Form 10-QSB
U.S. Securities and Exchange Commission
Washington, D.C. 20549
(Mark One)
[XX]QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For Quarter Ended December 31, 1998
[ ]TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE
EXCHANGE ACT
For the transition period from to
Commission File Number: 0-7775
WESTLAND DEVELOPMENT CO., INC.
------------------------------
(Exact name of small business issuer as
specified in its charter)
NEW MEXICO 85-0165021
- --------------------------------- -------------------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
401 Coors Blvd., N.W.,
Albuquerque, New Mexico 87121
- -------------------------------------------------------------------------------
(Address of principal executive offices)
(505)831-9600
- -------------------------------------------------------------------------------
(Issuer's telephone number)
N/A
- -------------------------------------------------------------------------------
(Former name, former address and former fiscal year, if changed since last
report)
Check whether the issuer (1) filed all reports required to be filed by
Section 13 or 15(d) of the Securities Exchange Act during the past 12 months (or
for such shorter period that the registrant was required to file such reports),
and (2) has been subject to such filing requirements for the past 90 days.
YES [ X ] No [ ]
State the number of shares outstanding of each of the issuer's classes of
common equity as of February 8, 1999:
No Par Value Common: 716,608
Class A $1.00 Par Value Common: NONE
Class B $1.00 Par Value Common: 86,100
Transitional Small Business Format (check one) Yes [ ] No [ X ]
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
WESTLAND DEVELOPMENT CO., INC.
BALANCE SHEET
(unaudited)
December 31, 1998
ASSETS
Cash and cash equivalents ........................ $ 4,083,705
Receivables:
Real estate contracts ......................... $ 26,307
Less related deferred profit ............. 322
------------
25,985
Note receivable - related party ............... 62,783
Other receivables ............................. 36,035 124,803
------------
Land and improvements held for
future development ............................ 6,602,797
Income producing properties, net ................. 6,974,400
Property and equipment, net of accumulated
depreciation of $472,169 ...................... 392,169
Investment in Partnerships and joint ventures .... 235,722
Other ............................................ 125,655
------------
$ 18,539,251
============
LIABILITIES AND STOCKHOLDERS' EQUITY
Accounts payable, accrued expenses
and other liabilities ......................... $ 315,193
Deferred income taxes ............................ 5,561,000
Notes, bonds, mortgages and assessments payable .. 5,967,033
------------
Total liabilities ............... 11,843,226
Stockholders' equity
Common stock - no par value;
authorized, 736,668 shares;
issued and outstanding,
716,608 shares ............................. 8,500
Class A common stock - $1.00 par
value; authorized, 736,668
shares; issued, none ....................... --
Class B common stock - $1.00 par
value; authorized, 491,112
shares; issued and outstanding,
86,100 shares .............................. 86,100
Additional paid-in capital .................... 581,527
Retained earnings ............................. 6,019,898 6,696,025
------------ ------------
$ 18,539,251
============
WESTLAND DEVELOPMENT CO., INC.
STATEMENTS OF OPERATIONS
(unaudited)
For the three months ended
December 31,
1998 1997
----------- -----------
Revenues
Land .................................... $ 3,103,827 $ 855,939
Deferred profit recognized
on installment sales .................. 28,766 3,341
Rentals ................................. 174,985 172,896
----------- -----------
3,307,578 1,032,176
Costs and expenses
Cost of land revenues ................... 150,015 148,376
Cost of rentals ......................... 47,654 54,356
General and administrative .............. 462,295 495,661
----------- -----------
659,964 698,393
----------- -----------
Income from operations ............... 2,647,614 333,783
Other (income) expense
Interest income ......................... (25,740) (24,274)
Gain on sale of property and
equipment ............................. -- (1,000)
Other income ............................ (4,406) 18,821
Interest expense ........................ 135,189 156,564
----------- -----------
105,043 150,111
----------- -----------
Earnings before income taxes ......... 2,542,571 183,672
Income tax expense ......................... 1,017,000 74,200
----------- -----------
NET EARNINGS ......................... $ 1,525,571 $ 109,472
=========== ===========
Weighted average common and
common equivalent shares
outstanding ............................. 802,708 802,708
=========== ===========
Net earnings per common and
common equivalent share ................. $ 1.90 $ .14
=========== ===========
WESTLAND DEVELOPMENT CO., INC.
