UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-KSB
(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, 1997
[ ] 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 registrant 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)
Registrant'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 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 [__]
Check if there is no 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 registrant'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: $4,280,351
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: $8,154,586
The number of shares outstanding of each of the Registrant's classes of common
stock, as of August 20, 1997, was:
No Par Value Common: 716,608 shares.
Class A $1.00 Par Value: none.
Class B $1.00 Par Value: 86,100 shares.
PART I
ITEM 1: DESCRIPTION OF BUSINESS
General Development of Business.
Westland Development Co., Inc., a New Mexico for-profit corporation
("Registrant"), 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 the
Registrant'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, New Mexico, may own shares of the Registrant's Common Stock.
The Registrant's executive offices are located in its own building at 401 Coors
Boulevard, N.W., Albuquerque, New Mexico, 87121, telephone (505) 831-9600, on
land which was originally part of the Atrisco Land Grant.
The Registrant is the owner of approximately 59,000 acres of land located on the
west side of Albuquerque, New Mexico. Most of its property is held for long term
investment and is not currently marketed nor planned for development in the
foreseeable future, and is devoted to the grazing of cattle. The Registrant
derives revenues through commercial and land leases, partnerships formed for
various development projects, lot development and sales and land sales.
As of August 15, 1997, approximately 245 acres of the Registrant's land located
on the west side of the City of Albuquerque, New Mexico which have been
segregated for development remain to be sold.
The Registrant believes that over the next few years it will enter into joint
ventures, land developments, ground leases, limited partnerships and, if
warranted by available capital, may begin the construction of industrial and
commercial structures for lease or sale. The Registrant's long term business
philosophy is to enhance the value of the Registrant'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 the Registrant's
stock and to provide dividends for its shareholders, when consistent with the
Registrant's need for a sufficient cash flow to meet current operating expenses.
Narrative Description of Business.
The Registrant previously developed six master plans for the development of
certain of its properties. Each such plan encompassed approximately 600 to 1,000
acres and are identified as Atrisco Urban Center and El Rancho Atrisco, Phases I
through V. Portions of Phases I and IV have been developed and sold and
development of Phase V master plan was abandoned due the introduction of the
Petroglyph National Monument. A revised master plan for the area between Unser
and Paseo del Volcan was initiated in 1994 and approved by Bernalillo County in
July of 1997.
On July 1, 1997, the Bernalillo County Commission approved the Registrant's
Master Plan for the development of approximately 6,400 acres of its land. The
County previously had approved a Memorandum of Understanding with the Registrant
relating to the development of a County owned and operated water utility and
sewer system to serve the lands within the Master Plan area. The City of
Albuquerque has attempted to exercise extra-territorial planning jurisdiction
over the Master Plan, but the Registrant believes, and has so informed the City,
that because the City failed to act within the statutorily permitted time after
the date of the filing of the Registrant's Master Plan with the City for its
review, the Master Plan was approved. Additional discussion of the Master Plan
is included hereinafter at those locations where such discussion is deemed
appropriate.
Oil and Gas, Grazing and Other Leases.
Approximately 58,000 acres of the Registrant's land is not planned for
development and is leased to unaffiliated people for grazing cattle. The leases
provided rental income of approximately $167,000 in fiscal 1997. During the year
the Registrant agreed to certain rent abatements for its leased grazing lands
because of a prolonged drought that severely limited the productive capacity of
the land.
The Registrant has leased approximately 8,500 acres under an oil and gas lease
upon which it receives annual rental of approximately $2.50 per acre. The lessee
has notified the Registrant that it intends to drill an exploratory well in
September, 1997.
The Registrant also owns and leases certain commercial buildings which produced
rental revenue of $621,000 in 1997. (See "Reinvestment Properties").
Development Properties.
As of June 30, 1997, the Registrant continued to own approximately 250 acres of
a total of 1,600 acres which it developed and sold over the last 16 years. A
summary of this acreage is as follows:
a) Atrisco Urban Center
1). Atrisco Urban Center Development and Sales. The Registrant owns
approximately 40 acres within this center and continues to work with end users
to develop additional projects. A senior citizen's center, five manufacturing
facilities, a warehouse facility, an office building, a police substation, a
retirement community, a 400-unit apartment complex, gas station and car wash are
among the projects currently located in the Center. See items number 3 and 4
below for a discussion of last years developed projects.
2) Atrisco Urban Center Rental Properties. The Registrant owns a two-story
office building in the Atrisco Urban Center. The entire first floor
(approximately 5,057 square feet of rentable space) is leased to Nations Bank
(formerly Sunwest Bank of Albuquerque, N.A.) for use as a branch bank for a term
ending in October 1999. The Registrant occupies the second floor of this
building.
3) Cedar Ridge Estates Subdivision. The Registrant owns a 26 acre tract located
within the Atrisco Urban Center zoned for a single family residential
subdivision called Cedar Ridge Estates Phases II and III. The Registrant has
completed development of and has sold the first phase consisting of
approximately 11 acres and 57 lots. During fiscal 1995 a Builder executed an
option agreement for the purchase of those developed lots upon which the builder
is constructing homes priced from $100,000 to $120,000. The Registrant has
platted and completed construction of Phase II, but has not yet sold the lots.
4) Assisted Living Development Corporation. The Registrant is a Limited Partner
in a partnership which has built and owns a housing facility for persons
in need of some care but who are otherwise ambulatory. The 40 unit complex was
opened in March of 1997, and occupancy advertised through Albuquerque newspapers
since that time. The Registrant was recently made aware that the Partnership was
in default of the payment terms of its construction money mortgage, that a
foreclosure action has been commenced by the construction lender and that it
might not be able to secure permanent financing. The Registrant's investment in
the Limited Partnership consists of approximately $160,000 plus land valued at
$260,000. The total value of the investment was expensed in prior years.
Management has not determined whether it would be in the Registrant's best
interest to bid to acquire the facility if it is sold at foreclosure. Such a
purchase would be for approximately $1,500,000 and Management is not sure that
the project would be sufficiently profitable to warrant the purchase.
b. Master Plan.
1) The Registrant prepared a master development plan covering approximately
6,400 acres which it planned to have annexed to the City of Albuquerque. The
master plan is located north of Interstate 40 and south of the area designated
for the Petroglyph National Monument. The Registrant initially filed this plan
with the City of Albuquerque, but due to the City's inability or unwillingness
to guarantee the availability of water and sewer service to the property in a
timely manner, the plan was withdrawn from the City and submitted to Bernalillo
County. The County has entered into a memorandum of understanding with the
Registrant that it will furnish the required services. A test water well has
recently been completed and the utilities are now in engineering analysis and
design stages.
c. ERA Phase II; Volcano Business Park.
Volcano Business Park consists of approximately 22 acres zoned for industrial
park uses of which 11 acres have been platted and developed into 9 lots. The
Registrant has entered into a partnership arrangement through which it
supervised construction, management and owns 50% of an 172 unit storage facility
on approximately 1.7 acres of this property. The facility was completed in
December of 1995 and as of August 1, 1997 was approximately 60% occupied.
d. ERA Phase III Commercial, Industrial and Residential Developments.
In the mid 1980's, the Registrant completed the planning of El Rancho Atrisco
Phase III Sector Development Plan. Those plans included construction of a total
of 200,000 square feet of office space, approximately 100,000 square feet of
retail space, 130 acres for industrial usage (Ladera Industrial Park), 41 acres
of high density housing and 113 acres of single family housing. During fiscal
1995, the Registrant sold a 6.3 acre tract which has been developed as an
affordable apartment complex. During fiscal 1996 the Registrant sold a 0.86 acre
parcel of land to Diamond Shamrock for the development of a convenience
store-gas station at the corner of Unser and Ladera Drive. During fiscal 1996,
the Registrant also sold approximately 16 acre tract to a local developer for
construction of additional family homes. The Registrant has also joined a
limited liability corporation for the planning, approval and development of an
9.6 acre tract, which will also be developed for affordable multi-family
apartment units. During fiscal 1997, after securing tax credit bond financing
and site development plan approval, the entire project was sold to a third party
developer who plans to do construct the apartment units.
e. Other Properties.
1). Travel Plaza In March 1990, the Registrant submitted a zone change request
to Bernalillo County for 100 acres for a travel center and related commercial
uses. In June 1990, the County Commission approved the request for zone change.
Anticipated users may include restaurants, motel-hotel facilities, fueling
stations, and other travel/tourist related facilities. During 1995, the
Registrant sold two acres, on which there has now been a truck sales facility
developed.
