to exceed net realizable value. Improvements consist of abstracts, surveys, legal fees, master and sector plans, infrastructure improvements and other costs related to land held by the Company which are allocated to respective tracts primarily by specific identification of costs. 6. Income-Producing Properties and Property and Equipment ------------------------------------------------------ Income-producing properties and property and equipment are stated at cost, less accumulated depreciation, computed on a straight-line basis over their estimated lives of three to 30 years. The cost of the building in which the Company has its offices, a portion of which is rented to others, has been allocated to income-producing properties and property and equipment based upon square footage. 7. Recognition of Income on Real Estate Transactions and Rentals ------------------------------------------------------------- The Company recognizes the entire gross profit on sales where the down payment is sufficient to meet the requirements for the full-accrual method. Transactions where the down payment is not sufficient to meet the requirements for the full-accrual method are recorded using the deposit or installment method. Under the deposit method, cash received is recorded as a deposit on land sale. Under the installment method, the Company records the entire contract price and the related costs at the time the transaction is recognized as a sale. Concurrently, the gross profit on the sale is deferred and is subsequently recognized as revenue in the statements of operations as payments of principal are received on the related contract receivable. Rental income is recognized when earned under lease agreements. Rents received in advance are deferred until earned. Revenue from leases with escalating rental payments are recognized on a straight-line basis over the minimum lease term. For leases with provisions for additional rental payments based on percentages of annual sales, contingent rental income is recognized when the lessee provides an accounting which reflects the contingent rental income has been earned under the terms of the lease agreements. 8. Income Taxes ------------ Deferred income tax assets or liabilities are determined based on the difference between financial statement and tax bases of certain assets and liabilities as measured by the enacted tax rates in effect using the liability method. NOTES TO FINANCIAL STATEMENTS - CONTINUED June 30, 2001 and 2000 NOTE A - NATURE OF OPERATIONS AND SUMMARY OF ACCOUNTING POLICIES - CONTINUED 9. Earnings (Loss) Per Common Share -------------------------------- Earnings (loss) per common share are based upon the weighted average number of common shares outstanding during the year, including the number of no par value common shares which may be issued in connection with eliminating fractional shares (which resulted from the determination made by the Court in the heirship case) and the number of no par value common shares for which the Court ruled that no incorporator or heirs existed. The Company has no potential common stock items. 10. Use of Estimates ---------------- In preparing financial statements in conformity with generally accepted accounting principles, management is required to make estimates and assumptions that affect certain reported amounts and disclosures; accordingly, actual results could differ from those estimates. 11. Long-Lived Assets ----------------- Long-lived assets to be held and used are reviewed for impairment, generally on a property-by-property basis, whenever events or changes in circumstances indicate that the related carrying amount may not be recoverable. When required, impairment losses are recognized based upon the estimated fair value of the asset. NOTE B - REAL ESTATE CONTRACTS RECEIVABLE Real estate contracts receivable at June 30, 2001 consist of three contracts, one payable in monthly installments of principal and interest and two due in lump sum payments of principal and interest at maturity with interest rates from 8% to 9.5%, and are collateralized by land. Principal collections due on real estate contracts receivable for the years ending June 30 are as follows: 2002 $455,308 2003 9,806 2004 - 2005 - 2006 10,000 ------- $475,114 ======= NOTES TO FINANCIAL STATEMENTS - CONTINUED June 30, 2001 and 2000 NOTE C - LAND AND IMPROVEMENTS HELD FOR FUTURE DEVELOPMENT The Company estimates that it presently owns in excess of 59,000 acres of land, primarily including land located within the boundaries of the Town of Atrisco Land Grant and land located elsewhere which the Company has acquired since incorporation. Plans for ultimate development of the properties have not been finalized. Land and improvements consist of the following at June 30, 2001: Land $1,058,283 Improvements 7,133,188 --------- $8,191,471 ========= NOTE D - INCOME-PRODUCING PROPERTIES Income-producing properties consist primarily of five single-tenant retail store buildings and a portion of the Company's office building and are summarized as follows at June 30, 2001: Buildings and equipment $ 8,787,426 Less accumulated depreciation 1,145,219 ---------- 