-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, NaUq0VLP1VPypeVkIRIdJl4zYh5ZhSCC8R7O9QX6i1r7E1ArqTpzKZNmghnNB0cA hKd1IZ9MH9GCfOqZ4SmFnA== 0001008878-02-000029.txt : 20021108 0001008878-02-000029.hdr.sgml : 20021108 20021108154826 ACCESSION NUMBER: 0001008878-02-000029 CONFORMED SUBMISSION TYPE: 10QSB PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20020930 FILED AS OF DATE: 20021108 FILER: COMPANY DATA: COMPANY CONFORMED NAME: WESTLAND DEVELOPMENT CO INC CENTRAL INDEX KEY: 0000106423 STANDARD INDUSTRIAL CLASSIFICATION: LAND SUBDIVIDERS & DEVELOPERS (NO CEMETERIES) [6552] IRS NUMBER: 850165021 STATE OF INCORPORATION: NM FISCAL YEAR END: 0630 FILING VALUES: FORM TYPE: 10QSB SEC ACT: 1934 Act SEC FILE NUMBER: 000-07775 FILM NUMBER: 02814263 BUSINESS ADDRESS: STREET 1: 401 COORS BOULEVARD S W CITY: ALBUQUERQUE STATE: NM ZIP: 87121 BUSINESS PHONE: 5058319600 MAIL ADDRESS: STREET 1: 401 COORS BLVD S W CITY: ALBUQUERQUE STATE: NM ZIP: 87121 10QSB 1 form10q1q03.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, 2002 [ ]TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT For the transition period from to Commission File Number: 0-7775 WESTLAND DEVELOPMENT CO., INC. ------------------------------ (Exact name of small business issuer as specified in its charter) NEW MEXICO 85-0165021 - ------------------------------- ------------------------------- (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 401 Coors Blvd., N.W., Albuquerque, New Mexico 87121 - ------------------------------------------------------------------------------- (Address of principal executive offices) (505)831-9600 - ------------------------------------------------------------------------------- (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 12, 2002: No Par Value Common: 714,231 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, 2002 ASSETS Cash and cash equivalents ........................ $ 7,345,099 Receivables: Real estate contracts ......................... $ 18,871 Note receivable - related party ............... 94,247 Other receivables ............................. 95 113,213 ------------ Land and improvements held for future development ............................ 8,546,986 Income producing properties, net ................. 11,476,006 Property and equipment, net of accumulated depreciation of $602,379 ...................... 329,719 Investment in Partnerships and joint ventures .... 194,212 Other ............................................ 228,075 ------------ $ 28,233,310 ============ LIABILITIES AND STOCKHOLDERS' EQUITY Accounts payable, accrued expenses and other liabilities ......................... $ 805,695 Dividends declared ............................... 250,256 Deferred income taxes ............................ 7,362,021 Notes, bonds, mortgages and assessments payable .. 8,712,899 ------------ Total liabilities ............... 17,130,871 Stockholders' equity Common stock - no par value; authorized, 736,668 shares; issued and outstanding, 714,231 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 ............................. 10,416,028 11,102,439 ------------ ------------ $ 28,233,310 ============ WESTLAND DEVELOPMENT CO., INC. STATEMENTS OF OPERATIONS (unaudited) For the three months ended September 30, 2002 2001 ----------- ----------- Revenues Land ...................................... $ 6,106,340 $ 932,390 Rentals ................................... 303,280 299,725 ----------- ----------- 6,409,620 1,232,115 Costs and expenses Cost of land revenues ..................... 571,075 488,327 Cost of rentals ........................... 82,841 67,504 General and administrative ................ 630,961 416,384 ----------- ----------- 1,284,877 972,215 ----------- ----------- Income from operations ................. 5,124,743 259,900 Other (income) expense Interest income ........................... (8,350) (21,744) Other income .............................. (14,438) (8,957) Interest expense .......................... 182,356 191,909 ----------- ----------- 159,568 161,208 ----------- ----------- Earnings before income taxes ........... 4,965,175 98,692 Income tax expense ........................... 1,999,000 39,500 ----------- ----------- NET EARNINGS ........................... $ 2,966,175 $ 59,192 =========== =========== Weighted average common shares outstanding ............................... 805,393 800,941 =========== =========== Earnings per common share .................... $ 3.68 $ .07 =========== =========== WESTLAND DEVELOPMENT CO., INC. STATEMENTS OF CASH FLOWS (unaudited) For the three months ended September 30, 2002 2001 ------------ ------------- Cash flows from operating activities Cash received from land sales and collections on real estate contracts receivable ................. $ 6,103,163 $ 1,054,139 Development and closing costs paid on land sales ............................... (810,188) (686,579) Cash received from rental operations .......... 