2) Parkway Subdivision. In 1994, the Company agreed to develop approximately 15
acres of land (57 lots) for Sivage Thomas known as Parkway Unit 7 development.
Development of the residential lots is complete and all lots were sold by
November of 1995. The Registrant also designed and nearly completed construction
of Parkway Unit 8, and in June, 1997, the total Unit was sold to Sivage Thomas
Home, Inc. in July of 1997 the Registrant sold an additional 18 acres to Sivage
Thomas Homes, Inc. for the development of Parkway Unit 9 Subdivision.
In 1995 the Registrant sold approximately 11 acres to Albuquerque Public Schools
for development of an elementary school adjacent to Parkway Unit 8. In 1996 the
voters approved school bonds which included funding of the proposed school which
is currently under design with construction scheduled to be completed for the
fall term of 1998.
3) Recreation Complex During fiscal 1994, the Registrant entered into a
lease/option arrangement with PG Corporation, a New Mexico corporation, for 100
acres of Registrant's land located north of I-40 on Paseo del Volcan. A portion
of the property was subsequently developed as a recreation and softball complex.
The Registrant exchanged $100,000 in rental and option payments for a 6% equity
position in the Partnership which owns and operates the recreation venture. PG
Corporation is in default on its payments to the Registrant and the Registrant
will take possession of the property. Bernalillo County considered purchasing
the complex, including a portion of the Registrant's properties, but did not do
so. PG Corporation has sued the County for its failure to purchase the property.
4) Tierra Oeste The Registrant has committed approximately 28 acres of land
north of Ladera Dr., west of Unser Blvd, to a limited liability corporation
formed jointly by the Registrant and a local development company. The Registrant
purchased the development company's interest in the limited liability
corporation and is now its sole shareholder. In July, 1995, this limited
liability corporation executed a sale agreement with a home builder for the
purchase of developed lots and the Registrant believed that construction would
be started on the property during the fall of 1996. Subsequently that builder
failed to compete the purchase contract and the contract was terminated in
January of 1996. Subsequently a second developer approached the Registrant
requesting the opportunity to perform the obligations of the local development
company to the limited liability corporation. The Registrant agreed that the
second developer could assume the first development company's interest in the
corporation if it satisfied the Registrant that it had the financial capacity to
complete the project. The second developer never acquired the first developer's
interest in the corporation and never furnished financial statements to the
Registrant and the Registrant canceled its agreement with the second developer.
The Registrant has been sued by the second developer for specific performance of
the contract alleging that the contract was prematurely terminated. The
Registrant has denied the allegations of the complaint and has counter sued for
damages caused by the delay in its being able to deal in this property. The
Registrant considers this litigation to be ordinary, routine and incidental to
its business and not material.
5) Education and Community Projects Approximately 50 acres of land have been
donated to the Technical-Vocational Institute for the construction of a
southwest mesa campus. The Company also donated approximately 8 acres to Youth
Development, Inc. The properties are located in the Gun Club Rd. area west of
Coors Blvd., but the Registrant and TVI have agreed to trade the 50 acres which
had been donated to it for a like parcel of land along the proposed extension of
Rio Bravo. In addition, the Registrant has agreed by letter of intent to donate
12 acres to Albuquerque Public Schools and up to 10 acres to the Archdiocese of
Santa Fe, in the same area.
f. Sales to National Park Service.
On June 27, 1990, the United States Congress established an approximately 7,000
acre national monument (the Petroglyph National Monument) to preserve and
protect the volcanic escarpment on Albuquerque's West Mesa area. The Monument's
proposed boundaries included approximately 1,964 acres of the Registrant's land.
The Company sold 444 acres in fiscal year 1992, 713 acres in fiscal 1993, 118
acres in fiscal 1994, 24 acres in fiscal 1995, and none in fiscal 1996 to the
National Park Service. The Park Service purchased 218 acres from the Registrant
during fiscal 1997. Approximately 447 acres have yet to be acquired by the Park
Service and the Registrant has been given no assurance when the final purchases
of the property may occur. The Registrant's Board of Directors has agreed that,
subject to negotiation of acceptable terms of sale, the Registrant will sell to
the National Park Service the Registrant's remaining lands included in the
Monument.
g. Reinvestment Properties.
As part of the Registrant's plans to defer the tax burden arising from the sale
of its lands to the National Park Service for inclusion in the Petroglyph
National Monument, during the last three fiscal years it reinvested its funds in
the properties described below. As a result of these purchases, the Registrant
believes that it has deferred taxes on approximately $7,000,000 in sales through
fiscal 1997.
During the last three fiscal years, as part of its tax deferral program related
to proceeds from the sale of land to the National Park Service, the Registrant
purchased land upon which commercial buildings were constructed and leased to
others. Those properties are:
a) A commercial building at Coors Boulevard and Sequoia Road in Albuquerque at a
cost of $2,630,000, $1,869,000 of which is subject to a Mortgage upon which the
Registrant must pay monthly payments of $17,629.78. This building has been
leased to Walgreen Co. for 20 years at a fixed rent of $19,173.37 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
$1,059,000, $751,000 of which is subject to a Mortgage upon which the Registrant
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 $8,976 per month.
c) A commercial building located at Coors Boulevard and Central Avenue at a cost
of $3,592,806, which is subject to a mortgage upon which the Registrant must
make monthly payments of $24,682. 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. Walgreen, Co. may continue the term of the lease for
an additional 40 years.
All of the above properties were purchased by the Registrant in part to defer
taxes resulting from the Sale of its lands to the National Park Service for
inclusion in the Petroglyph National Monument.
Current Real Estate Market Conditions.
The market conditions for the development and sale of properties in Albuquerque
are positive at the present time. After a period of high occupancies, the
multi-family market enjoyed a building boom, which has resulted in lower
occupancies and rent, on average. Although there has been a slump in the market
during the first six months of 1997, Management believes that for the
foreseeable future commercial and industrial construction will further stabilize
and the demand for single family residential construction will slow, but
continue to be strong.
Competition.
The Registrant'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. The Registrant
believes that a sale made by another party resulting in the introduction of Coca
Cola in the Business Park and development of the business center within the
Business Park will add to the quality of the Park's tenants and will attract
other businesses to the Parks.
Residential subdivisions on the Registrant'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 the Registrant's land are not fully sold. These include Rio Rancho
(about six miles north of the Registrant's land), Paradise Hills (about five
miles north of the Registrant's land), Volcano Cliffs, Taylor Ranch and Vantana
Ranch (each about two to three miles north of the Registrant's land).
The mandate by the State Legislature for implementation of Impact Fees may
result in the Registrant'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 beginning on January 1, 1996, but the Registrant has not been able to
determine whether these fees will adversely impact its business.
Employees.
As of June 30, 1997, the Registrant had nine full-time and eight part-time
employees. The Registrant's president, who is also a director, is a full time
employee. The Registrant also had contractual relationships with six
individuals, including two of the Registrant's officers and directors, who
provided various services to the Company.
Government Regulations.
The Registrant's ability to undertake an active program of development of its
land and management of its rental properties, (whether such development is
performed by the Registrant itself or by sale of the Registrant's land to others
for development), is dependent on the Registrant's ability to comply with laws
and regulations of the State of New Mexico and 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, has had no material effect upon the capital expenditures,
earnings and competitive position of the Registrant, no assurance can be given
that this situation will continue. Requests relating to flood drainage, traffic
flow and similar matters from the City of Albuquerque have occasionally delayed
the receipt of necessary building permits and required modification of
development proposals. The opening of the Double Eagle II Municipal Airport by
the City of Albuquerque to the north of the Registrant's Land on Paseo del
Volcan may have an impact on the use of and planning for the Registrant's land
in the vicinity of the airport as will the creation of the Petroglyph National
Monument, although Management believes both facilities will favorably impact the
Company's lands.
At the Registrant's request, the City of Albuquerque has 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.
Approximately 3,000 acres of the Registrant's land is designated "Developing
Urban" by the current Albuquerque/Bernalillo County Comprehensive Plan.
According to the Plan, "Developing Urban" land is land without accepted and
approved platting, but which has adequate resource capabilities for
urbanization. Certain land use regulations contained in the Comprehensive Plan
apply to said land which may inhibit its development to its highest and best
use.
