October 9, 1998


Dear Shareholders:

I am pleased to report your Company continues to make great strides.  Our annual
meeting this  November will be the 10th time I will address you on the condition
of the Company as your  president.  Many successes have come our way during this
time and it will be a pleasure to discuss our  performance and future plans with
you.

Fiscal Year 1999 is taking  shape to be an  interesting  period.  Our 6,400 acre
Master Plan known as  Westland  North has been  approved by both the  Bernalillo
County  Commission and the Albuquerque City Council.  We anticipate the majority
of the Company's  development  activity to take place within the Westland  North
area for the next 10 to 20  years.  Westland  North  will be key to the  ongoing
growth of the west side, which continues to be strong.

Currently,  we are negotiating with the City of Albuquerque for the expansion of
water and sewer service into the Westland North property.  While our discussions
have not been concluded,  in all likelihood Westland will be responsible for the
construction of utilities.  Infrastructure  financing may require the Company to
take on new debt and/or increase its land sales to cover development  costs. Pay
back of the Company's  investment will occur as new residents and businesses tie
into the water and sewer systems.

During Fiscal Year 1998 the Company sold about 150 acres.  Please  remember that
when management came into office in 1989 the Company owned approximately  49,000
acres.  This acreage has been  increased to 59,000 acres,  52,000 acres of which
are being held for long term  investment.  Land  acquisitions  have far exceeded
land sales.

Share values have increased  significantly over the past 9 years. Shares are now
traded among heirs for about $15.00 per share.  There are 5,533 shareholders and
802,708 shares outstanding.

We look  forward to seeing you at the  November  13,  1998  Annual  Meeting.  We
encourage you to vote "yes" on items presented and mail your proxy in as soon as
possible.  Our future  looks  bright and we look forward to an even greater year
next year.


Sincerely,



Barbara Page
President & Chief Executive Officer





BUSINESS OF WESTLAND

Westland Development Co., Inc., a New Mexico for-profit corporation ("Company"),
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 Company'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
may own shares of the Company's Common Stock.

The  Company'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.

Westland generates cash internally through its land operations  (grazing leases,
real  estate  sales and  commercial  leases)  and  externally  through  long and
short-term  borrowing.  The profitability and resulting cash flows of Westland's
land operations depend on numerous  factors,  such as demand for grazing leases,
land  leases,  supply  of  competitively   priced,   developed  or  undeveloped,
properties for  residential,  industrial or commercial uses. Over the long term,
Westland  expects that residential and industrial  growth on Albuquerque's  west
side will  increase  demand for  Westland's  land,  thus  increasing  Westland's
ability to generate  revenue from land development and sales. In the short term,
however,  periodic  local  economic  conditions  may decrease the number of land
sales and hinder development, such as during the period from 1986 through 1992.

The Company 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 for sale and is devoted to the cattle grazing. The Company
derives revenues  through  commercial and land leases,  partnerships  formed for
various development projects, lot development sales and bulk land sales to other
land developers.

Westland's basic business  philosophy has been to hold certain areas of the land
in trust for  shareholders  and to enhance  the value of other areas of the land
through  careful  planning and  development to assure  perpetual  benefit to the
Company and its shareholders.

The Company  believes that it will continue to enter into joint  ventures,  land
developments, ground leases, limited partnerships and, if warranted by available
capital,  may begin the  construction of residential,  industrial and commercial
structures for lease or sale. The Company's long term business  philosophy is to
enhance  the  value  of  the  Company'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 Company's stock and to
provide dividends for its shareholders,  when consistent with the Company's need
for a sufficient cash flow to meet current operating expenses.

Narrative Description of Business.

Over  the  past 16  years,  the  Company  developed  six  master  plans  for the
development of certain of its properties and,  through  implementation  of those
plans,  sold  approximately  1,350  acres  of  its  lands.  Those  master  plans
encompassed approximately 600 to 1,000 acres and are identified as Atrisco Urban
Center and El Rancho  Atrisco,  Phases I through V. These lands,  except for the
Phase V master plan which was abandoned due the  introduction  of the Petroglyph
National Monument, have now been substantially developed and sold. A master plan
(the "Westland Master Plan") encompassing approximately 6,400 acres for the area
between  Unser  and  Paseo del  Volcan  has been  approved  by  Albuquerque  and
Bernalillo County.  Discussions  related to the introduction of utilities to the
area are ongoing at the time of this Report.

Oil and Gas and Grazing Leases.