7,642,207 Land 4,201,715 ---------- $11,843,922 ========== The Company's rentals from income-producing properties are principally obtained from tenants through rental payments as provided for under noncancelable operating leases. The lease terms range from one to 20 years and typically provide for guaranteed minimum rent, five-year renewals at tenants' options, percentage rent and other charges to cover certain operating costs. Minimum future rentals from income-producing properties on noncancelable tenant operating leases as of June 30, 2001 are as follows: Year ending June 30 2002 $ 1,229,103 2003 1,210,947 2004 1,213,930 2005 1,144,675 2006 1,041,581 Thereafter 10,248,121 ---------- $16,088,357 ========== NOTES TO FINANCIAL STATEMENTS - CONTINUED June 30, 2001 and 2000 NOTE E - NOTES, MORTGAGES AND ASSESSMENTS PAYABLE Notes, mortgages and assessments payable are summarized as follows at June 30, 2001: Promissory note, due in monthly installments of $17,970 through May 2015, including interest at 9.37%; collateralized by income-producing properties $ 1,673,491 Promissory note, due in monthly installments of $9,079 through July 2014, including interest at 8%; collateralized by income-producing properties 878,804 Note payable, due in monthly installments of $6,893 through September 2015, including interest at 8.75%; collateralized by income-producing properties 670,405 Mortgage note, due in monthly installments of $24,682, including interest at 8.52%, due November 1, 2016; collateralized by income-producing properties 2,537,296 Mortgage note, due in monthly installments of $25,403, including interest at 7.8%, due April 15, 2020; collateralized by income-producing properties 3,004,348 Note payable, due in monthly installments of $5,140 through February 2002, including interest at 9%; collateralized by specific tracts of land; paid off in July 2001 34,876 Balloon note, interest due quarterly at 9%, principal due March 2003; collateralized by specific tracts of land; paid off in July 2001 83,048 Revolving line of credit with a bank, variable interest payable quarterly (7% at June 30, 2001), principal due September 29, 2001; collateralized by real estate with borrowings up to $2,000,000 800,000 Revolving line of credit with a bank, interest payable quarterly at 8.25%, principal due April 25, 2002; collateralized by real estate with borrowings up to $1,600,000 1,509,681 Assessments payable 2,196 ----------- $11,194,145 =========== Aggregate required principal payments on the notes, mortgages and assessments payable as of June 30, 2001 are as follows: Year ending June 30 2002 $ 2,703,673 2003 298,045 2004 324,363 2005 353,016 2006 384,213 Thereafter 7,130,835 ---------- $11,194,145 ========== NOTES TO FINANCIAL STATEMENTS - CONTINUED June 30, 2001 and 2000 NOTE F - INCOME TAXES An analysis of the deferred income tax assets and liabilities as of June 30, 2001 is as follows: Deferred tax assets Improvements held for future development $ 129,728 Property, equipment and land 553,397 Investments 24,192 Other 122,346 Valuation allowance (121,216) --------- 708,447 Deferred tax liabilities Deferred tax gain on involuntary conversion of land 6,124,870 --------- Net deferred tax liability $5,416,423 ========= Income tax expense (benefit) consists of the following: Year ended June 30, -------------------------- 2001 2000 --------- ---------- Current Federal $(111,429) $1,015,805 State (16,668) 281,610 --------- ---------- (128,097) 1,297,415 Deferred Federal 35,257 44,497 State 12,118 12,552 --------- ---------- 47,375 57,049 --------- ---------- $ (80,722) $1,354,464 ========== ========== The income tax provision is reconciled to the tax computed at statutory rates as follows: Year ended June 30, ------------------------- 2001 2000 -------- --------- Tax expense (benefit) at statutory rates $(162,872) $1,253,466 State income taxes at statutory rates (36,407) 280,186 Change in valuation allowance - (194,784) Nondeductible expenses 21,459 19,926 Other 1,195 (4,330) Revision of prior year estimates 95,903 - -------- --------- Total expense (benefit) $ (80,722) $1,354,464 ======== ========= NOTES TO FINANCIAL STATEMENTS - CONTINUED June 30, 2001 and 2000 NOTE F - INCOME TAXES - CONTINUED A valuation allowance of approximately $121,000 has been recognized at June 30, 2001 based on estimates of tax assets which are not likely to be realized in the future. Significant changes in assumptions concerning future taxable income and deductions may cause changes in the valuation allowance. NOTE G - COMMON STOCK Under its original Articles of Incorporation (the "Articles"), the Company was authorized to issue 1,964,448 shares of common stock. During 1999, the Articles were amended to eliminate the authority to issue 736,668 shares of Class A common stock for $1.45 a share. The remaining authorized stock is as follows: (a) 736,668 shares of no par value common stock to represent $8,500 estimated value of land held by the Town of Atrisco; (b) 491,112 shares to be sold for a price to be determined by the Board of Directors, designated as Class B, $1 par value, common stock. The holders of no par value common stock have