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 the
Registrant's water rights has not been determined. However, lack of ownership of
water rights by the Registrant would not be an inhibiting factor to the
developing of the Registrant's land if adequate water were to be made available
through the City of Albuquerque and/or Bernalillo County and/or other water
sources or by purchase by the Registrant or a developer that might purchase and
develop land. For example, both Tierra West Mobile Home Park sold by the
Registrant near 9-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 of portions of the Registrant's land 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 Registrant has not been able to get assurances from
the City that services of any of the Registrant's lands by the City will occur
at any reasonable time in the future, and the Registrant has pursued alternative
methods of providing water, sewer and other services to its lands. During the
last fiscal year, the Company worked closely with Bernalillo County to secure
the County's assistance in providing such services to Albuquerque's west side
and to lands owned by the Registrant. The County recently completed a
feasibility study looking toward providing those services. Subsequently the
Registrant and the County entered into a memorandum of understanding which
outlines the County's providing services.
With the exception of the Atrisco Urban Center and the residential subdivisions,
most of the Registrant's land lies outside the municipal limits of the City of
Albuquerque and are not furnished with City of Albuquerque water or other City
of Albuquerque services. The Registrant experienced little difficulty in having
the Atrisco Urban Center and the residential subdivisions within areas where
water service is currently available annexed to the City of Albuquerque and
furnished with services, but the same cannot be assumed for other areas of
Registrant's land.
Other Factors Affecting Development of Registrant's Land.
Various activist groups, as well as neighborhood organizations occasionally have
in the past taken actions which have, to some extent, delayed the Registrant's
plans for the development of some of its lands. During the 1994 fiscal year two
activist groups filed appeals with the City of Albuquerque related to the
Registrant's Master Plan. However, the Master Plan was upheld with only minor
modifications. During 1997, an activist group protested the County's proceeding
with its plans to establish utility services for the Registrant's lands, but the
County Commissioners approved going forward with the project. Adjacent
neighborhood associations supported the Plan and the Registrant's efforts to
implement the Master Plan.
ITEM 2: DESCRIPTION OF PROPERTIES
The major physical assets owned by the Registrant are its land which is owned in
fee simple. The land comprises approximately 59,000 acres of undeveloped land
held for long-term investment and approximately 250 acres of land remaining from
those which the Registrant has developed to various stages of completion. The
Registrant also owns the Atrisco Urban Center office building, comprising
approximately 11,097 square feet, which the Registrant uses in its rental
operations. This building has mortgages against it aggregating $259,419 as of
June 30, 1997. Approximately 5.500 square footage of the building is leased to
Nations Bank (formerly Sunwest Bank in Albuquerque) at a monthly rental of
$3,160. The Registrant also owns three commercial buildings that are leased to
others. See "Item 1. Business - Reinvestment Properties."
The population of the Albuquerque metropolitan area has grown significantly over
the last 40 years. Physical expansion of the City of Albuquerque has taken place
on the north, south and east sides, but the bulk of the most recent growth has
been west of the Rio Grande River where the Registrant's land is located. In
fact, much of the real property directly west of the City of Albuquerque is the
Registrant's land, which was previously considered unmarketable and was,
therefore, generally viewed as being unavailable for the expansion of the City
of Albuquerque. The Registrant anticipates that growth on the West Side will
continue into the foreseeable future.
The Registrant's land is bisected by Interstate Highway I-40, the main east-west
thoroughfare through Albuquerque. Access to the Registrant's land from
Interstate 40 is provided by the Coors Boulevard interchange near the eastern
edge of the Registrant'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 the Registrant's
land to the Double Eagle II Airport. In 1994, the Registrant dedicated
approximately 180 acres to Bernalillo County for the linking of Paseo del Volcan
and Rio Bravo. The County has extended Paseo del Volcan south of the I-40
interchange to the point at which it will intersect with the Rio Bravo extension
to form an inner loop for the City's southwest quadrant.
The Registrant 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 New Mexico State Highway 44, traversing the western portion of
the Registrant's land within the Rio Puerco valley. In 1995 the Registrant
donated 169 acres for development of the Northwest Loop. Completion of the
Northwest Loop is not expected for 15 to 20 years. Most of the Registrant's land
is remote and not readily accessible, not serviced by utilities, and Registrant
believes that the bulk of its land will not be available for development in the
foreseeable future.
There is no limitation on the kind of securities into which the Company may
exchange real estate. The Company has considered various structures through
which it might enhance the value of its properties and would exchange property
for partnership units or other securities issued by others for the purpose of
developing the Company's land.
A large portion of the undeveloped land is leased for agricultural uses (see
"Item 1. Business" ). The bulk of the Registrant's undeveloped land is held for
long term investment.
In the opinion of the Company's Management, its property is adequately covered
by insurance.
ITEM 3: LEGAL PROCEEDINGS
Other than ordinary routine litigation incidental to the Company's business,
neither the Company 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, 1997.
PART II
ITEM 5: MARKET FOR REGISTRANT'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 last two fiscal years and during the ninety (90) days
preceding this date of this report shares has been $11.00 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 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 August 20, 1997:
Number of
Title of Class Record Holders
No Par Value Common 5472
$1.00 Par Value Common Class A 0
$1.00 Par Value Common Class B 20
Dividends: During each of the last two (2) fiscal years ended June 30, 1996 and
June 30, 1997, Westland declared and paid cash dividends to shareholders,
aggregating a total during those two years of $955,749. Subsequent to June 30,
1997, the Company has paid an additional cash dividend of $0.75 per share for an
aggregate dividend payment to the shareholders of $602,031.
ITEM 6: MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS.
In the past fiscal year, land sales decreased from the prior year because of a
slump in the Albuquerque real estate market resulting in the Company
experiencing fewer sales of improved residential lots to builders. Also, early
in the fiscal year the Company acquired an additional property leased by a large
national retailer.
During the last fiscal year there were $2,000,000 of sales of lands to the
National Park Service ("NPS") as part of its acquisition of the lands included
in the Petroglyph National Monument. These sales to NPS amounted to
approximately 55% of the Company's land revenue for 1997, while such sale during
fiscal 1995 amounted to $329,000, or 11% of total revenue and during fiscal 1996
there were no sales and therefore no contribution to revenue by such sales..
During the spring of 1997, the real estate market in Albuquerque showed signs of
recovery from the slump in sale. With the recovery of sales, Management
continues to believe that the Company is no longer as dependent on large bulk
sales of its Land and that its income will continue to strengthen with the sale
of small improved parcels and lots, even though the costs associated with such
sales will always be a larger percentage of revenue than the expenses associated
with large bulk sales. Albuquerque continues to be one of the fastest growing
cities in the Southwest and, because of certain geographical and other
limitations on its growth, Westland's Lands lie directly in the path of future
predictable growth patterns. Sales of improved residential lots in 1997 were
approximately $273,000, compared to sales of approximately $1,147,000 in fiscal
1996.
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,
which now appear to have recovered from the depressed state of several years
ago.
Westland anticipates making capital commitments for land development projects
over the next few years if the economy and opportunities continue to improve to
the extent that such expenditures would be warranted. Capital commitments may
include assessments for roads and water and sewer lines on its land.
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
the fiscal year ended June 30, 1997, 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,
1997 carrying value of the Land is substantially less than the current market
value of the land. 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.
The company is continuing to study the feasibility of establishing various
agricultural developments for portions of its Land. Such development is
contingent on the availability of adequate water. If water rights cannot be
established for the Company's lands, such rights would necessarily have to be
purchased and transferred to wells on the Company's land capable of producing
sufficient water to satisfy any agricultural undertaking on the property. The
costs of such water rights would materially effect the Company's decision to
enter into any agricultural endeavor requiring a high water use..
Westland has moved another major step toward establishment of its Sector Plan in
the area north of Interstate 40 and south of the area designated for the
Petroglyph National Monument between Unser and Paseo del Volcan for the
development of that portion of its properties. Although the Sector Plan was
initially filed with the City of Albuquerque, the City could not furnish any
assurance that water and sewer services would be made available in a reasonable
period of time. The City's position caused the Company to withdraw the plan from
the City and to work with Bernalillo County to determine if those services can
be furnished by the County. During the year the County approved having a
feasibility study completed looking toward the County establishing its own
utilities for the lands covered by the Sector Plan. The Sector plan excludes
land located in the Monument and will have no adverse impact on the Monument..
Financial Condition:
During fiscal 1997, total assets increased to $16,840,432 from $15,488,167,
while liabilities increased from $10,290,537 to $11,888,352. This was the result
principally of the Management's efforts to replace lands sold through
investments to defer taxes. During fiscal 1997 the Company invested $938,403 in
income producing and other properties with the accompanying net borrowing on
notes and mortgages of $618,021.Despite this net investment along with the
decrease in deposits of cash for the retirement of bonds outstanding and payment
of dividends of $480,125 cash and equivalents increased by $147,392, as
operations provided $510,884.
