10QSB 1 form10q2q02.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 December 31, 2001 [ ]TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT For the transition period from to Commission File Number: 0-7775 WESTLAND DEVELOPMENT CO., INC. ------------------------------ (Exact name of small business issuer as specified in its charter) NEW MEXICO 85-0165021 ------------------------------- ------------------------------- (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 401 Coors Blvd., N.W., Albuquerque, New Mexico 87121 ------------------------------------------------------------------------------- (Address of principal executive offices) (505)831-9600 ------------------------------------------------------------------------------- (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 February 11, 2001: No Par Value Common: 714,841 Class B $1.00 Par Value Common: 86,100 Transitional Small Business Format (check one) Yes [ ] No [ X ] PART I. FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS WESTLAND DEVELOPMENT CO., INC. BALANCE SHEET (unaudited) December 31, 2001 ASSETS Cash and cash equivalents ........................ $ 1,420,854 Short-term investments ........................... 302,193 Receivables: Real estate contracts ......................... $ 2,482,644 Note receivable - related party ............... 97,803 Other receivables ............................. 29,227 2,609,674 ------------ Land and improvements held for future development ............................ 7,941,175 Income producing properties, net ................. 11,696,298 Property and equipment, net of accumulated depreciation of $603,988 ...................... 317,824 Investment in Partnerships and joint ventures .... 224,789 Income taxes receivable .......................... 14,257 Other ............................................ 242,477 ------------ $ 24,769,541 ============ LIABILITIES AND STOCKHOLDERS' EQUITY Accounts payable, accrued expenses and other liabilities ......................... $ 1,551,327 Deferred income taxes ............................ 5,416,423 Notes, bonds, mortgages and assessments payable .. 9,410,709 ------------ Total liabilities ............... 16,378,459 Stockholders' equity Common stock - no par value; authorized, 736,668 shares; issued and outstanding, 714,841 shares ............................. 8,500 Class B common stock - $1.00 par value; authorized, 491,112 shares; issued and outstanding, 86,100 shares .............................. 86,100 Additional paid-in capital .................... 591,811 Retained earnings ............................. 7,704,671 8,391,082 ------------ ------------ $ 24,769,541 ============ WESTLAND DEVELOPMENT CO., INC. STATEMENTS OF OPERATIONS (unaudited) For the three months ended December 31, 2001 2000 ----------- ----------- Revenues Land ...................................... $ 4,337,035 $ 136,710 Rentals ................................... 299,224 298,063 ----------- ----------- 4,636,259 434,773 Costs and expenses Cost of land revenues ..................... 1,063,275 110,693 Cost of rentals ........................... 72,968 81,632 General and administrative ................ 730,627 465,072 ----------- ----------- 1,866,870 657,397 ----------- ----------- Income (loss) from operations .......... 2,769,389 (222,624) Other (income) expense Interest income ........................... (16,270) (31,083) Other income .............................. (10,130) (5,737) Interest expense .......................... 209,015 192,851 ----------- ----------- 182,615 156,031 ----------- ----------- Earnings (loss) before income taxes .... 2,586,774 (378,655) Income tax expense (benefit) ................. 1,034,500 (152,000) ----------- ----------- NET EARNINGS (LOSS) .................... $ 1,552,274 $ (226,655) =========== =========== Weighted average common shares outstanding ............................... 800,941 801,103 =========== =========== Earnings (loss) per common share ............. $ 1.94 $ (.28) =========== =========== WESTLAND DEVELOPMENT CO., INC. STATEMENTS OF OPERATIONS (unaudited) For the six months ended December 31, 2001 2000 ----------- ----------- Revenues Land ...................................... $ 5,269,425 $ 468,247 Rentals ................................... 598,949 517,247 ----------- ----------- 5,868,374 985,494 Costs and expenses Cost of land revenues ..................... 1,551,602 296,126 Cost of rentals ........................... 140,472 142,247 General and administrative ................ 1,147,011 1,129,268 ----------- ----------- 2,839,085 1,567,641 ----------- ----------- Income (loss) from operations .......... 3,029,289 (582,147) Other (income) expense Interest income ........................... (38,014) (88,071) Other income .............................. (19,087) (11,658) Interest expense .......................... 400,924 339,138 ----------- ----------- 343,823 239,409 ----------- ----------- Earnings (loss) before income taxes .... 2,685,466 (821,556) Income tax expense (benefit) ................. 1,074,000 (329,000) ----------- ----------- NET EARNINGS (LOSS) .................... $ 1,611,466 $ (492,556) =========== =========== Weighted average common shares outstanding ............................... 