no preemptive rights to purchase Class B stock. At June 30, 2001, the 5,047 shares of no par value common stock, upon judicial determination, can be distributed to stockholders of record as of the date of incorporation. There is no established market for the Company's common stock. At June 30, 2001, 714,841 shares of the Company's no par value common stock were issued and outstanding. Of the 5,047 shares of no par value common stock issuable, 1,872 shares may be issued in connection with eliminating fractional shares which resulted from the determinations made by the Court in the heirship case and 3,175 shares represent shares for which the Court in the heirship case ruled that no incorporator or heirs existed. The Company also has reacquired and canceled 16,780 shares of no par value common stock which have been constructively retired. These shares have not been formally retired and, as such, may be issuable to stockholders of record as of the date of incorporation. During the year ended June 30, 1999, the Board of Directors approved protection against takeover measures whereby a threat of change of three or more directors in any one year would result in directors threatened with replacement being granted an immediate Class B stock bonus of 5,000 shares if in office as a director ten years or more, and 2,500 shares of Class B stock if in office as a director for less than ten years. The maximum number of shares which could be issued under this agreement at June 30, 2001 is 40,000 shares. NOTES TO FINANCIAL STATEMENTS - CONTINUED June 30, 2001 and 2000 NOTE H - SEGMENT INFORMATION The Company operates primarily in two industry segments. They are as follows: Land - Operations involve the development and sale of tracts, both residential and commercial. In addition, included are incidental revenues from leasing of grazing rights. Rentals - Operations involve rentalsfrom five single-tenant retail store buildings and a portion of the Company's office building. Financial information for each industry segment is summarized as follows:
2000 2001 ----------------------------------------------------- -------------------------------------------------- General General Land Rentals corporate Total Land Rentals corporate Total ----------- ----------- ----------- ----------- ----------- --------- ----------- ----------- Revenues ............. $ 2,020,990 $ 1,108,177 $ -- $ 3,129,167 $ 6,511,919 $ 843,105 $ -- $ 7,355,024 Operating income ..... 471,768 728,473 (1,031,133) 169,108 4,658,425 508,774 (1,126,633) 4,040,566 Interest income ...... -- -- 141,122 141,122 -- -- 234,872 234,872 Interest expense ..... (109,256) (668,699) (38,402) (816,357) (20,106) (536,240) (48,931) (605,277) Income tax expense (benefit) .......... -- -- (80,722) (80,722) -- -- 1,354,464 1,354,464 Identifiable assets .. 8,913,781 12,061,614 2,890,531 23,865,926 7,141,245 8,426,628 4,669,789 20,237,662 Capital expenditures . -- 3,906,671 7,010 3,913,681 -- 169,624 68,657 238,281 Depreciation ......... -- 265,528 57,729 323,257 -- 188,037 71,216 259,253
General corporate assets consist primarily of cash, furniture, equipment and a portion of an office building, of which the remaining portion is included in rentals. NOTE I - BENEFIT PLANS The Company has certain defined contribution employee retirement plans that provide for employee and employer contributions. The Company's contribution expense for these plans was $107,000 and $95,000 for 2001 and 2000, respectively. NOTE J - SALES TO MAJOR CUSTOMERS Sales to major customers are summarized as follows: During the year ended June 30, 2001, land sales to two customers individually accounted for 35% and 19% of total revenues. During the year ended June 30, 2000, land sales to three customers individually accounted for 12%, 29% and 16% of total revenues. NOTES TO FINANCIAL STATEMENTS - CONTINUED June 30, 2001 and 2000 NOTE K - COMMITMENTS AND CONTINGENCIES The Company is engaged in various lawsuits either as plaintiff or defendant which have arisen in the conduct of its business which, in the opinion of management, based upon advice of counsel, would not have a material effect on the Company's financial position or operations. The Company has entered into employment contracts with eight of its key officers and employees for periods from one to five years which are automatically renewed for one additional period. In the event of involuntary employee termination, these employees may receive from one to six times annual compensation. The remaining terms under the agreements range from one to nine-and-one-half years and the maximum salaries to be paid under the remaining contract periods are approximately $1,283,000. NOTE L - RELATED PARTY TRANSACTIONS The Company purchases its directors' and officers' liability insurance through a corporation controlled by a member of the Board of Directors. Total premiums for these policies paid in 2000 were $92,500. The note receivable - related party is from a joint venture partner, is payable in monthly installments of $1,000, including interest at 8.5%, and is collateralized by developed property. The note matures November 2014. NOTE M - FINANCIAL INSTRUMENTS The following table includes various estimated fair value information, which pertains to the Company's financial instruments, and does not purport to represent the aggregate net fair value of the Company. The carrying amounts in the table are the amounts at which the financial instruments are reported in the financial statements. All of the Company's financial instruments are held for purposes other than trading. The following methods and assumptions were used to estimate the fair value of each class of financial instruments: 1. Cash and Cash Equivalents ------------------------- The carrying amount approximates fair value because either the Company has the contractual right to receive immediate payment or because of short maturities. 