In fiscal 1997, the Company maintained a line of credit with a local bank in the
amount of $2,000,000, collateralized by certain real property. The purpose of
the line is to provide funds necessary for its continued expansion. At June 30,
1997, the line had no outstanding balance.
During fiscal 1998, the Company will be obligated to pay income tax of
approximately $200,000 should replacement properties totaling $497,000 for lands
sold to the National Park not be acquired.
Management believes that the uncommitted balance of cash, cash equivalents,
investments and its borrowing capacity are sufficient to meet all of the
Company's obligations during 1998 without considering additional revenues that
may be generated during that period.
Results of Operations:
In fiscal 1997, land revenues decreased by $720,747 from $4,334,367 in 1996 to
$3,613,620. The related cost of land revenues decreased to $385,553, or
$1,323,440 from $1,708,993 in fiscal 1996. Rental revenue increased from
$394,419 to $621,171 due to the acquisition of a single tenant property and the
related costs increased from $119,862 to $170,589. These increases are expected
to continue as the Company expands its activities in these areas.
ITEM 7: FINANCIAL STATEMENTS
FINANCIAL STATEMENTS AND
REPORT OF INDEPENDENT
CERTIFIED PUBLIC ACCOUNTANTS
WESTLAND DEVELOPMENT CO., INC.
June 30, 1997 and 1996
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, 1997, and the related statements of earnings, stockholders'
equity, and cash flows for each of the two years in the period ended June 30,
1997. 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 generally accepted auditing
standards. 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, 1997, and the results of its operations and its cash flows for
each of the two years in the period ended June 30, 1997 in conformity with
generally accepted accounting principles.
GRANT THORNTON LLP
Oklahoma City, Oklahoma
July 25, 1997
Westland Development Co., Inc.
BALANCE SHEET
June 30, 1997
ASSETS
Cash and cash equivalents ........................ $ 2,331,150
Receivables
Real estate contracts (note B) ................. $ 69,033
Less related deferred profit ................. 51,007
-----------
18,026
Income taxes recoverable ..................... 155,001
Note receivable - related party (note M) ..... 68,003
Other receivables ............................ 149,243 390,273
-----------
Land and improvements held for future
development (notes C and E) .................... 6,032,630
Income-producing properties,
net (notes D and E) ............................ 7,140,589
Property and equipment, net of
accumulated depreciation of
$401,693 (note E) .............................. 374,858
Investments in partnerships and joint ventures ... 357,955
Other assets ..................................... 212,977
-----------
$16,840,432
===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Accounts payable, accrued expenses, and other
liabilities .................................... $ 187,837
Accrued interest payable ......................... 36,596
Dividend payable ................................. 602,031
Deferred income taxes (note F) ................... 4,010,000
Notes, mortgages, and assessments payable
(note E) ....................................... 7,051,888
-----------
Total liabilities .................. 11,888,352
Commitments and contingencies
(notes E, K, and L) ............................ --
Stockholders' equity (note G)
Common stock - no par value; authorized,
736,668 shares; issued and outstanding,
716,608 shares .............................. $ 8,500
Class A common stock - $1 par value;
authorized, 736,668 shares;
issued, none ................................ --
Class B common stock - $1 par value;
authorized, 491,112 shares; issued and
outstanding, 86,100 shares .................. 86,100
Additional paid-in capital .................... 581,527
Retained earnings ........................ 4,275,953 4,952,080
----------- -----------
$16,840,432
===========
The accompanying notes are an integral part of this statement
Westland Development Co., Inc.
STATEMENTS OF EARNINGS
Year ended June 30,
1997 1996
Revenues
Land ........................................... $ 3,613,620 $ 4,334,367
Deferred profit recognized on
installment sales ............................ 45,560 37,615
Rentals ........................................ 621,171 394,419
----------- -----------
4,280,351 4,766,401
Costs and expenses
Cost of land revenues .......................... 385,553 1,708,993
Cost of rentals ................................ 170,589 119,862
Other general, administrative, and operating ... 1,775,739 1,813,152
Legal .......................................... 11,384 81,980
----------- -----------
2,343,265 3,723,987
----------- -----------
Operating income ................... 1,937,086 1,042,414
Other (income) expense
Interest income ................................ (71,415) (101,974)
Gain on sale of property and equipment ......... (1,752) (200)
Other .......................................... 36,774 (156,889)
Interest expense ............................... 572,508 365,458
----------- -----------
536,115 106,395
----------- -----------
Earnings before income taxes ....... 1,400,971 936,019
Income tax expense (note F) ...................... 605,690 372,000
----------- -----------
NET EARNINGS ....................... $ 795,281 $ 564,019
=========== ===========
Weighted average common and common equivalent
shares outstanding ............................. 802,184 792,927
=========== ===========
Earnings per common and common equivalent shares . $ .99 $ .71
=========== ===========
The accompanying notes are an integral part of these statements
Westland Development Co., Inc.
STATEMENT OF STOCKHOLDERS' EQUITY
Years ended June 30, 1997 and 1996
<TABLE>
<CAPTION>
Class A Class B
Common stock Common stock Common stock
no par value $1 par value $1 par value Additional
----------------- --------------- ----------------- paid-in Retained
Shares Amount Shares Amount Shares Amount capital earnings Total
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Balances at July 1, 1995 ........ 716,608 $ 8,500 -- $ -- 61,100 $ 61,100 $ 423,777 $ 4,474,433 $ 4,967,810
Net earnings .................... -- -- -- -- -- -- -- 564,019 564,019
Options exercised ............... -- -- -- -- 17,500 17,500 123,925 -- 141,425
Cash dividends paid
$.60 per share ................ -- -- -- -- -- -- -- (475,624) (475,624)
------- ------- ------ ------ ------ -------- --------- ----------- -----------
Balances at June 30, 1996 ....... 716,608 8,500 -- -- 78,600 78,600 547,702 4,562,828 5,197,630
Net earnings .................... -- -- -- -- -- -- -- 795,281 795,281
Options exercised ............... -- -- -- -- 7,500 7,500 33,825 -- 41,325
Cash dividends paid
$.60 per share ................ -- -- -- -- -- -- -- (480,125) (480,125)
Cash dividends declared
$.75 per share ................ -- -- -- -- -- -- -- (602,031) (602,031)
------- ------- ------ ------ ------ -------- --------- ----------- -----------
Balances at June 30, 1997 ....... 716,608 $ 8,500 -- $ -- 86,100 $ 86,100 $ 581,527 $ 4,275,953 $ 4,952,080
======= ======= ====== ====== ====== ======== ========= =========== ===========
<FN>
The accopanying notes are an integral part of this statement
</FN>
</TABLE>
<TABLE>
Westland Development Co., Inc.
STATEMENTS OF CASH FLOWS
Year ended June 30,
<CAPTION>
1997 1996
------------ ------------
<S> <C> <C>
Increase (Decrease) in Cash and Cash Equivalents
Cash flows from operating activities
Cash received from land sales and collections on real estate contracts receivable .......... $ 3,873,634 $ 4,771,163
Development and closing costs paid on land sales ........................................... (1,226,110) (1,156,070)
Cash received from rental operations ....................................................... 533,289 357,025
Cash paid for rental operations ............................................................ (87,509) (57,359)
Cash paid for property taxes ............................................................... (96,349) (208,155)
Interest received .......................................................................... 71,369 85,197
Interest paid .............................................................................. (597,443) (356,765)
Income taxes paid .......................................................................... (262,000) (184,320)
Legal and other general and administrative costs paid ...................................... (1,699,509) (2,101,085)
Other ...................................................................................... 1,512 162,089
------------ ------------
Net cash provided by operating activities ...................................... 510,884 1,311,720
Cash flows from investing activities
Capital expenditures ....................................................................... (938,403) (1,096,068)
Investments in partnerships and joint ventures ............................................. (18,680) (346,298)
Proceeds from sale of assets ............................................................... 2,173 200
Proceeds from sinking fund ................................................................. 410,024 --
Proceeds from note receivable - related party .............................................. 2,173 --
------------ ------------
Net cash used in investing activities .......................................... (542,713) (1,442,166)
Cash flows from financing activities
Borrowings on notes, mortgages, and assessments payable .................................... 2,538,056 995,000
Repayments of notes, mortgages, and assessments payable .................................... (1,920,035) (219,400)
Stock options exercised .................................................................... 41,325 96,425
Payment of dividends ....................................................................... (480,125) (475,624)
------------ ------------
Net cash provided by financing activities ...................................... 179,221 396,401
------------ ------------
NET INCREASE IN CASH AND
CASH EQUIVALENTS ............................................................. 147,392 265,955
Cash and cash equivalents at beginning of year ............................................... 2,183,758 1,917,803
------------ ------------
Cash and cash equivalents at end of year ..................................................... $ 2,331,150 $ 2,183,758
============ ============
Reconciliation of Net Earnings to Net Cash Provided by Operating Activities
Net earnings ................................................................................. $ 795,281 $ 564,019
Adjustments to reconcile net earnings to net cash provided by operating activities
Depreciation ............................................................................... 215,433 138,778
Loss on partnerships and joint ventures .................................................... 36,534 --
Gain on sale of property and equipment ..................................................... (1,752) (200)
Sale of land for real estate contract ...................................................... -- (228,664)
Collections on real estate contracts receivable ............................................ 294,627 487,779
Profit recognized on installment sales ..................................................... (45,560) (37,614)
Deferred income taxes ...................................................................... 777,000 (32,000)
Change in
Income taxes recoverable/payable ......................................................... (433,310) 190,309
Other receivables ........................................................................ (98,693) 181,138
Land and improvements held for future development ........................................ (840,557) 552,923
Other assets ............................................................................. (67,191) (68,488)
Accounts payable, accrued expenses, and other liabilities ................................ (95,993) (444,952)
Accrued interest payable ................................................................. (24,935) 8,692
------------ ------------
Net cash provided by operating activities ........................................... $ 510,884 $ 1,311,720
============ ============
<FN>
Noncash investing and financing activities:
- -------------------------------------------
At June 30, 1997, declared but unpaid dividends totaled $602,031.