Approximately  52,000 acres of the Company's land is not planned for development
and is leased to non-affiliated  people for cattle grazing.  The leases provided
rental  income of  approximately  $16,000  in fiscal  1998.  During the year the
Company agreed to certain rent  abatements  because of a prolonged  drought that
severely limited the productive capacity of the land.

During  the year the  company  that held an oil and gas  lease to  approximately
8,500  acres  drilled  an  exploratory  well which was not  successful  and then
abandoned  the lease.  No further  interest in leasing the land has been made by
any  significant  company  and  it  is  not  known  whether  there  remains  any
exploratory interest in the land.

The Company also owns and leases  certain  commercial  buildings at an aggregate
annual rental of $686,000. (See "Revenue Producing Properties").

Development Properties.

As of June 30, 1998, the Company  continued to own  approximately 250 acres of a
total of 1,600 acres  which it  developed  and sold over the last 16 years.  The
Westland Master Plan was approved by Bernalillo  County in 1997 and was approved
by the City of  Albuquerque  in May of 1998.  The effort of the  Company and its
staff  is  being  devoted  to the  implementation  of the  Plan at the  earliest
possible date. The Company's Master Plan is discussed below:

Westland Master Plan.

As referred to earlier,  the Company prepared a master development plan covering
approximately  6,400 acres  located north of Interstate 40 and south of the area
designated for the Petroglyph  National Monument,  west of Unser Boulevard.  The
Company and the City of  Albuquerque  are currently  negotiating  the conditions
through which the City will begin  introducing  water and sewer utilities to the
portions of land that will be initially developed. At the present time, the City
is asking that the Company pay the cost of water utilities to zones 3 and 4W and
sewer  utilities to about one quarter of the master  planned area (an  estimated
total of about  $10,000,000),  which the Company  will  recover from the City as
lots are sold and the city receives  hook-up costs from the  developers.  If the
Company  is  required  to pay those  costs,  it  anticipates  doing so through a
combination  of borrowing  and use of portions of its income.  In addition,  any
water  rights now owned or  subsequently  acquired  by the  Company in the 6,400
acres of the  master  planned  area must be  assigned  to the City for only that
portion of the master  planned area to which the City  supplies  water and sewer
service.

It is anticipated that there are not insurmountable  obstacles  remaining to the
beginning of the implementation of the Master Plan.  Management expects that the
first  sale of lands in the master  planned  area will occur in about two years,
barring unforeseen delays.

Other Projects.

1.  Assisted Living Development

As you were  previously  told, the Company is a Limited Partner in a partnership
which  built and owned a housing  facility  for persons in need of some care but
who are not  otherwise  ambulatory.  The 40 unit  complex was opened in March of
1997, and occupancy was offered through Albuquerque newspapers, but a sufficient
occupancy to reach  profitability  was never obtained.  During the year the bank
that financed the  construction  of the project  foreclosed  and proceeded  with
efforts to sell the building.  The Company  reviewed the financial  condition of
the project and  concluded  that it was not in the  Company's  best  interest to
invest additional  resources into the project.  The Company's investment in this
project  was  written  off its books  more than two years ago and no  current or
future loss on the project will be experienced.

2. ERA Phase I - Volcano Business Park.

Volcano  Business Park consists of  approximately  22 acres zoned for industrial
park uses of which 22 acres have been platted and  developed  into 11 lots.  The
Company 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, 1998 was approximately 70% occupied.

3.  ERA Phase III  - Commercial, Industrial and Residential Developments

In the mid 1980's, the Company 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), 51 acres of high
density housing and 113 acres of single family housing.  During fiscal 1995, the
Company  sold a 6.3  acre  tract  which  has  been  developed  as an  affordable
apartment  complex.  During  fiscal 1996 the Company  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 Company also
sold a tract  consisting  of  approximately  16 acres to a local  developer  for
construction of additional family homes.

The Company joined a limited  liability  corporation for the planning,  approval
and   development  of  an  9.6  acre  tract,  to  be  developed  for  affordable
multi-family apartment units. During fiscal 1997, this entire project was sold.

4.  Travel Plaza

Since 1990,  the Company has been working to develop about 100 acres of its land
for a travel  center and related  commercial  uses.  Anticipated  users  include
restaurants,  motel-hotel facilities, fueling stations, and other travel/tourist
related facilities.  During 1995, the Company sold two acres, on which there has
now been a truck sales  facility  developed and in the last year sold the owners
of that facility an additional two acres for expansion of that business.