2. Short-Term Investments ---------------------- Short-term investments represent investments in treasury bills and are carried at fair value. NOTES TO FINANCIAL STATEMENTS - CONTINUED June 30, 2001 and 2000 NOTE M - FINANCIAL INSTRUMENTS - CONTINUED 3. Real Estate Contracts Receivable -------------------------------- These notes receivable are generally collateralized by real estate and accrue interest at 8% to 9.5%. The fair value of real estate notes is based upon the present value of future cash flows using current interest rates. 4. Note Receivable - Related Party ------------------------------- Note receivable - related party is valued at the present value of future cash flows based on the cur-rent rates at which similar loans would be made to borrowers with similar credit ratings. 5. Notes, Mortgages and Assessments Payable ---------------------------------------- The discounted amount of future cash flows using the Company's current incremental rate of bor-rowing for similar liabilities is used to estimate fair value. The carrying amounts and estimated fair values of the Company's financial instruments at June 30, 2001 are as follows: Carrying Estimated amount fair value ----------- ----------- Financial assets Cash and cash equivalents $ 764,001 $ 764,001 Short-term investments 1,497,275 1,497,275 Real estate contracts receivable 475,114 475,114 Note receivable - related party 99,707 111,830 Other receivables 152,399 152,399 Financial liabilities Notes, mortgages and assessments payable 11,194,145 11,579,135 ITEM 8: CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE There have been no changes in or disagreements with Accountants of the kind described by Item 304 of Regulation S-B at any time during Westland's two (2) most recent fiscal years. PART III ITEM 9: DIRECTORS, EXECUTIVE OFFICERS PROMOTERS AND CONTROL PERSONS; COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT Background Information for Officers and Directors Directors Barbara Page, age 67, has been a Director, a member of the Executive Committee and the Registrant's President and Chief Executive and Chief Financial Officer since 1989. Ms. Page is a member of the Albuquerque Economic Forum, is a member of National Association of Industrial and Office Properties, is on the board of Albuquerque Economic Development Inc., is also a member of the Albuquerque Chamber of Commerce, the Albuquerque West Side Association, the Albuquerque Hispano Chamber of Commerce and New Mexico Home Builders Association. Polecarpio (Lee) Anaya, age 70, has been a Director, the Company's Executive Vice President and Assistant Secretary/Treasurer. Mr. Anaya has served as Chairman of the Executive Committee since 1989. Mr. Anaya served as a member of the Town of Atrisco Board of Trustees from 1954 through 1959. From 1958 until his retirement in March of 1996, Mr. Anaya owned and operated Lee's Conoco and Lee's American Parts in Albuquerque. Charles V. Pena, age 50, has been a Director since 1996. He is a member of the board of directors of El Campo Santo, Inc., and a member of the Company's Disclaimer Committee. Mr. Pena retired from Safeway stores after 19 years in that employment. During part of that time, he was a member of the Retail Clerk's Union where he sat on two negotiating committees and twice ran for the Presidency of the Union. Mr. Pena attended the University of New Mexico and the University of Albuquerque, majoring in business courses. Since 1993, Mr. Pena has owned and operated CJ's New Mexican Food Restaurant in Albuquerque, New Mexico. Sosimo Sanchez Padilla, age 71, is Chairman of the Board of Directors. Mr. Padilla has served as a Director since 1971 and has been the Chairman of the Board of Directors for the last nine years and is a member of the Company's Executive Committee. Mr. Padilla has been retired from Albuquerque Publishing Company for more than the past 13 years. Mr. Padilla has served on the State of New Mexico Border Research Institute Support Council and National Association of Industrial and Office Properties; was Chairman of the New Mexico Highway Commission from 1982 to 1986; served as a Trustee for the University of Albuquerque; also served as a Director of the Westside Albuquerque Chamber of Commerce; the Greater Albuquerque Chamber of Commerce, and the Albuquerque Hispano Chamber of Commerce. Mr. Padilla was a founder of and for more than 20 years served