In June 1996, the Company assumed a $1,623,398 construction loan as part of the
purchase of a commercial building to be completed.
During the year ended June 30, 1996, the Company realized approximately $45,000
of tax benefits from deductible compensation related to the exercise of stock
options.
The accompanying notes are an integral part of these statements
</FN>
</TABLE>
Westland Development Co., Inc.
NOTES TO FINANCIAL STATEMENTS
June 30, 1997 and 1996
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 land holdings, all 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, 1997 and 1996 consist primarily of
proceeds from vacant 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. At June 30,
1997, United States Treasury Bills of approximately $1,734,000 are included in
cash and cash equivalents.
The Company maintains its cash in bank deposit accounts which, at times, may
exceed federally insured limits and in money market 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.
4. 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.
5. 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 thirty 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 property and equipment and income-producing properties based upon
square footage.
6. Recognition of Income on Real Estate Transactions
-------------------------------------------------
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 earnings as payments
of principal are received on the related contract receivable.
7. 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.
8. Earnings Per Common Share
-------------------------
Earnings per common share are based upon the weighted average number of common
and dilutive common equivalent shares outstanding during the year. Common
equivalent shares include 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.
9. Investments in Partnerships and Joint Ventures
----------------------------------------------
Investments in partnerships and joint ventures are accounted for on the equity
method.
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 are summarized as follows at June 30, 1997:
Contracts, due in varying monthly installments,
with interest rates ranging from 10% to 12%;
collateralized by land $ 69,033
=========
Principal collections due on the real estate contracts receivable for the
years ending June 30 are as follows:
1998 $ 25,870
1999 43,163
---------
$ 69,033
=========
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, 1997:
Land $1,060,655
Improvements 4,971,975
----------
$6,032,630
==========
NOTE D - INCOME-PRODUCING PROPERTIES
Income-producing properties consist of three single-tenant retail store
buildings and one-half of the Company's office building and are summarized as
follows at June 30, 1997:
Buildings and equipment $5,082,882
Less accumulated depreciation 354,184
----------
4,728,698
Land 2,411,891
----------
$7,140,589
==========
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 twenty years
and typically provide for guaranteed minimum rent, 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, 1997 are as follows:
Year ending June 30
1998 $ 774,027
1999 760,869
2000 736,901
2001 730,596
2002 732,310
Thereafter 8,270,890
-----------
$12,005,593
===========
NOTE E - NOTES, MORTGAGES, AND ASSESSMENTS PAYABLE
Notes, mortgages, and assessments payable are summarized as follows at June
30, 1997:
Mortgage notes, due in aggregate monthly installments of
$4,650 at June 30, 1997, including interest at rates
ranging from 7.5% to 9.75%, due at various dates from
August 1998 through November 1999; collateralized by
property and equipment, including income-producing
properties and related equipment $ 259,419
Promissory note, due in monthly installments of $17,970
through May 2015, including interest at 9.37%;
collateralized by income-producing properties 1,869,117
Note payable, due in monthly installments of $6,893
through September 2015, including interest at 8.75%;
collateralized by income-producing properties 751,346
Note payable to bank; due on demand, but if no demand is
made, then on November 8, 1997, with interest at 9.75%;
collateralized primarily by real estate 594,818
Note payable to bank; due in monthly installments of
$6,701 with any unpaid amounts due May 20, 1998,
interest at 10.5%; collateralized primarily by real
estate 410,704
Mortgage note, due in monthly installments of $24,682,
including interest at 8.52%, due November 1, 2016;
collateralized by income-producing properties 2,807,692
Other notes, mortgages, and assessments payable 358,792
----------
$7,051,888
==========
The Company had general obligation bonds outstanding of $625,900 at June 30,
1996 which provided for 7% annual interest payments. The Company redeemed the
bonds prior to maturity, in May 1997, by payment of the principal amount plus
a premium of 2% of the principal balance, plus accrued interest through the
date of redemption.
The Company maintains a line of credit with a bank due in June 1998 which
provides a maximum of $2,000,000 at the bank's prime rate of interest, payable
quarterly, and is collateralized by specific tracts of land. At June 30, 1997,
no amounts were outstanding on this line of credit.
Also, at June 30, 1997, the Company had approximately $10,000 of outstanding
letters of credit to the City of Albuquerque in connection with subdivision
improvements done for the Company.
Aggregate required principal payments of the notes, mortgages, and assessments
payable as of June 30, 1997 are as follows:
Year ending June 30
1998 $1,490,367
1999 364,933
2000 151,914
2001 160,767
2002 172,391
Thereafter 4,711,516
----------
$7,051,888
==========
NOTE F - INCOME TAXES
An analysis of the deferred income tax assets and liabilities as of June 30,
1997 is as follows:
Deferred tax assets
Contribution carryforwards ............................. $ 243,328
Property, equipment, and land .......................... 229,593
Investments ............................................ 84,576
Other .................................................. 25,191
Valuation allowance .................................... (240,000)
-----------
342,688
Deferred tax liabilities
Deferred tax gain on involuntary conversion of land .... 4,352,688
-----------
Net deferred tax liability ................ $ 4,010,000
===========
Income tax expense (benefit) consists of the following:
Year ended June 30,
------------------------------
1997 1996
--------- ---------
Current
Federal .................... $(156,043) $ 363,000
State ...................... (15,267) 41,000
--------- ---------
(171,310) 404,000
Deferred
Federal .................... 660,450 (29,000)
State ...................... 116,550 (3,000)
--------- ---------
777,000 (32,000)
--------- ---------
$ 605,690 $ 372,000
========= =========
The income tax provision is reconciled to the tax computed at statutory rates
as follows:
June 30,
-----------------------
1997 1996
--------- ---------
Tax expense at statutory rates ................. $ 476,330 $ 318,247
State income taxes at statutory rates .......... 84,058 56,161
Adjustment of estimated income tax liabilities
of prior year ................................ -- 41,078
Change in valuation allowance .................. 19,382 (88,050)
Nondeductible expenses ......................... 36,904 29,490
Other .......................................... (10,984) 15,074
--------- ---------
Total expense ................... $ 605,690 $ 372,000
========= =========
A valuation allowance of approximately $240,000 has been recognized at June
30, 1997 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 AND STOCK OPTIONS
Under its Articles of Incorporation, the Company is authorized to issue
1,964,448 shares of common stock classified 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) 736,668 shares to be sold for $1.45 a share, designated as Class A, $1
par value common stock. Class A stock is to be sold only to the
stockholders of record as of the date of incorporation as follows:
At the first sale of such stock, each stockholder shall have the
right to purchase up to the number of shares obtained by dividing the
total number of stockholders of record on the date of incorporation
into 736,668 shares.
Any stock remaining unpurchased shall be offered for sale at
subsequent sales, and only stockholders who purchased stock at a
preceding sale shall have the right to purchase stock at a subsequent
sale, each one being entitled to purchase up to the number of shares
obtained by dividing the total number of stockholders of record who
purchased at the preceding sale into the total number of unpurchased
shares remaining after the preceding sale.