5.  Parkway Subdivision

The  Company  previously  reported  that from 1994  through  1997,  the  Company
developed and sold to Sivage Thomas certain  developments known as Parkway Units
7 and 8. Sivage  Thomas  completed  building out homes on these Units during the
past  year and an  elementary  school,  constructed  on  approximately  11 acres
purchased from the Company by Albuquerque  Public Schools was opened for classes
beginning  in the fall of 1998.  In 1998,  the Company  sold  Parkway  Unit 9 to
Sivage Thomas.

6.  Recreation Complex

The Company  previously  reported  that in 1994 it entered  into a  lease/option
arrangement  related to  approximately  100 acres located north of I-40 on Paseo
del Volcan.  Because of a default in the terms of the  lease/option,  during the
past year the Company took possession of the property.  The lessee had developed
a recreation and softball complex on the property,  which became the property of
the Company upon taking  possession of the property.  In the summer of 1998, the
Company  held a  Matanza  for  its  shareholders  at the  softball  complex  and
approximately  600  shareholders  and heirs attended and enjoyed food and music.
The Company is looking for a purchaser for the facility and in the mean time has
leased the  facilities  on a month to month basis to a  temporary  operator at a
rental of $3,000 per month.

7.  Tierra Oeste

As previously  reported,  the Company  committed  approximately 28 acres of land
north of Ladera Dr.,  west of Unser Blvd.,  to a limited  liability  corporation
named Tierra Oeste,  LLC. The developer  defaulted in its obligations to the LLC
and the Company purchased the development company's interest.  After the initial
developer became unable to perform,  a second  developer  approached the Company
requesting the opportunity to perform the obligations of the first developer and
the Company agreed that the second developer could assume the first  developer's
interest if it  satisfied  the  Company  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
Company and the Company  canceled its agreement with the second  developer.  The
Company was subsequently  sued by the second developer for specific  performance
of the  contract  alleging  that the contract was  prematurely  terminated.  The
Company  denied the  allegations  of the  complaint and counter sued for damages
caused by the delay in its being  able to deal in this  property.  The issues in
this case were tried in August of 1998,  and the Company is awaiting the Court's
order.  It cannot be predicted  whether either party will appeal the Court Order
when  finally  entered.  If the Company  should lose this action the other party
must pay it not less than $500,000.  The Company considers this litigation to be
ordinary, routine and incidental to its business and not material.

8.  Education and Community Projects

The Company has a  continuing  corporate  program of donating  land or otherwise
assisting in projects that its management  believes have a long term  beneficial
effect to the  development  and furtherance of the educational and health of the
community and citizens.  As previously  reported,  the Company has donated lands
for the  purpose of building  schools,  churches,  and health  care  facilities.
Management will continue to review all requests of a similar nature to determine
the merits,  on a case by case basis, of future requests for similar  donations.
The Company is  currently  attempting,  with the help of others,  to establish a
facility for the housing and  employment  of mentally ill citizens  that will be
named "Westland Farms."

9.  Land Sales

1). Land Sales The  Company  has, in the last year,  completed  12  transactions
totaling  approximately  152 acres,  not including lots sold to Kaufman & Broad,
Inc. for Alvarado Estates (formerly Cedar Ridge Estates) and Westwind Homes.

2). Petroglyph  National Monument Properties 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 Company'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,  none in fiscal 1996 and 218 acres in fiscal  1997.  During the
current  fiscal year,  the Park Service  purchased 85 acres.  Approximately  362
acres are yet to be acquired by the Park  Service and the Company has been given
no assurance when the final  purchases of the property may occur.  The Company's
Board of Directors has agreed that,  subject to negotiation of acceptable  terms
of sale,  the Company  will sell to the  National  Park  Service  the  Company's
remaining lands included in the Monument.

10.   Reinvestment Properties

As part of the Company'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,  in the past it reinvested its funds in the properties discussed below
and two vacant land  parcels and 3  commercial  buildings.  As a result of these
purchases,  the Company  believes  that it has deferred  taxes on  approximately
$7,609,158 in sales  through  fiscal 1998.  The  Commercial  properties  are the
following:

   a) A commercial  building at Coors  Boulevard and Sequoia Road in Albuquerque
   at a cost of  $2,630,000,  $1,827,000  of which is subject to a Mortgage upon
   which the Company  must pay monthly  payments of $17,970.  This  building has
   been leased to Walgreen Co. for 20 years at a fixed rent of $19,173 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
   $1,074,000, $734,000 of which is subject to a Mortgage upon which the Company
   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 $9,235 per
   month.

   c) A commercial  building  located at Coors Boulevard and Central Avenue at a
   cost of  $3,593,000,  which is subject to a mortgage of $2,748,000  requiring
   payments of $24,682 per month.  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,  with the maximum  annual  rent being  capped at
   $626,922.  Walgreen Co. may continue the term of the lease for an  additional
   40 years.