800,941 801,248 =========== =========== Earnings (loss) per common share ............. $ 2.01 $ (.61) =========== =========== WESTLAND DEVELOPMENT CO., INC. STATEMENTS OF CASH FLOWS (unaudited) For the six months ended December 31, 2001 2000 ------------ ------------- Cash flows from operating activities Cash received from land sales and collections on real estate contracts receivable ................. $ 3,448,635 $ 499,906 Development and closing costs paid on land sales ............................... (1,297,559) (891,328) Cash received from rental operations .......... 598,949 486,685 Cash paid for rental operations ............... 7,152 (20,349) Cash paid for property taxes .................. (49,664) (33,880) Interest received ............................. 13,651 87,314 Interest paid ................................. (454,230) (324,959) Income taxes paid ............................. (9,200) (50,000) General and administrative costs paid ......... (1,037,181) (651,095) Other ......................................... -- 100 ------------ ------------ Net cash provided (used) by operating activities ........................ 1,220,553 (897,606) ------------ ------------ Cash flows from investing activities Capital expenditures for income producing and other properties .............. -- (3,956,389) Investment in partnerships and joint ventures . 22,750 14,000 Change in short-term investments .............. 1,195,082 (1,500,007) Proceeds from note receivable-related party ... 1,904 1,649 Proceeds from sale of assets .................. -- 90 ------------ ------------ Net cash provided (used) in investing activities ........................ 1,219,736 (5,440,657) ------------ ------------ Cash flows from financing activities Borrowing on notes, mortgages and assessments payable ......................... 926,928 4,247,109 Repayments of bonds, mortgages, notes and assessments payable ............... (2,710,364) (255,066) Payment of dividends .......................... -- (1,003,623) Purchase/retireentof common stock, net ........ -- 4,434 ------------ ------------ Net cash (used) provided by financing activities ....................... (1,783,436) 2,992,854 ------------ ------------ NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS ......................... 656,853 (3,345,409) Cash and cash equivalents at beginning of period .......................... 764,001 3,882,560 ------------ ------------ Cash and cash equivalents at end of period ................................ $ 1,420,854 $ 537,151 ============ ============ Reconciliation of net earnings (loss) to net cash provided (used) in operating activities Net earnings (loss) ............................ $ 1,611,466 $ (492,556) Adjustments to reconcile net earnings (loss) to net cash provided (used in) by operating activities Depreciation .............................. 167,655 154,249 Gain on sale of assets .................... -- (90) Change in Rents receivable, accrued interest, property tax and other assets ........... 123,172 11,921 Real estate contracts ..................... (2,007,530) 49,271 Land and improvements held for future development and income producing properties .................... 250,296 (600,900) Other assets .............................. (91) (46,698) Accounts and retainages payable, accrued interest and other liabilities ............................. 10,785 (379,000) Income taxes payable ...................... 1,064,800 406,197 ------------ ------------ Net cash provided by (used in) operating activities ......................... $ 1,220,553 $ (897,606) ============ ============ WESTLAND DEVELOPMENT CO., INC. NOTES TO THE FINANCIAL STATEMENTS (unaudited) December 31, 2001 1. The balance sheet at December 31, 2001, statements of operations for the three and six months ended December 31, 2001 and December 31, 2000 and statements of cash flows for the six month periods ended December 31, 2001 and 2000 have been prepared by the Company without audit. In the opinion of management, all adjustments, including normal recurring adjustments necessary to present fairly the financial position, results of operations and cash flows, have been made. Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted. It is suggested that these financial statements be read in conjunction with the Company's audited financial statements at June 30, 2001. The results of operations for the three months and six months ended December 31, 2001 are not necessarily indicative of operating results for the full year. 2. The computation of earnings (loss) per common share has been based upon the weighted average number of shares of outstanding common stock and common stock issuable without further consideration, which for the three and six month periods ended December 31, 2001 was 800,941 and for the three and six month periods ended December 31, 2000 were 801,103 and 801,248, respectively. 