as a Director of the Bank of New Mexico. In March of 1995, he became a Director of Rancher's State Bank. From 1996 to the present, he has served as a Director of the Hispano Chamber of Commerce in Albuquerque. Joe S. Chavez, age 64, has served as a Director since 1995. He is a member of the Company's Disclaimer Committee. Mr. Chavez served on the Petroglyph National Monument Advisory Committee. For more than the past 5 years, Mr. Chavez has been a co-owner of Regina's Dance Studio, a business specializing in the sale of gymnastics equipment, costume and ballet apparel and coordination of dance performances and other functions. Mr. Chavez was employed as a Sales Consultant with Casey Luna Ford and for more than the past three years has been employed by with Galles Chevrolet. Mr. Chavez was employed for 20 years by Kimbell Co., OBA Foodway, as Manager Director of store operations. Mr. Chavez served in the Naval Reserve as Front Line Operations, Hydraulics Structural-Line Trouble Shooter. Carlos Saavedra, age 75, has served as a Director since 1989. Dr. Saavedra is the Chairman of the Company's Disclaimer Committee and was a member of the Historic Research Committee for the Petroglyph National Monument, the National Advisory Board on Child Nutrition, the Ethnic Heritage Studies Task Force, the Board of Directors of the La Compania de Teatro de Alburquerque and the Albuquerque Westside Coalition of Businesses. He holds degrees as follows: B.S. in Education, M.A. in School Administration, Ed.S. in Bilingual Education, and Ed.D. in linguistics. Until his retirement in 1985, he was employed as a teacher, administrator and consultant for school systems in New Mexico, Colorado and California, and served as a consultant to the Ministries of Education in Caracas, Venezuela and Cochabamba, Bolivia. Dr. Saavedra received a Presidential Citation for Service Beyond the Call of Duty and is listed in the Who's Who of American Education. From 1989 to 2000 Dr. Saavedra owned and operated Aspen Country Florist in Albuquerque. David C. Armijo, age 84, has been a Director since 1976 and Secretary and Treasurer since 1989. Mr. Armijo is President and Chairman of the Board of California All Risk Insurance Agency, Inc., in Los Angeles, California. He is a member of the Board of Directors of the Lockheed Martin Aircraft Overseas Association, the San Gabriel Valley Medical Center, Planning Commissioner for the City of San Gabriel, California, and Chairman of the Finance and Insurance Committee of the Garibaldina Society of California. Mr. Armijo holds a Bachelor of Arts Degree in Business Administration from the University of California at Berkeley. During World War II, Mr. Armijo was assigned as Civilian Technician to the Eighth Air Force in Europe, and subsequently as Eastern Representative for Lockheed. Mr. Armijo is a licensed pilot. Mr. Armijo holds A&E Licenses as well as an Air Craft Radio Telephone License. Josie G. Castillo, age 69, has been a Director since 1984, and served as the Company's Treasurer from 1985 to 1989. She is the Chairman of the board of directors of El Campo Santo, Inc. and is a member of the Company's Disclaimer Committee. Mrs. Castillo is a member of the Company's Executive Committee. From 1983 until her retirement in 1995, she was employed by the Human Services Department of the State of New Mexico in Albuquerque, New Mexico. Carmel Chavez, age 82, has been a Director since 1967, the time of conversion of the Town of Atrisco to Westland. He is one of the signers of the Proposal for Conversion of Town of Atrisco to Westland Development Co., Inc. and was one of the Company's incorporators. He is the Vice-Chairman of El Campo Santo, Inc. and is a member of the Company's Executive Committee and Disclaimer Committee. Until his retirement in 1983, Mr. Chavez had been employed for 27 years by the Albuquerque Public Schools as head custodian. Officers As stated above, Mr. Sosimo S. Padilla is the Chairman of the Board of Directors, Ms. Barbara Page is the President, Chief Executive Officer and Chief Financial Officer, Mr. Lee Anaya is the Executive Vice President and Assistant Secretary/Treasurer, and Mr. David C. Armijo is the Secretary/Treasurer for the Company. Other officers of the Company are the following: Leroy J. Chavez, age 40 was appointed to the position of Vice President of Development on April 26, 1996. Mr. Chavez has been employed by the Company since August, 1984, with his primary responsibility being the supervision of engineering and development related to the Company's properties. Mr. Chavez' responsibilities include the development of the Company's projects as well as the planning and zoning of its land holdings. Mr. Chavez holds a B.S. degree from the University of New Mexico in Civil Engineering. He is also the qualifying party for the Company's General Contractor's License. Brent Lesley, age 41 was appointed to the position of Vice President of Marketing on April 26, 1996. Mr. Lesley has been employed by the Company since May of 1986. Mr. Lesley's responsibilities are centered on the sale of real property, from raw land to developed lots. Mr. Lesley's responsibilities