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 last 18 months,  the Company has been able to sell the  properties it
had available for sale.  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 Company'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 Company 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 Company'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 Company's land are not fully sold.  These include Rio Rancho (about
six miles north of the Company's  land),  Paradise Hills (about five miles north
of the Company's  land),  Volcano  Cliffs,  Taylor Ranch and Ventana Ranch (each
about two to three miles north of the Company's land).

The  mandate by the State  Legislature  for  implementation  of Impact  Fees may
result  in the  Company'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  Company has not been able to
determine whether these fees will adversely impact its business.

MANAGEMENT'S  DISCUSSION  AND  ANALYSIS OF  FINANCIAL  CONDITION  AND RESULTS OF
OPERATIONS

In the past fiscal year,  land sales  increased  over the prior year even though
the Company  experienced  slightly fewer sales of improved  residential  lots to
builders and reduced sales to the National Park Service for the Monument.

During  the last  fiscal  year there  were  $1,507,000  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  33% of the  Company's  land  revenue  for 1998,  while such sales
during fiscal 1997 amounted to $2,000,000, or 55% of land revenue.

During 1998, the real estate market in Albuquerque showed signs of recovery from
the slump in  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 1998 were
approximately  $224,000,  compared to sales of approximately  $273,000 in fiscal
1997.

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.

Westland  anticipates making capital  commitments for land development  projects
over the next few  years as the  economy  and  opportunities  dictate  that such
expenditures would be warranted. Capital commitments may include assessments for
roads  and  water and sewer  lines on its  land.  In some  cases  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, 1998, 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,
1998 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.

After some delay,  Westland has received approval of its Master Plan by both the
City of Albuquerque and Bernalillo  County. The Master Planned land includes 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.  The Master Planned area  encompasses  approximately
6,400 acres,  but does not include any land located within the Monument and will
have no adverse impact on the Monument.  Management anticipates that development
and sale of the  initial  parcels of land  within the Master  Planned  area will
occur in the year 2000,  however,  unforeseeable  delays in getting utilities to
the lands may cause this period to be extended beyond that anticipated date.

Financial Condition:

During fiscal 1998,  total assets  increased to  $17,557,093  from  $16,840,432,
while liabilities decreased from $11,888,352 to $11,350,853.  During fiscal 1998
the  Company  invested  $46,818 in income  producing  and other  properties  and
reduced net borrowing on notes and mortgages by $855,309.  Despite these uses of
cash and payment of  dividends  of $602,031  cash and  equivalents  increased by
$878,743, as operations provided $2,382,901.

In fiscal 1998, 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,
1998, the line had no outstanding balance.

During  fiscal  1999,  the  Company  will  be  obligated  to pay  income  tax of
approximately $318,000 should replacement properties totaling $810,000 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 1999 without considering  additional revenues that
may be generated during that period.

Results of Operations:

In fiscal 1998, land revenues increased by $1,016,903 from $3,613,620 in 1997 to
$4,630,523.  The related cost of land revenues increased to $449,791, or $64,238
from $385,553 in fiscal 1997. Rental revenue increased from $621,171 to $697,385
and the related costs  decreased from $170,589 to $169,907.  These increases are
expected to continue as the Company expands its activities in these areas.

Year 2000 Issues:

Management  has  assessed  the  Year  2000  issues  and  determined  that  their
consequences would not have a material effect on the Company's business, results
of operations or financial condition.


MARKET  PRICE  OF  AND  DIVIDENDS  ON  WESTLAND'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 has been $15.00 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 September 25, 1998:


                                                            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, 1997 and
June 30,  1998,  Westland  declared  and paid cash  dividends  to  shareholders,
aggregating a total during those two years of $1,082,156. Subsequent to June 30,
1998, the Company has paid an additional cash dividend of $1.00 per share for an
aggregate dividend payment to the shareholders of $802,708.