3. Financial information for the two industry segments, land sales and rental operations, are as follows: General Land Rentals corporate Total ---- ------- --------- ----- Three months ended December 31, 2001: Revenues $4,337,035 $299,224 $ - $4,636,259 Costs and expenses 1,063,275 72,968 730,627 1,866,870 ---------- -------- ----------- ---------- Income (loss) from operations 3,273,760 226,256 (730,627) 2,769,389 Interest income (16,270) (16,270) Other income (10,130) (10,130) Interest expense 17,282 190,664 1,069 209,015 ---------- -------- ----------- ---------- Earnings (loss) before income taxes $3,256,478 $ 35,592 $ (705,296) $2,586,774 ========== ======== =========== ========== Three months ended December 31, 2000: Revenues $ 136,710 $298,063 $ - $ 434,773 Costs and expenses 110,693 81,632 465,072 657,397 ---------- -------- ----------- ---------- Income (loss) from operations 26,017 216,431 (465,072) (222,624) Interest income (31,083) (31,083) Other income (5,737) (5,737) Interest expense 25,810 157,970 9,071 192,851 ---------- -------- ----------- ---------- Earnings (loss) before income taxes $ 207 $ 58,461 $ (437,323) $ (378,655) ========== ======== =========== ========== Six months ended December 31, 2001: Revenues $5,269,425 $598,949 $ - $5,868,374 Costs and expenses 1,551,602 140,472 1,147,011 2,839,085 ---------- -------- ----------- ---------- Income (loss) from operations 3,717,823 458,477 (1,147,011) 3,029,289 Interest income (38,014) (38,014) Other income (19,087) (19,087) Interest expense 33,150 365,724 2,050 400,924 ---------- -------- ----------- ---------- Earnings (loss) before income taxes $3,684,673 $ 92,753 $(1,091,960) $2,685,466 ========== ======== =========== ========== Six months ended December 31, 2000: Revenues $ 468,247 $517,247 $ - $ 985,494 Costs and expenses 296,126 142,247 1,129,268 1,567,641 ---------- -------- ----------- ---------- Income (loss) from operations 172,121 375,000 (1,129,268) (582,147) Interest income (88,071) (88,071) Other income (11,658) (11,658) Interest expense 45,388 277,797 15,953 339,138 ---------- -------- ----------- ---------- Earnings (loss) before income taxes $ 126,733 $ 97,203 $(1,045,492) $ (821,556) ========== ======== =========== ========== ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS During the six months ended December 31, 2001, the Company's cash and cash equivalents increased by $656,853. During this period, operations provided $1,220,553 and investing activities provided $1,219,736, primarily from short-term and joint venture investments. Also, the Company repaid debt of $1,783,436, net. Except for short-term borrowing, the Company's primary source of cash is the sale of land. Although rental operations generated approximately $600,000 in the first two quarters, most of those receipts were used to service the mortgage debt for those properties. Other than trade payables, the other significant debt is $784,802 on lines of credit used for operations. This amount fluctuates, and is paid from receipts from lot sales. The Company will continue to improve its land projects to create saleable products, and management believes that receipts from those sales will sustain the Company for the balance of the year. During the second quarter of the current fiscal year, the Company had revenues of $4,636,259 compared to $434,773 during the same period in the prior fiscal year. Land revenues increased significantly primarily due to a greater amount of improved lot sales, $2,214,600 compared to $435,000 and an increase in large parcel sales of $2,725,000. Operating expenses during the three months ended December 31, 2001, were $1,866,870 compared to $657,397 during the comparable period in 2000. The increase was due principally to higher cost of land revenues by $952,582, and an increase in general and administrative expenses of $265,555, which is primarily due to increased uncollectible accounts of $183,000. As the Company sells the remaining lots in its Tierra Oeste units this year, it has begun sales of lots in the Painted Sky divisions, which should continue into the next fiscal year. For the year to date, revenues in 2001 were $5,868,374 compared to $985,494, for reasons stated above. Operating costs were $2,839,085 compared to $1,567,641 as cost of sales increased by $1,255,476. The cost of rental revenues and general and administrative expenses remained relatively constant from 2000 to 2001. Most of the improvement in revenue and income occurred in the second quarter, due to accelerated subdivision lot sales and one single transaction of $2,225,000. Management expects increased sales of land to continue. For the past nine years, the National Park Service has been buying land from Westland for its Petroglyph National Park pursuant to condemnation. The Company is allowed to defer federal and state income tax on the gain from these sales if it reinvests the proceeds within a specified time. The result has been a deferred tax liability of $5,416,423. Of the approximately $15,600,000 spent, the Company has remaining approximately $3,585,000 of replacemant lands and property to acquire by June 30, 2004. In the event the Company does not replace the property sold to the National Park Service, it may need to utilize a substantial portion of its liquid investments for the payment of these taxes. SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. WESTLAND DEVELOPMENT CO., INC. DATE: February 11, 2002 By: Barbara Page --------------------------- Barbara Page, President, Chief Executive Officer and Chief Accounting Officer