STATEMENTS OF OPERATIONS
(unaudited)
For the six months ended
December 31,
1998 1997
----------- -----------
Revenues
Land .................................... $ 3,407,232 $ 1,656,490
Deferred profit recognized
on installment sales .................. 29,984 7,212
Rentals ................................. 358,295 348,593
----------- -----------
3,795,511 2,012,295
Costs and expenses
Cost of land revenues ................... 321,943 177,548
Cost of rentals ......................... 93,630 109,475
General and administrative .............. 986,971 1,161,925
----------- -----------
1,402,544 1,448,948
----------- -----------
Income from operations ............... 2,392,967 563,347
Other (income) expense
Interest income ......................... (54,520) (52,027)
Gain on sale of property and
equipment ............................. -- (1,000)
Other income ............................ (6,561) 17,255
Interest expense ........................ 300,555 322,055
----------- -----------
239,474 286,283
----------- -----------
Earnings before income taxes ......... 2,153,493 277,064
Income tax expense ......................... 861,000 111,000
----------- -----------
NET EARNINGS ......................... $ 1,292,493 $ 166,064
=========== ===========
Weighted average common and
common equivalent shares
outstanding ............................. 802,708 802,708
=========== ===========
Net earnings per common and
common equivalent share ................. $ 1.61 $ .21
=========== ===========
WESTLAND DEVELOPMENT CO., INC.
STATEMENTS OF CASH FLOWS
(unaudited)
For the six months ended
December 31,
1998 1997
----------- -----------
Cash flows from operating activities
Cash received from land sales
and collections on real
estate contracts receivable ................. $ 3,462,469 $ 1,757,427
Development and closing costs paid
on land sales ............................... (507,964) (231,834)
Cash received from rental operations .......... 365,434 353,831
Cash paid for rental operations ............... (5,642) (3,267)
Cash paid for property taxes .................. (76,592) (20,614)
Interest received ............................. 54,531 51,579
Interest paid ................................. (294,283) (358,259)
Income taxes paid ............................. (147,000) (80,000)
General and administrative costs paid ......... (904,663) (969,688)
Other ......................................... 3,752 (19,427)
----------- -----------
Net cash provided by
operating activities ........................ 1,950,042 479,748
----------- -----------
Cash flows from investing activities
Capital expenditures for income
producing and other properties .............. (43,789) (40,714)
Proceeds from sale of assets .................. -- 1,000
Cash distributions from (investment in)
partnerships, net ........................... (187) 7,911
----------- -----------
Net cash used in investing activities ........ (43,976) (31,803)
----------- -----------
Cash flows from financing activities
Borrowing on notes, mortgages and
assessments payable ......................... 800,000 692,064
Repayments of bonds, mortgages,
notes and assessments payable ............... (1,029,546) (489,430)
Payment of dividends .......................... (802,708) (602,031)
----------- -----------
Net cash used in
financing activities ....................... (1,032,254) (399,397)
----------- -----------
NET INCREASE IN CASH
AND CASH EQUIVALENTS ......................... 873,812 48,548
Cash and cash equivalents at
beginning of period .......................... 3,209,893 2,331,150
----------- -----------
Cash and cash equivalents at
end of period ................................ $ 4,083,705 $ 2,379,698
=========== ===========
Reconciliation of net earnings
to net cash used in
operating activities
Net earnings ................................... $ 1,292,493 $ 166,064
Adjustments to reconcile net
earnings to net cash provided
by operating activities
Depreciation .............................. 113,474 135,605
Profit recognized on prior
years' installment sales ................ (29,984) (7,212)
Deferred income tax ....................... 1,034,000 --
Gain on sale of assets .................... -- (1,000)
Loss on retirement of assets .............. 2,071 --
Change in
Income taxes recoverable/payable .......... (320,000) 31,000
Other receivables ......................... 10,863 93,700
Real estate contracts ..................... 33,466 (10,495)
Land and improvements held for
future development and income
producing properties .................... (145,324) (60,824)
Other assets .............................. (48,936) 75,268
Accounts and retainages payable,
accrued interest and other
liabilities ............................ 9,919 57,642
----------- -----------
Net cash provided by
operating activities ......................... $ 1,950,042 $ 479,748
=========== ===========
WESTLAND DEVELOPMENT CO., INC.