also include overseeing the acquisition of property for the Company's property portfolio and the procurement of project financing on both a construction and permanent basis. Mr. Lesley holds a B.S. degree from Iowa State University and an MBA degree from the University of New Mexico. Fred Ambrogi, age 50, was appointed to the position of Vice President in the Development Division on December 30, 1999. Mr. Ambrogi has been a Company employee since February 1993. Mr. Ambrogi's responsibilities primarily focus on the planning, design, oversight and coordination of specific Company development projects, including the negotiation, oversight and coordination of project related engineering and construction contracts. Mr. Ambrogi holds a B.F.A. degree from the University of New Mexico in Architecture. He has more than 23 years of experience in land development. Family relationships None of the Directors, nominees or other Officers of the Company are related (as first cousins or closer) by blood, marriage or adoption to any other Director, nominee, or Officer. Meetings of the Board The Board holds regular meetings monthly and special meetings as the business of the Company requires. During the past fiscal year the Board held 12 regular meetings, and no special meetings. All Board members attended at least 85% of the meetings. The Board has no audit, nominating or compensation committees, but does have an Executive Committee consisting of Sosimo Sanchez Padilla, Polecarpio (Lee) Anaya, Barbara Page, Josie Castillo and Carmel Chavez, with an alternate being Carlos Saavedra. Pursuant to the Company's Bylaws, the Executive Committee performs those functions delegated to it by the Board. The Executive Committee did not meet during the past fiscal year. Josie Castillo, Carmel Chavez and Charles Pena also serve as Directors and Dr. Saavedra serves as an alternate Director of El Campo Santo, Inc., a wholly owned non-profit corporation that manages and operates 3 cemeteries maintained by the Company. Ms. Castillo and Mr. Chavez also serve as Chairman and Vice Chairman, respectively. These Directors held four meetings during the year, which were attended by all Board members. Beneficial Ownership Reporting Requirements All reports required by Section 16(a) of the Exchange Act to be filed during the fiscal year were filed. ITEM 10: EXECUTIVE COMPENSATION The following table sets forth the compensation for the fiscal year ended June 30, 2001, 2000 and 1999, including bonuses and deferred cash compensation (if any), of the certain Directors, the Company's Chief Executive Officer and the three other highest paid executive officers: SUMMARY COMPENSATION TABLE Annual Compensation ------------------- (a) (b) (c) (d) (e) Other Name and Annual Principal Salary Bonus Compensation Position Year ($) ($)(1) ($) -------- ---- ------- ------ ------------ Barbara Page (1) ................... 2001 110,000 -- 13,967 President, CEO and Director ....... 1999 110,000 -- 13,951 1999 138,555(4) -- 13,967 Polecarpio (Lee) Anaya (1)(2) ...... 2001 -- -- 47,776 Executive Vice President .......... 2000 -- -- 47,756 and Director ................... 1999 -- -- 47,776 Sosimo S. Padilla(1)(2) ........... 2001 -- -- 47,776 Chairman of the Board ........... 2000 -- -- 47,756 of Directors .................. 1999 -- -- 47,776 David C. Armijo(1)(3)............... 2001 -- -- 18,276 Secretary and Director ............ 2000 -- -- 20,556 1999 -- -- 18,876 ----------------- 1) Mr. Padilla, Mr. Anaya, Mr. Armijo and Dr. Saavedra are each paid a Directors fee of $1,400 per month. Ms. Page and each of the Company's other Directors are paid a Directors fee of $1,100 per month. 2) Mr. Padilla and Mr. Anaya are each paid $30,000 per year pursuant to consulting agreements. 3) Does not include payments made to Mr. Armijo's insurance agency, if any, by the insurance carrieras commossions form policies owned by the Company. 4) No executive officer except Ms. Page received $100,000 or more in total annual compensation and bonuses during the fiscal year. There were no options issued or outstanding at any time during the fiscal year relating to the purchase of shares of any Class of the Company's securities by members of the Board of Directors. The Company has no long term compensation arrangements with its directors other than those discussed herein. Employment and Consulting Arrangements with Current Officers Since December of 1991 Ms. Page has been employed as the Company's President under a renewable five year employment agreement. If Ms. Page is involuntarily terminated during the term of the agreement she shall be paid, in addition to any salary earned to the date of such termination, an amount of cash equal to six times the amount of her annual salary on the date of termination. Mr. Padilla, the Company's Chairman, and Mr. Anaya, the Company's Executive Vice President, are each paid $30,000 per year for their services to the Company under renewable five year consulting agreements. If either Mr. Padilla's or Mr. Anaya's consulting agreement is involuntarily terminated during the term of the agreement, the person so terminated shall be paid an amount