(c) 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. Those
acquiring no par value common stock and Class A, $1 par value common
stock have no preemptive rights to purchase Class B, $1 par value common
stock.
The following summarizes, at June 30, 1997, the number of shares of common
stock which, upon judicial determination, can be distributed (no par) or
offered for sale (Class A) to stockholders of record as of the date of
incorporation:
Price
Number --------------------
of Per
shares share Total
---------- ----- ----------
Shares issuable
No par value common .............. 5,047 $ -- $ --
Class A, $1 par value common ..... 736,668 1.45 1,068,169
---------- ----------
741,715 $1,068,169
========== ==========
There is no established market value for the Company's common stock. At June
30, 1997, 716,608 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 15,013 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 1985, the stockholders of the Company approved a stock option plan for
certain directors and employees. During 1987, the plan was terminated. At the
time of termination, options for 48,000 Class B shares had been granted at
$5.51 per share with an expiration date in December 1996. At June 30, 1996,
options for 20,500 Class B shares were exercisable. Options for 7,500 shares
were exercised during 1997 and 17,500 were exercised during 1996. During 1996,
the Company realized approximately $45,000 in the reduction of income taxes
relating to compensation recognized by the directors and employees for the
exercise of the options. The reduction in income taxes was not included in
earnings but has been reflected as additional paid-in capital. At June 30,
1997, no options were outstanding.
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 rentals from three single-tenant retail store
buildings and one-half of the Company's office building.
Financial information for each industry segment is summarized as follows:
General
Land Rentals corporate Total
1997
Revenues $3,659,180 $ 621,171 $ -- $ 4,280,351
Operating income
(expense) 2,697,194 355,852 (1,115,960) 1,937,086
Identifiable assets 6,151,103 7,555,231 3,134,098 16,840,432
Capital expenditures -- 907,158 31,245 938,403
Depreciation -- 163,369 52,064 215,433
1996
Revenues $4,371,982 $ 394,419 $ -- $ 4,766,401
Operating income
(expense) 2,056,547 179,800 (1,193,933) 1,042,414
Identifiable assets 5,546,102 6,792,172 3,149,893 15,488,167
Capital expenditures -- 2,710,818 8,648 2,719,466
Depreciation -- 95,823 42,955 138,778
General corporate assets consist primarily of cash, furniture, equipment, and
one-half of an office building, of which the remaining one-half is included in
income-producing properties.
NOTE I - BENEFIT PLANS
The Company has certain defined benefit employee retirement plans that provide
for employee and employer contributions. The Company's contribution expense
for these plans was $74,000 and $53,000 for 1997 and 1996, respectively.
NOTE J - SALES TO MAJOR CUSTOMERS
Sales to major customers are summarized as follows:
During the year ended June 30, 1997, sales to two customers individually
accounted for 47% and 21% of total revenues.
During the year ended June 30, 1996, sales to two customers individually
accounted for 24% and 18% of total revenues.
NOTE K - SALE OF LAND FOR NATIONAL PARK
On June 28, 1990, the Petroglyph National Monument (National Monument) was
established by an act of the United States Congress (Congress). Under the bill
passed by Congress, the National Park Service is authorized to acquire acreage
within the National Monument using funds specifically appropriated by Congress
each year. In 1997, approximately 218 acres were transferred to the National
Park Service for cash of $2,000,000. The Company's remaining land within the
National Monument boundary of approximately 601 acres is expected to be sold
in a series of transactions over the next several years.
NOTE L - LITIGATION
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.
NOTE M - 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 1997 and 1996 were $50,000 and $68,000,
respectively.
The note receivable - related party is from a joint venture partner, is
payable in monthly installments of $758 including interest at 10%, and is
collateralized by developed property. The note matures April 2006.
NOTE N - FINANCIAL INSTRUMENTS
The following table includes various estimated fair value information as
required by Statement of Financial Accounting Standards (SFAS) No. 107,
Disclosures about Fair Value of Financial Instruments. Such information, which
pertains to the Company's financial instruments, is based on the requirements
set forth in SFAS No. 107 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. Real Estate Contracts Receivable
--------------------------------
These notes receivable are generally collateralized by real estate and accrue
interest at rates from 10% to 12%. Because the ultimate collectibility of
these notes is not reasonably assured, it is not practicable to estimate fair
value.
3. Other Notes Receivable
----------------------
Other notes receivable are valued at the present value of future cash flows
based on the current rates at which similar loans would be made to borrowers
with similar credit ratings.
4. Notes, Mortgages, and Assessments Payable
-----------------------------------------
The discounted amount of future cash flows using the Company's current
incremental rate of borrowing 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, 1997 are as follows:
Carrying Estimated
amount fair value
Financial assets
Cash and cash equivalents ........................ $2,331,150 $2,331,150
Real estate contracts receivable (not practicable
to estimate fair value) ........................ 18,026 --
Other notes receivable ........................... 68,003 68,003
Financial liabilities
Notes, mortgages, and assessments payable ........ 7,051,888 7,127,226
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 the Registrant'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
The Executive Officers and the Directors of the Company are:
Name Position Age
Sosimo S. Padilla Chairman of the Board of Directors 67
since July 25, 1989,
Director since 1971
Barbara Page President, Chief Executive 63
Officer President and Director
since July 25, 1989
Polecarpio (Lee) Anaya Executive Vice President and Director 66
since July 25, 1989
David C. Armijo Secretary and Treasurer since 80
July, 25, 1989, Director since 1976.
Josie G. Castillo Director since 1984 65
Carmel Chavez Director since 1973 78
Joe S. Chavez Director since 1995 60
Charles V. Pena Director Since 1996 46
Carlos Saavedra Director since 1989 70
Leroy J. Chavez Vice President of Development 36
Brent Lesley Vice President of Marketing 37
Background information relative to each officer and each director is as follows:
DIRECTORS:
Sosimo Sanchez Padilla, age 67, is Chairman of the Board of Directors. Mr.
Padilla was Vice President of the Company from 1971 to 1986 and has been a
Company Director since 1971. Mr. Padilla is a member of the Company's Executive
Committee. For more than 30 years prior to 1987, Mr. Padilla owned and operated
Western Securities Transportation Corporation, a family-owned newspaper and
record transportation business in New Mexico. Mr. Padilla is retired from
Albuquerque Publishing Company where he was employed for 37 years. Mr. Padilla
has served as director on State of New Mexico Border Research Institute Support
Council and National Association of Industrial and Office Parks. Mr. Padilla was
a member of the New Mexico Highway Commission from 1978 to 1986, and was
Chairman of that Commission from 1982 to 1986. For three years he served as a
Trustee for the University of Albuquerque, and 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. Mr.
Padilla is currently a member of the Board of Directors of Rancher's State Bank,
a position he has held since March, 1995, and in 1996, accepted a position on
the Board of Directors of the Hispano Chamber of Commerce in Albuquerque. In
1997, Mr. Padilla became a member of the Middle Rio Grande Council of
Government.
Barbara Page, age 63, has been the Company's President and Chief Executive
Officer since 1989. Ms. Page received a certificate in banking from the Robert
O. Anderson School of Management of the University of New Mexico. She has served
as a Company Director and member of the Company's Executive Committee since July
25, 1989. Ms. Page previously served as the Registrant's Corporate Secretary
from 1971 until she resigned in 1978. From November of 1982, Ms. Page also
served as the Company's Treasurer until her resignation in October of 1985. Ms.
Page served as a director of the Registrant until October 16, 1986.
Ms. Page was employed by First Interstate Bank (formerly, the Bank of New
Mexico) for 20 years and served as an Assistant Vice President and Branch
Manager at its Candelaria and North Valley offices from 1973 through November
1981. She was an owner of the Bluewater Inn, Bluewater, New Mexico from 1981
until 1984. Ms. Page was employed during the fall and winter of 1988 - 1989 as a
salesperson with American Homes in Las Vegas, Nevada. Ms. Page is Secretary and
Board Member of the Albuquerque Economic Forum, a Board member of the
Albuquerque Economic Development, Inc., a member of National Association of
Industrial and Office Parks, Albuquerque Chamber of Commerce, Albuquerque West
Side Association and the Albuquerque Hispano Chamber of Commerce.
Polecarpio (Lee) Anaya, age 66, is a Company Director, its Executive Vice
President and Chairman of the its Executive Committee, positions he has held
since July 25, 1989. Mr. Anaya was a Bernalillo County Deputy Sheriff during
1952 and 1953. 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.
David C. Armijo, age 80, has been the Company's Secretary and Treasurer since
1989. Mr. Armijo previously served as the Company's Secretary from 1978 to 1985.
He has been a Company Director since 1976. For more than the past 30 years Mr.