ON WRITTEN  REQUEST,  THE COMPANY WILL PROVIDE,  WITHOUT  CHARGE,  A COPY OF ITS
ANNUAL  REPORT ON FORMS  10-KSB FOR THE FISCAL YEAR ENDED JUNE 30,  1998,  FILED
WITH THE SECURITIES AND EXCHANGE COMMISSION  (INCLUDING THE FINANCIAL STATEMENTS
AND THE  SCHEDULES  THERETO)  TO ANY RECORD  HOLDER OR  BENEFICIAL  OWNER OF THE
COMPANY'S  SHARES AS OF THE CLOSE OF BUSINESS ON SEPTEMBER 25, 1998. ANY EXHIBIT
WILL  BE  PROVIDED  ON  REQUEST  UPON  PAYMENT  OF THE  REASONABLE  EXPENSES  OF
FURNISHING THE EXHIBIT. ANY SUCH WRITTEN REQUEST SHOULD BE ADDRESSED TO DAVID C.
ARMIJO,  SECRETARY,  WESTLAND DEVELOPMENT CO., INC., 401 COORS BOULEVARD,  N.W.,
ALBUQUERQUE, NEW MEXICO 87121.



                            FINANCIAL STATEMENTS AND
                             REPORT OF INDEPENDENT
                          CERTIFIED PUBLIC ACCOUNTANTS

                         WESTLAND DEVELOPMENT CO., INC.

                             June 30, 1998 and 1997



               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, 1998, and the related statements of earnings, stockholders'
equity,  and cash flows for each of the two years in the  period  ended June 30,
1998.  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, 1998,  and the results of its  operations  and its cash flows for
each of the two years in the  period  ended  June 30,  1998 in  conformity  with
generally accepted accounting principles.



GRANT THORNTON LLP

Oklahoma City, Oklahoma
August 28, 1998



                         Westland Development Co., Inc.

                                 BALANCE SHEET

                                 June 30, 1998


                          ASSETS

Cash and cash equivalents ..........................                 $ 3,209,893

Receivables
   Real estate contracts (note B) ..................   $    59,774
      Less related deferred profit .................        30,306
                                                       -----------
                                                            29,468
   Note receivable - related party (note M) ........        65,601
   Other receivables ...............................        44,080       139,149
                                                       -----------
Land and improvements held for future development
   (notes C and E) .................................                   6,457,473

Income-producing properties, net (notes D and E) ...                   7,058,640

Property and equipment, net of accumulated
   depreciation of $447,768 (note E) ...............                     379,685

Investments in partnerships and joint ventures .....                     229,908

Other assets .......................................                      82,345
                                                                     -----------

                                                                     $17,557,093
                                                                     ===========


      LIABILITIES AND STOCKHOLDERS' EQUITY

Accounts payable, accrued expenses,
   and other liabilities ...........................                 $   627,274
Deferred income taxes (note F) .....................                   4,527,000
Notes, mortgages, and assessments payable
   (note E) ........................................                   6,196,579
                                                                     -----------

               Total liabilities ...................                  11,350,853

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 ...............................     5,530,113     6,206,240
                                                       -----------   -----------

                                                                     $17,557,093
                                                                     ===========

        The accompanying notes are an integral part of these statements.


                         Westland Development Co., Inc.

                             STATEMENTS OF EARNINGS

                              Year ended June 30,


                                                         1998           1997
                                                     -----------    -----------

Revenues
   Land ..........................................   $ 4,630,523    $ 3,613,620
   Deferred profit recognized on installment sales        20,701         45,560
   Rentals .......................................       697,385        621,171
                                                     -----------    -----------
                                                       5,348,609      4,280,351

Costs and expenses
   Cost of land revenues .........................       449,791        385,553
   Cost of rentals ...............................       169,907        170,589
   Other general, administrative, and operating ..     2,101,493      1,775,739
   Legal .........................................         4,902         11,384
                                                     -----------    -----------
                                                       2,726,093      2,343,265
                                                     -----------    -----------

               Operating income ..................     2,622,516      1,937,086

Other (income) expense
   Interest income ...............................       (99,672)       (71,415)
   Gain on sale of property and equipment ........          (779)        (1,752)
   Other, net ....................................        11,451         36,774
   Interest expense ..............................       631,356        572,508
                                                     -----------    -----------
                                                         542,356        536,115
                                                     -----------    -----------

               Earnings before income taxes ......     2,080,160      1,400,971

Income tax expense (note F) ......................       826,000        605,690
                                                     -----------    -----------

               NET EARNINGS ......................   $ 1,254,160    $   795,281
                                                     ===========    ===========

Weighted average common shares outstanding .......       807,755        802,184
                                                     ===========    ===========

Earnings per common share ........................   $      1.55    $       .99
                                                     ===========    ===========

        The accompanying notes are an integral part of these statements.