NOTES TO THE FINANCIAL STATEMENTS
(unaudited)
December 31, 1998
1. The balance sheet at December 31, 1998, statements of cash flows and
statements of operations for the three months and six months ended December 31,
1998 and December 31, 1997 have been prepared by the Company, without audit. In
the opinion of management, all adjustments, including normal recurring
adjustments necessary to present fairly the financial position, results of
operations and cash flows, have been made. Certain information and footnote
disclosures normally included in financial statements prepared in accordance
with generally accepted accounting principles have been condensed or omitted. It
is suggested that these financial statements be read in conjunction with the
Company's audited financial statements at June 30, 1998. The results of
operations for the three months and six months ended December 31, 1998 are not
necessarily indicative of operating results for the full year.
2. The computation of net earnings (loss) per common and common equivalent
share has been based upon the weighted average number of shares of outstanding
common stock and common stock issuable without further consideration (referred
to as equivalents), which for the three and six month periods ended December 31,
1998 and December 31, 1997 were 802,708.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
During the six months ended December 31, 1998, the Company's cash and cash
equivalents decreased by $ 873,812. During this period, operations provided
$1,950,042, the Company invested $43,976 in fixed and other assets, retired
$1,029,546 of debt, borrowed $800,000 and paid dividends in the amount of
$802,708.
During the second quarter of the current fiscal year, the Company had
revenues of $3,307,578 compared to $1,032,176 during the same period in the
prior fiscal year. Land revenues increased significantly primarily due to the
sale in fiscal 1999 of a single parcel for approximately $2,605,000. Operating
expenses during the three months ended December 31, 1998, were $659,964 compared
to $698,393 during the comparable period in fiscal 1998. For the year to date,
revenues were $3,795,511 in 1998 and $2,012,295 in 1997. Operating expenses were
$1,402,544 and $1,448,948, respectively.
Prior to June 30, 1999, the Company may expend approximately $800,000 or
more to acquire replacement lands and property for the land sold to the National
Park Service under threat of condemnation. In the event the Company does not
replace the property sold to the National Park Service, it may need to utilize a
substantial portion of its liquid investments for federal and state income
taxes.
Presently, management has not completed its assessment of Year 2000 issues.
The total cost of compliance in both information and non-information technology
systems is expected to be less than $30,000. Since a substantial portion of this
cost is third party hardware and software, the effect on net earnings will be
less than the total. Completion of changes in internal systems is expected to
occur in the first quarter of calendar 1999. Determination of level of risk in
the Company's material relationships with third parties is incomplete, but is
expected to be finished by fiscal year end, and is considered negligible.
Therefore, contingency plans have not been formulated at this time.
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
Other than the ordinary routine litigation incidental to the Company's
business, neither the Company nor any member of management is the subject of any
pending or threatened legal proceeding.
ITEM 2. CHANGES IN SECURITIES
NONE
ITEM 3. DEFAULTS IN SENIOR SECURITIES
NONE
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
NONE
ITEM 5. OTHER INFORMATION
NONE
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) (3) (i) (a) Certificate of Amendment of Articles of Incorporation.
There are no other exhibits required by Item 601 of Regulation S-B.
(b) Reports on Form 8-K. State whether any reports on Form 8-K have been
filed during the quarter for which this report is filed, listing the items
reported, any financial statements filed, and the dates of any such reports.
NONE
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
WESTLAND DEVELOPMENT CO., INC.
