10QSB 1 form10q1q02.txt Form 10-QSB U.S. Securities and Exchange Commission Washington, D.C. 20549 (Mark One) [XX]QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For Quarter Ended September 30, 2001 [ ]TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT For the transition period from to Commission File Number: 0-7775 WESTLAND DEVELOPMENT CO., INC. ------------------------------ (Exact name of small business issuer as specified in its charter) NEW MEXICO 85-0165021 ------------------------------- ------------------------------- (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 401 Coors Blvd., N.W., Albuquerque, New Mexico 87121 ------------------------------------------------------------------------------- (Address of principal executive offices) (505)831-9600 ------------------------------------------------------------------------------- (Issuer's telephone number) N/A ------------------------------------------------------------------------------- (Former name, former address and former fiscal year, if changed since last report) Check whether the issuer (1) filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act during the past 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. YES [ X ] No [ ] State the number of shares outstanding of each of the issuer's classes of common equity as of November 13, 2001: No Par Value Common: 714,841 Class B $1.00 Par Value Common: 86,100 Transitional Small Business Format (check one) Yes [ ] No [ X ] PART I. FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS WESTLAND DEVELOPMENT CO., INC. BALANCE SHEET (unaudited) September 30, 2001 ASSETS Cash and cash equivalents ........................ $ 850,391 Short-term investments ........................... 300,512 Receivables: Real estate contracts ......................... $ 473,820 Note receivable - related party ............... 98,819 Other receivables ............................. 66,713 639,352 ------------ Land and improvements held for future development ............................ 8,389,395 Income producing properties, net ................. 11,769,366 Property and equipment, net of accumulated depreciation of $594,243 ...................... 327,569 Investment in Partnerships and joint ventures .... 226,659 Income taxes receivable .......................... 14,257 Other ............................................ 300,532 ------------ $ 22,818,033 ============ LIABILITIES AND STOCKHOLDERS' EQUITY Accounts payable, accrued expenses and other liabilities ......................... $ 492,480 Deferred income taxes ............................ 5,416,423 Notes, bonds, mortgages and assessments payable .. 10,070,322 ------------ Total liabilities ............... 15,979,225 Stockholders' equity Common stock - no par value; authorized, 736,668 shares; issued and outstanding, 714,841 shares ............................. 8,500 Class B common stock - $1.00 par value; authorized, 491,112 shares; issued and outstanding, 86,100 shares .............................. 86,100 Additional paid-in capital .................... 591,811 Retained earnings ............................. 6,152,397 6,838,808 ------------ ------------ $ 22,818,033 ============ WESTLAND DEVELOPMENT CO., INC. STATEMENTS OF OPERATIONS (unaudited) For the 3 months ended September 30, 2001 2000 ----------- ----------- Revenues Land ...................................... $ 932,390 $ 331,537 Rentals ................................... 299,725 219,184 ----------- ----------- 1,232,115 550,721 Costs and expenses Cost of land revenues ..................... 488,327 185,433 Cost of rentals ........................... 67,504 60,615 General and administrative ................ 416,384 664,196 ----------- ----------- 972,215 910,244 ----------- ----------- (Loss) income from operations .......... 259,900 (359,523) Other (income) expense Interest income ........................... (21,744) (56,988) Other income .............................. (8,957) (5,921) Interest expense .......................... 191,909 146,287 ----------- ----------- 161,208 83,378 ----------- ----------- (Loss) earnings before income taxes .... 98,692 (442,901) Income tax (benefit) expense ................. 39,500 (177,000) ----------- ----------- NET (LOSS) EARNINGS .................... $ 59,192 $ (265,901) =========== =========== Weighted average common shares outstanding ............................... 800,941 801,380 =========== =========== (Loss) earnings per common share ............. $ .07 $ (.33) =========== =========== WESTLAND DEVELOPMENT CO., INC. STATEMENTS OF CASH FLOWS (unaudited) For the three months ended September 30, 2001 2000 ------------ ------------- Cash flows from operating activities Cash received from land sales and collections on real estate contracts receivable ................. $ 1,054,139 $ 329,807 Development and closing costs paid on land sales ............................... (686,579) (154,948) Cash received from rental operations .......... 312,084 217,987 Cash paid for rental operations ............... (5,307) (10,690) Cash received for property taxes .............. 15,130 18,930 Interest received ............................. 9,554 56,419 Interest paid ................................. (245,478) (137,105) Income taxes paid ............................. (9,200) (50,000) General and administrative costs paid ......... (442,531) (652,457) Other ......................................... -- 5,921 ------------ ------------ Net cash provided (used) by operating activities ........................ 1,812 (376,136) ------------ ------------ Cash flows from investing activities Capital expenditures for income producing and other properties .............. -- (3,952,194) Investment in partnerships and joint ventures . 10,750 179 Change in short-term investments .............. 1,196,763 (1,476,667) Proceeds from note receivable-related party ... 888 816 ------------ ------------ Net cash provided (used) in investing activities ........................ 1,208,401 (5,427,866) ------------ ------------ Cash flows from financing activities Borrowing on notes, mortgages and assessments payable ......................... 