Armijo has been an insurance broker. He 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 Aircraft Overseas Association
and of the San Gabriel Valley Medical Center for whom he is also Treasurer and
Finance Committee Executive. He is a former member of fourteen years serving
variously as Chairman, Vice Chairman and Planning Commissioner for the City of
San Gabriel, California, where he resides. Mr Armijo also serves as Chairman of
the Finance and Insurance Committee of the Garibaldina Society of California, a
non profit corporation dedicated to charitable and cultural purposes. Mr. Armijo
holds a Bachelor of Arts Degree in Business Administration from the University
of California at Berkeley. Since 1962, he has held a non-resident insurance
broker's license in New Mexico.
During World War II, Mr. Armijo was assigned as Civilian Technician to the
Eighth Air Force in Europe for two years, for Lockheed Aircraft Corp.. Upon his
return from Europe, Mr. Armijo was named Eastern Representative for Lockheed
Aircraft and was based in New York City and in Washington, D.C. Mr. Armijo is a
licensed pilot, holding licenses in A&E and also aircraft radio telephone.
Josie G. Castillo, age 65, has been a Director of the Company since 1984, was
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. Ms. Castillo is a member and the Vice Chairman of the Company's
Executive Committee. From November of 1980 to February of 1983 Ms. Castillo
worked for the Company in shareholder relations. From 1983 until her retirement
in 1995, she had been employed by the office staff of the Human Services
Department of the State of New Mexico in Albuquerque, New Mexico.
Carmel Chavez, age 78, has been a Director of the Company since its
incorporation in 1967. He was 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.
Joe S. Chavez, age 60, was elected to the Board of Directors at the annual
meeting of Shareholders held in November, 1995. He is an alternate member of the
Company's Disclaimer Committee. Mr. Chavez has extensive knowledge and
experience in business, customer relations and sales. For more than the past 35
years, Mr. Chavez has been a co-owner and budget director of Regina's Dance
Studio, a business with two locations in Albuquerque specializing in the sale of
gymnastics equipment, costume and ballet apparel and coordination of dance
performances and other functions. For approximately 13 years from 1960 to 1973
Mr. Chavez was a store manager for Kimbell Co., that did business in Albuquerque
as Foodway Super Markets and from 1975 to 1986 he was employed by the U.S.
Postal Service at various positions, including Letter Carrier, Postal Systems
Examiner, Supervisor, Acting Station Manager, Manager and ad-hoc Facilitator and
Coordinator of employees, which involved conducting training sessions and work
teams. From 1986 to June, 1995, Mr. Chavez was a Sales Consultant with Casey
Luna Ford and recently became employed in a similar position with Galles
Chevrolet. Mr. Chavez served in the United States Navy from 1955 to 1959 when he
was honorably discharged. In 1992, Mr. Chavez was appointed to represent the
interest of Westland Development Co., Inc. on the Petroglyph National Monument
Citizen's Advisory Commission.
Charles V. Pena, age 46, was appointed to the Board of Directors on April 26,
1996, to fill the vacancy created by the death of Mr. Raymundo H. Mares. Mr.
Pena was raised from the age of one month until age thirteen in the Saint
Anthony's Home for Boys in Albuquerque, New Mexico. He began employment with
Safeway Stores at age fifteen, a career that spanned more than 19 years until
Safeway Stores in Albuquerque, New Mexico was acquired by Furrs Food Stores.
During his career with Safeway Stores he was a member of the rose to the
position of Inventory Control Person. Also during his employment with Safeway
Stores 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 Old Albuquerque High School and graduated from Highland High School.
Following high school, he attended the University of New Mexico and the
University of Albuquerque, majoring in business courses. Since his retirement
from Safeway Stores in 1993, Mr. Pena purchased and is an owner and operator of
CJ's New Mexican Food Restaurant in Albuquerque, New Mexico.
Carlos Saavedra, age 70, first served as a Company Director from 1969 to 1975
and has served as a Class B Director from 1989 to present. Dr. Saavedra is
Chairman of the Company's Disclaimer Committee. Dr. Saavedra was a member of the
Board of Directors of the La Compania de Teatro de Albuquerque. Dr. Saavedra
holds a B.S. degree in Education from the University of Albuquerque (1952); a
M.A. degree in Education Administration from the University of New Mexico
(1962); an Ed.S. degree in Bilingual Education from the University of New Mexico
(1968); and an Ed.D. degree in linguistics from the University of New Mexico
(1969). He has done post-graduate work at the University of Texas in Austin and
Highlands University in Las Vegas, New Mexico. After the creation of the
Petroglyph National Monument, Dr. Saavedra was appointed a member of the
Petroglyph National Monument Historical Research Committee. He is also a member
of the Westside Coalition in Albuquerque.
From 1953 to 1975 Dr. Saavedra was employed by the Albuquerque, New Mexico
Public Schools as a teacher, Administrator, and Director of Bilingual Education.
From 1975 to 1977 he was the Director of Bilingual Education for the Colorado
Department of Education and from 1977 to 1985 he was the Superintendent of
Instruction of Bilingual Education for the Oakland Unified School District,
Oakland, California. Dr. Saavedra has been a consultant to the Ministries of
Education in Caracas, Venezuela and Cochabamba, Bolivia. Dr. Saavedra served for
four years as a member of the National Advisory Board on Child Nutrition and for
three years as a member of the Ethnic Heritage Studies Task Force, Washington,
D.C. He received a Presidential Citation for Service Beyond the Call of Duty and
is listed in the Who's Who of American Education. Dr. Saavedra served in the
United States Air Force from 1944 to 1950 and received an honorable discharge.
Dr. Saavedra retired from education in 1985. From 1985 to 1989, he was Business
Manager for Clinical Pharmacy in Albuquerque, New Mexico, and currently owns
Aspen Country Florist in Albuquerque, New Mexico.
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 Armijo is the Secretary/Treasurer for the
Company. Other officers of the Company are the following people:
Leroy J. Chavez, age 36, 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 37, 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. He is also a licensed New
Mexico real estate broker.
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 twelve regular
meetings, and no special meetings. All members attended at least 90% 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. During the past fiscal
year, the Executive Committee met four times.
Josie Castillo, Carmel Chavez and Charles Pena also serve as Directors and Dr.
Saavedra serves as an alternate Director o f El Campo Santo, Inc., a wholly
owned non-profit corporation. El Campo Santo, Inc. Ms. Castillo and Mr. Chavez
also serve as Chairman and Vice Chairman, respectively. These Directors held
four meetings during the year.
ITEM 10: EXECUTIVE COMPENSATION
The following table sets forth the compensation for the fiscal year ended June
30, 1997, 1996 and 1995 including bonuses and deferred cash compensation (if
any), of the Company's Chief Executive Officer and the three other highest paid
executive officers, being all of the executive officers:
SUMMARY COMPENSATION TABLE
Annual Compensation Long Term Compensation
(a) (b) (c) (e) (i)
Other
Name and Annual All other
Principal Salary Compensation Compensation
Position Year ($) ($) ($)
Barbara Page 1997 110,000 13,934 ---
President, CEO and Director 1996 110,000 19,428 ---
1995 125,229 12,696 (1) 23,915 (2)
Polecarpio (Lee) Anaya (1)(3) 1997 --- 47,434 ---
Executive Vice President 1996 --- 53,232 ---
and Director 1995 --- 46,505 11,311 (2)
Sosimo S. Padilla (1)(3) 1997 --- 47,734 ---
Chairman of the Board 1996 --- 53,232 ---
of Directors 1995 --- 46,505 11,311 (2)
David C. Armijo (1) 1997 --- 19,034 ---
Secretary and Director 1996 --- 17,332 (4) ---
1995 --- 16,505 (1)(4) 11,311 (2)(4)
Leroy Chavez (5) 1997 65,097 (6) --- ---
Vice President 1996 63,476 (6) --- ---
1995 57,630 (6) --- ---
Brent Lesley (5) 1997 57,634 (6) --- ---
Vice President 1996 55,766 (6) --- ---
1995 49,875 (6) --- ---
_____________
(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) As part of its grant of shares of its Class B common stock to its nine
directors during fiscal 1993, the Company agreed to pay all state and federal
taxes related to the grant. Such payments were based on the actual income
liability the grant caused each director to incur.
(3) Mr. Padilla and Mr. Anaya are each paid $30,000 per year pursuant to
consulting agreements.