                         Westland Development Co., Inc.

                       STATEMENT OF STOCKHOLDERS' EQUITY

                       Years ended June 30, 1998 and 1997

<TABLE>
<CAPTION>
                                                    Class A             Class B
                              Common stock        Common stock        Common stock       Additional
                              no par value        $1 par value        $1 par value        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, 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

Net earnings ............      --        --        --        --        --         --          --       1,254,160      1,254,160     
                            -------   -------   -------   -------   -------   --------   ---------   -----------    -----------

Balances at June 30, 1998   716,608   $ 8,500      --     $  --      86,100   $ 86,100   $ 581,527   $ 5,530,113    $ 6,206,240
                            =======   =======   =======   =======   =======   ========   =========   ===========    ===========
<FN>
        The accompanying notes are an integral part of these statements.
</FN>
</TABLE>


                         Westland Development Co., Inc.

                            STATEMENTS OF CASH FLOWS

                              Year ended June 30,


                                                        1998           1997
                                                     -----------    -----------

Increase (Decrease) in Cash and Cash Equivalents

Cash flows from operating activities
   Cash received from land sales and collections
      on real estate contracts receivable ........   $ 4,647,316    $ 3,873,634
   Development and closing costs paid ............      (874,634)    (1,226,110)
   Cash received from rental operations ..........       732,254        533,289
   Cash paid for rental operations ...............          (816)       (87,509)
   Cash paid for property taxes ..................       (58,150)       (96,349)
   Interest received .............................       100,866         71,369
   Interest paid .................................      (667,609)      (597,443)
   Income taxes (paid) refunded, net .............        18,274       (262,000)
   Legal and other general and administrative
      costs paid .................................    (1,536,439)    (1,699,509)
   Other .........................................        21,839          1,512
                                                     -----------    -----------
              Net cash provided by
                 operating activities ............     2,382,901        510,884

Cash flows from investing activities
   Capital expenditures ..........................       (60,958)      (938,403)
   (Investments in) distributions from
      partnerships and joint ventures ............         8,588        (18,680)
   Proceeds from sale of assets ..................         3,150          2,173
   Proceeds from sinking fund ....................          --          410,024
   Proceeds from note receivable - related party .         2,402          2,173
                                                     -----------    -----------
              Net cash used in
                 investing activities ............       (46,818)      (542,713)

Cash flows from financing activities
        Borrowings on notes, mortgages,
           and assessments payable ...............       132,063      2,538,056
        Repayments of notes, mortgages,
           and assessments payable ...............      (987,372)    (1,920,035)
        Stock options exercised ..................          --           41,325
        Payment of dividends .....................      (602,031)      (480,125)
                                                     -----------    -----------
              Net cash provided by (used in)
                 financing activities ............    (1,457,340)       179,221
                                                     -----------    -----------
              NET INCREASE IN CASH AND
                 CASH EQUIVALENTS ................       878,743        147,392

Cash and cash equivalents at beginning of year ...     2,331,150      2,183,758
                                                     -----------    -----------

Cash and cash equivalents at end of year .........   $ 3,209,893    $ 2,331,150
                                                     ===========    ===========


Reconciliation of Net Earnings to Net Cash Provided by Operating Activities

Net earnings .....................................   $ 1,254,160    $   795,281
Adjustments to reconcile net earnings to
   net cash provided by
   operating activities
      Depreciation ...............................       221,879        215,433
      Loss on partnerships and joint ventures ....        33,289         36,534
      Gain on sale of property and equipment .....          (779)        (1,752)
      Collections on real estate
         contracts receivable ....................         9,259        294,627
      Profit recognized on installment sales .....       (20,701)       (45,560)
      Deferred income taxes ......................       517,000        777,000
      Change in
          Income taxes recoverable/payable .......       327,274       (433,310)
          Other receivables ......................       105,163        (98,693)
          Land and improvements held
             for future development ..............      (424,843)      (840,557)
          Other assets ...........................       130,632        (67,191)
          Accounts payable, accrued expenses,
             and other liabilities ...............       266,821        (95,993)
          Accrued interest payable ...............       (36,253)       (24,935)
                                                     -----------    -----------
              Net cash provided by
                 operating activities ............   $ 2,382,901    $   510,884
                                                     ===========    ===========

Noncash investing and financing activities:
-------------------------------------------

At June 30, 1997, declared but unpaid dividends totaled $602,031.