303,280 312,084 Cash paid for rental operations ............... (9,120) (5,307) Cash (paid for) received for property taxes ... (56,656) 15,130 Interest received ............................. 8,473 9,554 Interest paid ................................. (167,979) (245,478) Income taxes paid ............................. (106,931) (9,200) General and administrative costs paid ......... (496,034) (442,531) ------------ ------------ Net cash provided by operating activities ........................ 4,768,008 1,812 ------------ ------------ Cash flows from investing activities Distributions from partnerships and joint ventures .......................... 15,142 10,750 Change in short-term investments .............. -- 1,196,763 Proceeds from note receivable-related party ... 1,343 888 ------------ ------------ Net cash provided by investing activities ........................ 16,485 1,208,401 ------------ ------------ Cash flows from financing activities Borrowing on notes, mortgages and assessments payable ......................... 763,853 339,871 Repayments of bonds, mortgages, notes and assessments payable ............... (837,235) (1,463,694) Payment of dividends .......................... (602,479) -- ------------ ------------ Net cash used in financing activities ....... (675,861) (1,123,823) ------------ ------------ NET INCREASE IN CASH AND CASH EQUIVALENTS ......................... 4,108,632 86,390 Cash and cash equivalents at beginning of period .......................... 3,236,467 764,001 ------------ ------------ Cash and cash equivalents at end of period ................................ $ 7,345,099 $ 850,391 ============ ============ Reconciliation of net earnings to net cash provided by operating activities Net earnings ................................... $ 2,966,175 $ 59,192 Adjustments to reconcile net earnings to net cash provided by operating activities Depreciation .............................. 85,420 84,842 Change in Rents receivable, accrued interest, property tax and other assets ........... 197 85,686 Real estate contracts ..................... 26,553 1,294 Land and improvements held for future development and income producing properties .................... (257,352) (197,924) Other assets .............................. (16,225) (48,016) Accounts and retainages payable, accrued interest and other liabilities ............................. 71,170 (13,562) Income taxes payable ...................... 1,892,070 30,300 ------------ ------------ Net cash provided by operating activities ......................... $ 4,768,008 $ 1,812 ============ ============ Noncash investing and financing activities: Dividends declared but not paid .............. $ 250,256 $ -- WESTLAND DEVELOPMENT CO., INC. NOTES TO THE FINANCIAL STATEMENTS (unaudited) September 30, 2002 1. The balance sheet at September 30, 2002, statements of cash flows and statements of operations for the three months ended September 30, 2002 and September 30, 2001 have been prepared by the Company without audit. In the opinion of management, all adjustments, including normal recurring adjustments necessary to present fairly the financial position, results of operations and cash flows, have been made. Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted. It is suggested that these financial statements be read in conjunction with the Company's audited financial statements at June 30, 2002. The results of operations for the three months ended September 30, 2002 are not necessarily indicative of operating results for the full year. 2. The computation of earnings 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, 2002 and September 30, 2001 were 805,393 and 800,941, 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 September 30, 2002: Revenues $6,106,340 $303,280 $ -- $6,409,620 Costs and expenses 571,075 82,841 630,961 1,284,877 ---------- -------- ----------- ---------- Income (loss) from operations 5,535,265 220,439 (630,961) 5,124,743 Interest income -- -- (8,350) (8,350) Other income -- -- (14,438) (14,438) Interest expense 94 177,563 4,699 182,356 ---------- -------- ----------- ---------- Earnings (loss) before income taxes $5,535,171 $ 42,876 $ (612,872) $4,965,175 ========== ======== =========== ========== Three months ended September 30, 2001: Revenues $ 932,390 $299,725 $ -- $1,232,115 Costs and expenses 488,327 67,504 416,384 972,215 ---------- -------- ----------- ---------- Income (loss) from operations 444,063 232,221 (416,384) 259,900 Interest income -- -- (21,744) (21,744) Other income -- -- (8,957) (8,957) Interest expense 7,745 183,591 573 191,909 ---------- -------- ----------- ---------- Earnings (loss) before income taxes $ 436,318 $ 48,630 $ (386,256) $ 98,692 ========== ======== =========== ========== ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS This document contains statements that are not historical but are forward-looking statments within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. These include statements regarding the expectations, beliefs, intentions or strategies for the future. The Company intends that all forward-looking statements be subject to the safe-harbor provisions of the Private Securities Litigation Reform Act 1995. These forward-looking statements reflect the Company's views as of the date they are made with respect to future events and financial performance but are subject to many uncertainties and risks which could cause the actual results of the Company to differ materially from any future results expressed or implied by such forward-looking statements. Examples of such uncertainties and risks include, but are not limited to: fluctuations in occupancy levels and labor costs; the availability and cost of financing to redeem common shares and to expand the Company's business; and public resistance to privatization. additional risk factors include those discussed in reports filed by the Company from time to time on forms 10-KSB, 10-QSB and 8-K. The Company does not undertake any obligation to update any forward-looking statements. Management's Discussion and Analysis should be read in conjunction with our Financial Statements and the notes to our Financial Statements. Financial condition: During the three months ended September 30, 2002, the Company's cash and cash equivalents increased by $4,108,632. During this period, operations provided $4,768,008 and investing activities provided $16,485. Also, the Company repaid debt of $73,382, net and paid dividends of $602,479. Except for short-term borrowing, the Company's primary source of cash is the sale of land. Although rental operations generated $303,280 in the first fiscal quarter, most of those receipts normally are used to service the mortgage debt for those properties. Other than trade payables and mortgages, the other significant debt is $188,640 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. Results of operations: During the first quarter of the current fiscal year, the Company had revenues of $6,409,620 compared to $1,232,115 during the same period in the prior fiscal year. Land revenues increased significantly primarily due to the sale of a single large parcel for approximately $5,279,000. Improved lot sales decreased by approximately $100,000 to $810,200. Operating expenses during the three months ended September 30, 2002, were $1,284,877 compared to $972,215 during the comparable period in 2001. The increase was due principally to increases in cost of land revenues by approximately $83,000 and $215,000 in general and administrative expenses. As the Company sells the remaining lots in its Tierra Oeste and Painted Sky units this year, it will begin sales of lots in the Crossings subdivisions, which should continue into the next fiscal year. For the past ten years, governmental entities have been buying land from Westland 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 $7,362,021. Of the approximately $21,899,000 received, the Company has remaining approximately $2,681,000 of replacemant lands and property to acquire by June 30, 2003, $500,000 by June 30, 2004 and $5,279,000 by June 30, 2005. In the event the Company does not replace the property sold pursuant to condemnation, it may need to utilize a substantial portion of its liquid investments for the payment of these taxes. Critical Accounting Policies: Income recognition and cost allocation: In recent years, the Company has had very few installment sales, so income is recognized when a property is sold with financing provided by the buyer. Some of the sales are basically raw land which has little more than its original cost of $2.60 per acre. Other parcels benefit from certain infrastructure improvements such as roads financed by Special Assessment District obligations, which are generally allocated to the subject property based on site location and acreage. Improved lots bear costs such as roads, sewer, sidewalk, etc. as they are incurred by subdivision. "Soft" costs such as engineering fees and improvements which benefit an entire project are generally allocated to units based on number of lots or acreage. This policy has been consistently applied over most of the last decade. Contingencies: Management continues to be diligent in recognizing possible liabilities as they become known. In June, the Company accrued $346,000 against possible loss due to a claim made by Bernalillo County for costs allegedly incurred in researching creation of a new municipality for Westland's sector development plan. Management believes this is sufficient to liquidate alleged damages, if any. Asset Impairment: Management periodically assesses the possibility that the carrying