of cash equal to six times the annual compensation rate then in effect under the contract. Pension Plan Effective January 1, 1997, the Company established a Money Purchase Profit Sharing Deferred Compensation Plan (the "97 Plan") and abandoned the SEP-IRA plan, which it had established in 1991. No payments were made to the abandoned plan after fiscal 1997. Under the `97 Plan, the Company contributes up to 15% of the aggregate earnings of participating employees. During fiscal 1999, 2000 and 2001 $121,197, $88,831 and $107,078, respectively, were contributed by the Company pursuant to the `97 Plan. Ms. Page, Mr. Leroy J. Chavez, Mr. Lesley and Mr. Ambrogi participate in all employee benefit plans and Mr. Chavez, Mr.Lesley and Mr. Ambrogi participate in any bonuses, which may be declared by the Board of Directors. Each of Westland's Vice Presidents also have one year agreements with the Company providing that if they are involuntarily terminated each of them will be paid an amount equal to one year's salary. ITEM 11: SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT The following table sets forth, as of September 15, 2001, the beneficial ownership of No Par Value Stock and Class B Stock by Director of the Company and by all officers and Directors as a group. The information as to beneficial stock ownership is based on data furnished by each person. Each person has sole voting and investment power as to all shares unless otherwise indicated. No person is known by the Company to own beneficially 5% or more of its issued and outstanding equity securities.
NO PAR SHARES CLASS B SHARES Amount Percent Amount Percent and of and of Nature of Class Nature of Class Beneficial Beneficially Beneficial Beneficially Ownership Owned Ownership Owned (1)(2) ---------- ------------ ---------- ------------ CLASS "A" DIRECTORS Barbara Page ................ 2,647 * 11,300 13.12 401 Coors Blvd., N.W ........ Albuquerque, N.M. 87121 Polecarpio (Lee) Anaya ...... 70 * 1,000 1.16 1815 Sunset Gardens Rd., S.W Albuquerque, N.M. 87105 Charles V. Pena ............. 100 * 500 * 2312 Britt St., N.E ......... Albuquerque, N.M. 87112 CLASS "B" DIRECTORS Sosimo S. Padilla ........... 2,308(3) * 20,700 24.04 401 Coors Blvd., N.W ........ Albuquerque, N.M. 87121 Joe S. Chavez ............... 250 * 200 * 3901 Donald Rd., S.W ........ Albuquerque, N.M. 87105 Carlos Saavedra ............. 141 * * * 220 Tohatchi, N.W ........... Albuquerque, N.M. 87104 CLASS "C" DIRECTORS David C. Armijo ............. 3,132 * 5,000 5.81 401 Coors Blvd., N.W ........ Albuquerque, N.M. 87121 Josie Castillo .............. 738 * 10,000 11.61 401 Coors Blvd., N.W ........ Albuquerque, N.M. 87121 Carmel Chavez ............... 617 * 5,700 6.62 401 Coors Blvd., N.W ........ Albuquerque, N.M. 87121 OFFICERS Leroy J. Chavez (4) ......... * * * * 401 Coors Blvd., N.W ........ Albuquerque, New Mexico 87121 Brent Lesley (4) ............ * * * * 401 Coors Blvd., N.W ........ Albuquerque, New Mexico 87121 Fred Ambrogi (4) ............ * * * * 401 Coors Blvd., N.W ........ Albuquerque, New Mexico 87121 Directors and Officers as a group (11 people) .... 10,003(1-3) 1.3 (1-3) 54,400 63.18
------------- 1) Each of the classs B Directors is a Management's nominee for Director at the Annual Meeting of Shareholders. 2) In July of 2001, Ms. Page purchased 1,000 Class B shares from Mr. Anaya. 3) Of which, 46 shares are owned by Mr. Padilla's wife. 4) These officers are not lineal descendants of an incorporator of the Town of Atrisco, New Mexico, and cannot own Company's shares. * Represents less than 1% of the issued No Par Value common shares. The total of the No Par Shares and Class B Shares owned by the Company's Officers and Directors is approximately 8.12% of all such shares that might be voted at the Annual Meeting of Shareholders. ITEM 12: CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS During fiscal 1990, the Company appointed Mr. David C. Armijo's California all-risk agency as its broker to obtain all of the Company's insurance. Mr. Armijo has held a non-resident broker's license to sell insurance in the State of New Mexico since 1962. That agency received a total of $9,250 in commissions for the placement of the Company's insurance in fiscal 2000 and $-0- in 2001. During fiscal 2000 and 2001, the Company compensated Dr. Carlos Saavedra for lobbying before the New Mexico Legislature on behalf of the Company. The total compensation to Dr. Saavedra for this work was $3,500 in 2000 and $-0- in 2001. Mr. Padilla, Mr. Anaya, Dr. Saavedra and Mr. Armijo were paid Director's fees of $1,400 per month and each other Director received a Director's fee of $1,100 per month. PART IV ITEM 13: EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K 1. Financial Statements: Report of Independent Certified Public Accountants Balance Sheet Statements of Operations Statement of Stockholders' Equity Statements of Cash Flows Notes to Financial Statements 2. Exhibits: (3) Articles of Incorporation and Bylaws: (3)(I) Articles of Incorporation filed as an exhibit to Westland's Registration Statement on Form 10-K on September 28, 1982 and incorporated herein by