       The accompanying notes are an integral part of these statements.


                         Westland Development Co., Inc.

                         NOTES TO FINANCIAL STATEMENTS

                             June 30, 1998 and 1997


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,  1998 and 1997  consist  primarily  of
   proceeds  from 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,
   1998,  United States Treasury Bills of approximately  $2,248,000 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 certain  other  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  shares  outstanding  during the year,  including 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.  The  Company  has no
   potential common stock items.

   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, 1998:

        Contracts, due in varying monthly installments, with 
        interest rates ranging from 10% to 12%; 
        collateralized by land                                   $  59,774
                                                                 =========

   Principal collections due on the real estate contracts receivable 
      for the years ending June 30 are as follows:

                    1999                        $  35,774
                    2000                            4,393
                    2001                            4,829
                    2002                            5,308
                    2003                            9,470
                                                ---------
                                                $  59,774
                                                =========

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, 1998:

      Land                                        $1,060,226
      Improvements                                 5,397,247
                                                  ----------

                                                  $6,457,473
                                                  ==========

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, 1998:

       Buildings and equipment                         $5,082,882
          Less accumulated depreciation                   523,275
                                                       ----------
                                                        4,559,607
       Land                                             2,499,033
                                                       ----------

                                                       $7,058,640
                                                       ==========

   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, 1998 are as follows:

             Year ending June 30
                1999                      $   757,190
                2000                          670,740
                2001                          664,353
                2002                          665,669
                2003                          669,379
                Thereafter                  7,247,183
                                          -----------

                                          $10,674,514
                                          ===========

NOTE E - NOTES, MORTGAGES, AND ASSESSMENTS PAYABLE

   Notes,  mortgages,  and assessments payable are summarized as follows at June
   30, 1998:

        Promissory  note,  due in  monthly  installments  of
        $17,970  through  May 2015,  including  interest  at
        9.37%; collateralized by income-producing properties        $1,826,831

        Note payable,  due in monthly installments of $6,893
        through September 2015, including interest at 8.75%;
        collateralized   by   income-producing    properties           733,676

        Note  payable  to  bank;  due on  demand,  but if no
        demand  is  made,  then on  August  29,  1998,  with
        interest at 9.5%;  collateralized  primarily by real
        estate                                                         506,484

        Note payable to bank; due in monthly installments of
        $6,701  with any unpaid  amounts  due May 14,  1999,
        interest at 9.5%;  collateralized  primarily by real
        estate                                                         326,657

        Mortgage  note,  due  in  monthly   installments  of
        $24,682,  including  interest at 8.52%, due November
        1,   2016;    collateralized   by   income-producing
        properties                                                   2,748,443

        Other notes, mortgages, and assessments payable                 54,488
                                                                    ----------

                                                                    $6,196,579
                                                                    ==========

   The  Company  maintains  a line of credit  with a bank due in June 1999 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, 1998, no amounts were outstanding on this line of credit.

   Also, at June 30, 1998, the Company had approximately  $19,000 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, 1998 are as follows:

             Year ending June 30
                1999                                    $   994,693
                2000                                        157,212
                2001                                        160,767
                2002                                        172,391
                2003                                        185,340
                Thereafter                                4,526,176
                                                        -----------

                                                        $ 6,196,579
                                                        ===========
NOTE F - INCOME TAXES

   An analysis of the deferred  income tax assets and liabilities as of June 30,
   1998 is as follows:

Deferred tax assets
   Contribution carryforwards ..............................        $    89,004
   Property, equipment, and land ...........................            291,555
   Investments .............................................             35,888
   Other ...................................................            100,913
   Valuation allowance .....................................            (89,000)
                                                                    -----------
                                                                        428,360

Deferred tax liabilities
   Deferred tax gain on involuntary
      conversion of land ...................................          4,955,360
                                                                    -----------
                Net deferred tax liability .................        $ 4,527,000
                                                                    ===========

   Income tax expense (benefit) consists of the following:

                                                      Year ended June 30,
                                                  1998                  1997
                                                ---------             ---------

      Current
         Federal ...................            $ 289,242             $(156,043)
         State .....................               19,758               (15,267)
                                                ---------             ---------
                                                  309,000              (171,310)

      Deferred
         Federal ...................              439,000               660,450
         State .....................               78,000               116,550
                                                ---------             ---------
                                                  517,000               777,000
                                                ---------             ---------