339,871 3,429,135 Repayments of bonds, mortgages, notes and assessments payable ............... (1,463,694) (70,252) Payment of dividends .......................... -- (1,003,623) Purchase of common stock ...................... -- (5,850) ------------ ------------ Net cash (used) provided by financing activities ....................... (1,123,823) 2,349,410 ------------ ------------ NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS ......................... 86,390 (3,454,592) Cash and cash equivalents at beginning of period .......................... 764,001 3,882,560 ------------ ------------ Cash and cash equivalents at end of period ................................ $ 850,391 $ 427,968 ============ ============ Reconciliation of net earnings (loss) to net cash provided (used) in operating activities Net (loss) earnings ............................ $ 59,192 $ (265,901) Adjustments to reconcile net (loss) earnings to net cash used provided by operating activities Depreciation .............................. 84,842 66,416 Change in Rents receivable, accrued interest, property tax and other assets ........... 85,686 (9,647) Real estate contracts ..................... 1,294 1,790 Land and improvements held for future development and income producing properties .................... (197,924) 25,557 Other assets .............................. (48,016) (5,824) Accounts and retainages payable, accrued interest and other liabilities ............................. (13,562) 38,473 Income taxes payable ...................... 30,300 (227,000) ------------ ------------ Net cash (used in) provided by operating activities ......................... $ 1,812 $ (376,136) ============ ============ WESTLAND DEVELOPMENT CO., INC. NOTES TO THE FINANCIAL STATEMENTS (unaudited) September 30, 2001 1. The balance sheet at September 30, 2001, statements of cash flows and statements of operations for the three months ended September 30, 2001 and September 30, 2000 have been prepared by the Company without audit. In the opinion of management, all adjustments, including normal recurring adjustments necessary to present fairly the financial position, results of operations and cash flows, have been made. Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted. It is suggested that these financial statements be read in conjunction with the Company's audited financial statements at June 30, 2001. The results of operations for the three months ended September 30, 2001 are not necessarily indicative of operating results for the full year. 2. The computation of earnings (loss) per common share has been based upon the weighted average number of shares of outstanding common stock and common stock issuable without further consideration, which for the three month periods ended September 30, 2001 and September 30, 2000 were 800,941 and 801,380, respectively. ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS During the three months ended September 30, 2001, the Company's cash and cash equivalents increased by $86,390. During this period, operations provided $1,812 and investing activities provided $1,208,401, primarily from short-term and joint venture investments. Also, the Company repaid debt of $1,123,823, net. Except for short-term borrowing, the Company's primary source of cash is the sale of land. Although rental operations generated $300,000 in the first fiscal quarter, most of those receipts normally are used to service the mortgage debt for those properties. Other than trade payables, the other significant debt is $1,374,000 on a construction line of credit. This amount fluctuates, and is paid from receipts from lot sales. The Company will continue to improve its land projects to create saleable product, and management believes that receipts from those sales will sustain the Company for the balance of the year. During the first quarter of the current fiscal year, the Company had revenues of $1,232,115 compared to $550,721 during the same period in the prior fiscal year. Land revenues increased significantly primarily due to a greater amount of improved lot sales, $910,000 compared to $315,000. Operating expenses during the three months ended September 30, 2001, were $972,215 compared to $910,244 during the comparable period in 2000. The increase was due principally to higher cost of land revenues by $303,000, offset by a decrease in general and administrative expenses of $248,000. As the Company sells the remaining lots in its Tierra Oeste units this year, it will begin sales of lots in the Painted Sky and Crossings divisions, which should continue into the next fiscal year. For the past nine years, the National Park Service has been buying land from Westland for its Petroglyph National Park pursuant to condemnation. The Company is allowed to defer federal and state income tax on the gain from these sales if it reinvests the proceeds within a specified time. The result has been deferred tax liability of $5,416,423. Of the approximately $15,600,000 spent, the Company has remaining approximately $3,585,000 of replacemant lands and property to acquire by June 30, 2004. In the event the Company does not replace the property sold to the National Park Service, it may need to utilize a substantial portion of its liquid investments for the payment of these taxes. PART II. OTHER INFORMATION ITEM 1. LEGAL PROCEEDINGS Other than the 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 proceeding. ITEM 2. CHANGES IN SECURITIES NONE ITEM 3. DEFAULTS IN SENIOR SECURITIES NONE ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS NONE ITEM 5. OTHER INFORMATION NONE ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K (a) There are no exhibits required by Item 601 of Regulation S-B. (b) Reports on Form 8-K. State whether any reports on Form 8-K have been filed during the quarter for which this report is filed, listing the items reported, any financial statements filed, and the dates of any such reports. NONE SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. WESTLAND DEVELOPMENT CO., INC. DATE: November 13, 2001 By: Barbara Page --------------------------- Barbara Page, President, Chief Executive Officer and Chief Accounting Officer