value of its assets is greater than its realizable value. For the most part, this question is obviated because the carrying cost of land is very low compared to any reasonable sale price. When property is improved for sale as individual lots, a commitment exists by contract obligating the purchaser prior to undertaking the development. However, the Company owns several properties held for the production of income, designed for a specific use, which could become impaired if the lessee vacated or rescinded its lease under bankruptcy. Management periodically determines by inspection that the properties are suitably maintained and insured and that the lessees are Conducting proper operations. ITEM 3. CONTROLS AND PROCEDURES The Company's principal executive and financial officer has evaluated the effectiveness of the Company's disclosure controls and procedures (as defined in Exchange Act Rules 13a-14(c) and 15d-14(c)) as of a date within 90 days of the filing date (the "Evaluation Date") of this quarterly report, and has concluded that as of the Evaluation Date, the Company's disclosure controls were adequate, effective and ensure that material information relating to the Company would be made known to her timely by others within the entity. There were no significant changes in the Company's internal controls or in other factors that could significantly affect the Company's disclosure controls and procedures subsequent to the Evsaluation Date, nor were there any significant deficiencies or material weaknesses in such disclosure controls and procedures requiring corrective actions. As a result, no corrective actions were taken. 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) Exhibit 99, Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, attached. (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 12, 2002 By: Barbara Page --------------------------- Barbara Page, President, Chief Executive Officer and Chief Accounting Officer CERTIFICATION I, Barbara Page, the principal executive and financial officer, of Westland Development Co., Inc., certify that: 1. I have reviewed this quarterly report on Form 10-QSB of Westland Development Co., Inc., SEC file No 0-7775; 2. Based on my knowledge, this annual report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this annual report; 3. Based on my knowledge, the financial statements, and other financial information included in this annual report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this annual report; 4. I am responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and have: a) designed such disclosure controls and procedures to ensure that material information relating to the registrant is made known to us by others within this entity, particularly during the period in which this quarterly report is being prepared. b) evaluated the effectiveness of the registrant's disclosure controls and procedures as of a date within 90 days prior to the filing date of this quarterly report (the "Evaluation Date"); and c) preseented in this quarterly report my conclusions about the effectiveness of the disclosure controls and procedures based on my evaluation as of the Evaluation Date; 5. I have disclosed, based on my most recent evaluation, to the registrant's auditors and board of directors: a) all significant defiencies in the design or operation of internal controls which could adversely affect the registrant's ability to record, process, summarize and rport financial data and have identidied for the registrant's auditors any material weaknesses in internal controls; and b) any fraud, whetheror not material, that involves management or other employees who have a sighificant role in the registrant's internal controls; and 6. I have indicated in this quarterly report whether or not there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of my most recent evaluation, including any corrective actions with regard to significant defiencies and material weaknesses. Date: November 12, 2002 Barbara Page ---------------------------------- Barbara Page, principal executive and financial officer [Signature] [Title] There are no other certifying officers. EX-99 3 ex991q03.txt Exhibit 99 CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002 Pursuant to 18 U.S.C. ss.1350 (as adopted pursuant to ss.906 of the Sarbanes-Oxley Act of 2002), I, the undersigned Chief Executive and Financial Officer of Westland Development Co., Inc. (the "Company"), hereby certify that the Quarterly Report on Form 10-QSB of the Company for the quarterly period ended September 30, 2002 (the "Report") fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934 and that information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. Date: November 12, 2002 Barbara Page ------------------------------------- Chief Executive and Financial Officer -----END PRIVACY-ENHANCED MESSAGE-----