reference. (3)(ii) Restated Bylaws filed as an exhibit with Westland's Annual Report on Form 10-KSB for the fiscal year ended June 30, 1993. (10) Material Contracts: (10.1) Consulting Agreement with Sosimo Padilla, dated December 18, 1992, as filed with Westland's Annual Report on Form 10-KSB for the fiscal year ended June 30, 1993, and incorporated herein by reference. (10.2) Consulting Agreement with Polecarpio (Lee) Anaya, dated December 18, 1992, as filed with Westland's Annual Report on Form 10-KSB for the fiscal year ended June 30, 1993, and incorporated herein by reference. (10.3) Employment Agreement with Barbara Page, dated December 18, 1992, as filed with Westland's Annual Report on Form 10-KSB for the fiscal year ended June 30, 1993, and incorporated herein by reference. (10.4) Lease Agreement dated April 25, 1994, between Central Avenue Partners and Walgreen Co., as filed with Westland's Annual Report on Form 10-KSB for the fiscal year ended June 30, 1998, and incorporated herein by reference. (10.5) Assignment of Lease dated April 20, 1995, from Central Avenue Partners to Westland, as filed with Westland's Annual Report on Form 10-KSB for the fiscal year ended June 30, 1995, and incorporated herein by reference. (10.6) Lease Agreement dated March 14, 1995, between George Brunacini and Jeannette Brunacini and Circuit City Stores, Inc., as filed with Westland's Annual Report on Form 10-KSB for the fiscal year ended June 30, 1995, and incorporated herein by reference. (10.7) Assignment of Lease dated June 28, 1995, from George Brunacini and Jeannette Brunacini to Westland, as filed with Westland's Annual Report on Form 10-KSB for the fiscal year ended June 30, 1995, and incorporated herein by reference. (10.8) Lease Agreement dated March 19, 1996, between C.A.P. II, a New Mexico general partnership, and Walgreen Co., as filed with Westland's Annual Report on Form 10-KSB for the fiscal year ended June 30, 1996, and incorporated herein by reference. (10.9) Assignment of Lease dated June 21, 1996, from C.A.P. II, a New Mexico general partnership, to Westland, as filed with Westland's Annual Report on Form 10-KSB for the fiscal year ended June 30, 1996, and incorporated herein by reference. (10.10) Lease Agreement dated June 29, 1999, between Marie Callender Restaurant and Pie Shop, a California corporation, as filed with Westland's Annual Report on Form 10-KSB for the fiscal year ended June 30, 1999. Exhibits filed with this Form 10-KSB. (10.11) Lease Agreement dated April 21, 1999 between C.A.P. II, a New Mexico general partnership and Walgreen, Co., an Illinois corporation. (11) Statement regarding computation of per share earnings is incorporated by reference to Note A(9) to the Financial Statements incorporated herein by reference to Westland's Annual Report to Shareholders for the Fiscal year ended June 30, 2000. Subsidiaries of Westland: Westland has the following subsidiaries: Name State of Incorporation El Campo Santo, Inc New Mexico - non-profit Westland Community Services, Inc New Mexico - non-profit All other exhibits required by Item 601 of Regulation S-B are inapplicable to this filing. (b) Reports on Form 8-K: During the last quarter of the period covered by this report, Westland filed no reports on Form 8-K: SIGNATURES In accordance with Section 13 or 15(d) of the Exchange Act, Westland caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. WESTLAND DEVELOPMENT CO., INC. By: Barbara Page ------------------------- Barbara Page, President, Chief Executive Officer, Chief Financial Officer and Director Date: October 16, 2001 ---------------- In accordance with the Exchange Act, this report has been signed below by the following persons in behalf of Westland and in the capacities and on the dates indicated. By: David C. Armijo ------------------------- David C. Armijo, Secretary-Treasurer and Principal Financial Officer Date: October 16, 2001 ---------------- In accordance with the Exchange Act, this report has been signed below by the following persons in behalf of Westland and in capacities and on the dates indicated. By: David C. Armijo ------------------------- David C. Armijo, Director Date: October 16, 2001 ---------------- By: Polecarpio (Lee) Anaya ------------------------- Polecarpio (Lee) Anaya, Executive Vice President and Director Date: October 16, 2001 ---------------- By: Sosimo S. Padilla ------------------------- Sosimo S. Padilla, Director and Chairman of the Board Date: October 16, 2001 ---------------- By: Josie G. Castillo ------------------------- Josie G. Castillo, Director Date: October 16, 2001 ---------------- By: Carmel T. Chavez ------------------------- Carmel T. Chavez, Director Date: October 16, 2001 ---------------- By: Joe S. Chavez ------------------------- Joe S. Chavez, Director Date: October 16, 2001 ---------------- By: Charles V. Pena ------------------------- Charles V. Pena, Director Date: October 16, 2001 ---------------- By: Carlos Saavedra ------------------------- Carlos Saavedra, Director Date: October 16, 2001 ---------------- By: Barbara Page ------------------------- Barbara Page, Director Date: October 16, 2001 ----------------