(4) Does not include $6,000, $6,800 and $5,000 paid to Mr. Armijo's insurance
agency by the insurance carrier as commissions from policies owned by the
Company during 1995, 1996 and 1997, respectively
(5) Became an Officer on April 26, 1996.
(6) Mr. Chavez and Mr. Lesley are paid for services rendered to the Company in
excess of 40 hours per week. All compensation, both regular salary and
compensatory pay are included.
In 1984, the Company granted certain stock options to persons who were at that
time members of the Company's Board of Directors. The following table sets forth
information concerning the value of those exercised and unexercised owned by
current Directors at June 30, 1997.
Aggregated Option/SAR Exercises in Last Fiscal Year
and FY-End Option SAR values
(d) (e)
Number of
Securities
Underlying Value of
Unexercised Unexercised
Options/ In-the-Money
SAR's at Options/Sar's
(a) (b) (c) FY-END(#) at FY-END($)
Shares Acquired Exercisable Exercisable
Name on Exercise(#) Value Realized($) Unexercised Unexercised
---- --------------- ----------------- ----------- -------------
Carmel Chavez 5,000 $22,450
Director
The Company has no long term compensation arrangements with its directors.
Certain officers and directors are compensated pursuant to employment or other
agreements. See Item 12.
Pension Plan:
On June 27, 1991, the Company established a Simplified Employee Pension
("SEP-IRA") plan under Section 401(k) of the Internal Revenue Code. Under the
terms of the SEP-IRA plan for 1994, the Company contributed 11% of each eligible
employee's earned wages. Under this SEP-IRA employees may also contribute up to
4% of their earned wages. The Company makes monthly contributions to the plan
whereby $30,801 was paid in fiscal 1997, $53,233 was paid in fiscal 1996 and
$47,023 was paid in fiscal 1995.
Effective January 1, 1997, the Company replaced the SEP-IRA plan with a Money
Purchase Profit Sharing Deferred Compensation Plan (the "97 Plan"). Under the 97
Plan, the Company contributes up to 15% of the aggregate earnings of
participating employees. During fiscal 1997, $43,474 was contributed by the
Company pursuant to the 97 Plan.
Stock Option Plan:
On December 14, 1996, the option plan established by the Company in 1984, to
provide incentives for the Company's Directors, Officers and Employees, expired.
Options to purchase 7,500 shares were exercised during fiscal 1997. The exercise
price of $5.51 per share was at least their fair market value in 1984 on the
date of the grant. Because there was no formal market for any class of the
Company's stock at the time of the Grant, the Board took into account the
Company's earning potential and the price of repurchases of No Par Value Stock.
The Company's Class B Stock does not have a readily determinable market value at
this time.
Compensation of Directors:
Directors were paid during the year the following amount as director's fees: 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.
Ms. Page, Mr. Leroy J. Chavez and Mr. Lesley participate in all employee benefit
plans and Mr. Leroy J. Chavez and Mr. Lesley participate in any bonuses which
may be declared by the Board of Directors.
ITEM 11: SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The Company's No Par Value Stock and its Class B Stock are its only classes of
voting securities outstanding. Only shareholders of record at the close of
business on August 20, 1997, will be entitled to vote at the Annual Meeting and
at any adjournment thereof. On August 20, 1997, there were issued and
outstanding 716,608 shares of No Par Value Stock and 86,100 shares of Class B
Stock, each of which is entitled to one vote on each matter coming before the
Meeting.
Security Ownership of Certain Beneficial Owners and Management:
The following table sets forth, as of August 20, 1996, the beneficial ownership
of No Par Value Stock and Class B Stock by each nominee and each present
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)
DIRECTORS AND PRINCIPAL OFFICERS:
Sosimo S. Padilla (2) ........ 335 * 20,700 24.04
401 Coors Blvd., N.W
Albuquerque, N.M. 87121
Barbara Page ................. 500 * 8,300 9.64
401 Coors Blvd., N.W
Albuquerque, N.M. 87121
Polecarpio (Lee) Anaya ....... 70 * 5,000 5.81
1815 Sunset Gardens Rd., S.W
Albuquerque, N.M. 87105
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
Joe S. Chavez ................ 100 * 200 *
3901 Donald Rd., S.W
Albuquerque, N.M. 87105
Charles V. Pena .............. 100 * 500 *
2312 Britt St., N.E
Albuquerque, N.M. 87112
Carlos Saavedra .............. 443 * -0- *
220 Tohatchi, N.W
Albuquerque, N.M. 87104
OTHER OFFICERS:
Leroy J. Chavez (3) ......... -0- * -0- *
401 Coors Blvd., N.W
Albuquerque, N.M. 87121
Brent Lesley (3) ............ -0- * -0- *
401 Coors Blvd., N.W
Albuquerque, N.M. 87121
Directors and Officers
as a group (11 people) ....5,989(1-3) *(1-3) 55,400 64.35
_____________
(1) Each of the current Class A Directors are the Management's nominees for
Director at the Annual Meeting of Shareholders
(2) Of which, 46 shares are owned by Mr. Padilla's wife.
(3) 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 8.39% of all such shares that might be voted at the
Annual Meeting of Shareholders.
ITEM 12: CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
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 providing for an annual salary
of $110,000. 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.
Certain Business Relationship:
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 $5,000 in commissions
for the placement of the Company's insurance in fiscal 1997.
PART IV
ITEM 13: EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-KSB
1. Financial Statements, included in this report as item 7 for each of the two
years ended June 30, 1996 and 1997:
Report of Independent Certified Public Accountants
Balance Sheet
Statements of Earnings
Statements of Stockholders' Equity
Statements of Cash Flows
Notes to Financial Statements
2. Exhibits:
Exhibit
(3) Articles of Incorporation and Bylaws:
(3)(I) Articles of Incorporation filed as an exhibit to the registrant'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 the registrant'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 the registrant'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 the registrant'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 the registrant'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 the registrant's Annual Report on Form 10-KSB for
the fiscal year ended June 30, 1997, and incorporated herein by reference.
(10.5) Assignment of Lease dated April 20, 1995, from Central Avenue Partners to
the Registrant, as filed with the registrant'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 the
registrant'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 the Registrant, as filed with the registrant'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 the registrant'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 the Registrant, as filed with the registrant's Annual
Report on Form 10-KSB for the fiscal year ended June 30, 1996, and incorporated
herein by reference.
Statement regarding computation of per share earnings is incorporated by
reference to Note A(8) to the Financial Statements incorporated herein by
reference to Registrant's Annual Report to Shareholders for the Fiscal year
ended June 30, 1997.
Subsidiaries of the Registrant
The registrant has the following subsidiaries:
Name State of Incorporation
El Campo Santo, Inc New Mexico - non-profit
Westland Community Services, Inc New Mexico - non-profit
Westland Somerville Ltd. New Mexico - profit
Tierre Oeste Ltd. New Mexico - profit
All other exhibits required by Item 601 of Regulation S-B are inapplicable to
this Registrant in this filing.
(b) Reports on Form 8-K:
During the last quarter of the period covered by this report, the Registrant
filed no reports on Form 8-K:
SIGNATURES
In accordance with Section 13 or 15(d) of the Exchange Act, the Registrant
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, Principal
Executive Officer, Chief
Financial Officer and
Director
Date: August 27, 1997
In accordance with the Exchange Act, this report has been signed below by the
following persons in behalf of the registrant and in the capacities and on the
dates indicated.
By: David C. Armijo
------------------------------------
David C. Armijo, Secretary-Treasurer
and Principal Financial Officer
Date: August 27, 1997
In accordance with the Exchange Act, this report has been signed below by the
following persons in behalf of the registrant and in capacities and on the dates
indicated.
By: David C. Armijo
-------------------------
David C. Armijo, Director
Date: August 27, 1997
By: Polecarpio (Lee) Anaya
--------------------------------
Polecarpio (Lee) Anaya, Director
Date: August 27, 1997
By: Sosimo S. Padilla
-----------------------------------------------------
Sosimo S. Padilla, Chairman of the Board of Directors
Date: August 27, 1997
By: Josie G. Castillo
---------------------------
Josie G. Castillo, Director
Date: August 27, 1997
By: Carmel T.Chavez
--------------------------
Carmel T. Chavez, Director
Date: August 27, 1997
By: Charles V. Pena
-------------------------
Charles V. Pena, Director
Date: August 27, 1997
By: Carlos Saavedra
-------------------------
Carlos Saavedra, Director
Date: August 27, 1997
By: Joe S. Chavez
-----------------------
Joe S. Chavez, Director
Date: August 27, 1997
By: Barbara Page
----------------------
Barbara Page, Director
Date: August 27, 1997
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