DATE: February 8, 1999 By: Barbara Page
---------------------------
Barbara Page, President,
Chief Executive Officer and
Chief Accounting Officer
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> JUN-30-1999
<PERIOD-END> DEC-30-1998
<CASH> 4083705
<SECURITIES> 0
<RECEIVABLES> 124803
<ALLOWANCES> 0
<INVENTORY> 6602797
<CURRENT-ASSETS> 0
<PP&E> 864338
<DEPRECIATION> 472169
<TOTAL-ASSETS> 18539251
<CURRENT-LIABILITIES> 0
<BONDS> 5967033
<COMMON> 94600
0
0
<OTHER-SE> 6601425
<TOTAL-LIABILITY-AND-EQUITY> 18539251
<SALES> 3407232
<TOTAL-REVENUES> 3795511
<CGS> 321943
<TOTAL-COSTS> 415573
<OTHER-EXPENSES> 1226445
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 300555
<INCOME-PRETAX> 2153493
<INCOME-TAX> 861000
<INCOME-CONTINUING> 1292493
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1292493
<EPS-PRIMARY> 1.61
<EPS-DILUTED> 1.61
</TABLE>
Exhibit (3)(i)(a)
CERTIFICATE OF AMENDMENT
OF
ARTICLES OF INCORPORATION
OF
WESTLAND DEVELOPMENT CO., INC.
Pursuant to the provisions of the Business Corporation Act of New Mexico, the
undersigned Corporation adopts the following Articles of Amendment to its
Articles of Incorporation:
FIRST: The name of the corporation is WESTLAND DEVELOPMENT CO., INC.
SECOND: The following amendments to the Articles of Incorporation were adopted
by the shareholders of the corporation at the annual meeting of shareholders
held on November 13, 1998, in the manner prescribed by the Business Corporation
Act of New Mexico, as follows:
1. Article IV For the Amendment of Article IV of the Company's Articles of
Incorporation to delete from such Article the authority to issue Class A
Stock. The remainder of the Article is not amended and remains the same.
2. Article VII: To amend the Articles of Incorporation to add thereto a new
Article VII to provide that: "The vote required to amend these Articles of
Incorporation shall be a simple majority of all shares entitled to notice
of and to vote at any meeting of shareholders whereat any amendment to
these Articles is proposed.
3. Article II: To amend Article II by replacing it in its entirety with the
following language: "The period of this corporation's existence shall be in
perpetuity".
THIRD: The number of issued and outstanding shares of the Corporation's common
stock entitled to vote on the Amendments at the meeting that adopted the
Amendments on November 4, 1998, was 802,708 shares.
FOURTH: The corporation has two classes of issued and outstanding common stock
entitled to vote on the amendment, those being no par value common stock and
Class B common stock. The aggregate of all such issued and outstanding shares at
the time of the meeting of shareholders was 802,708. The amendments were not
matters specified by Section 53-13-3 NMSA 1978 as requiring a vote by class.
FIFTH: Of the 802,708 shares of issued and outstanding common stock entitled to
vote on the amendments, they were voted as follows:
1. There were 550,252 shares voted for the Amendment of Article IV (68.55%)
and 80,773 shares voted against the amendment (10.06%).
2. There were 558,762 shares voted for the Amendment creating a new Article
VII (69.61%) and 71,428 shares voted against the amendment (8.89%).
3. There were 569,221 shares voted for the Amendment of Article II (70.91%)
and 61,029 shares voted against the amendment (7.60%).
SIXTH: The result of these amendments had no effect on the number of the
Corporation's authorized shares or its stated capital.
IN WITNESS WHEREOF, the said WESTLAND DEVELOPMENT CO., INC. has caused this
Certificate of Amendment to be signed by its President and its Secretary and its
corporate seal to be affixed hereto this __ day of November, 1998. WESTLAND
DEVELOPMENT CO., INC.
By: Barbara Page
-----------------------
Barbara Page, President
By: Lee Anaya
------------------------------
Lee Anaya, Assistant Secretary
STATE OF NEW MEXICO )
)ss.
COUNTY OF BERNALILLO )
On November 19, 1998, personally appeared before me, a Notary Public in and for
the State of New Mexico, Barbara Page, President, and Lee Anaya, Assistant
Secretary, of WESTLAND DEVELOPMENT CO., INC., a New Mexico corporation, who
acknowledged that they executed the foregoing Certificate of Amendment of the
Articles of Incorporation on behalf of WESTLAND DEVELOPMENT CO., INC. and that
the statements therein contained are true.
Linda J. Blair
--------------
Linda J. Blair (Notary Public)
My commission expires 8/15/2001