                                                $ 826,000             $ 605,690
                                                =========             =========

   The income tax provision is reconciled to the tax computed at statutory rates
   as follows:

                                                             June 30,
                                                       1998            1997

      Tax expense at statutory rates .............     $ 707,000      $ 476,330
      State income taxes at statutory rates ......        97,000         84,058
      Change in valuation allowance ..............      (151,000)        19,382
      Nondeductible expenses .....................        23,000         36,904
      Expiration of contribution carryforwards ...       104,000           --
      Other ......................................        46,000        (10,984)
                                                       ---------      ---------

         Total expense ...........................     $ 826,000      $ 605,690
                                                       =========      =========

   A valuation  allowance of  approximately  $89,000 has been recognized at June
   30, 1998 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

   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 subsequent sale, each one being entitled to
          purchase  up to the  number of shares  obtained  by  stockholders  who
          purchased  stock at a preceding  sale shall have the right to purchase
          stock at a 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 st ock.

   The following  summarizes,  at June 30, 1998,  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,  1998,  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.

   The Company had a stock option plan for certain directors and employees which
   was  terminated in 1987.  Options under this plan for 7,500 shares of Class B
   common stock were exercised during 1997 and all remaining unexercised options
   expired in December 1996.

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
                          -----------   -----------   ------------   -----------
   1998
   Revenues ...........   $ 4,651,224   $   697,385   $      --      $ 5,348,609
   Operating income
      (expense) .......     3,547,773       433,945    (1,359,202)     2,622,516
   Identifiable assets      6,552,542     7,277,962     3,726,589     17,557,093
   Capital expenditures          --             972        59,986         60,958
   Depreciation .......          --         169,091        52,788        221,879

   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

   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  $89,000  and  $74,000  for  1998  and  1997,
   respectively.

NOTE J - SALES TO MAJOR CUSTOMERS

   Sales to major customers are summarized as follows:

      During the year ended June 30, 1998,  sales to two customers  individually
      accounted for 28% and 13% of total revenues.

      During the year ended June 30, 1997,  sales to two customers  individually
      accounted for 47% and 21% 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 app ropriated
   by Congress each year. In 1998,  approximately  85 acres were  transferred to
   the National Park Service for cash of  $1,500,000.  The  Company's  remaining
   land within the  National  Monument  boundary of  approximately  362 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 1998 and 1997 were $50,000 each year.

   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 r
   equirements  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.

NOTE N - FINANCIAL INSTRUMENTS - CONTINUED

   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, 1998 are as follows:

          Carrying       Estimated
           amount         fair value

      Financial assets
         Cash and cash equivalents ...........       $3,209,893       $3,209,893
         Real estate contracts receivable
            (not practicable to estimate
            fair value) ......................           29,468             --
         Other notes receivable ..............           65,601           65,601
      Financial liabilities
         Notes, mortgages, and assessments
            payable ..........................        6,196,579        6,642,000

NOTE O - SUBSEQUENT EVENT

   On July 31,  1998,  the  Company  declared  a  dividend  of $1 per  share for
   stockholders  of record as of August 10,  1998.  The  dividend  is payable on
   September 1, 1998.



DIRECTORS OF WESTLAND

SOSIMO S. PADILLA,  Chairman of the Board of Directors  and Director.  Member of
the Executive Committee.  Mr. Padilla is retired from the circulation department
of  the  Albuquerque  Publishing  Company  and  was  owner/operator  of  Western
Securities Transportation Corporation for over thirty years.

BARBARA PAGE, President, Chief Executive Officer and Director.  Secretary of the
Executive  Committee.  Ms. Page is employed by Westland Development Co., Inc. as
its President.

POLECARPIO (LEE) ANAYA, Executive Vice President,  Assistant Secretary/Treasurer
and Director.  Chairman of the Executive Committee. Mr. Anaya was owner/operator
of Lee's Conoco.

DAVID C. ARMIJO,  Secretary/Treasurer  and Director.  Mr. Armijo is an insurance
broker  and  serves as  President  and  Chairman  of the  Board of  California's
All-Risk Insurance Agency, Inc. in Los Angeles.

CARMEL CHAVEZ.  Member of the Executive  Committee and the Disclaimer  Committee
and Vice Chairman of El Campo Santo,  Inc. Mr.  Chavez is a retired  employee of
the Albuquerque Public Schools.

JOSIE G.  CASTILLO.  Vice  Chairman of the Executive  Committee,  Chairman of El
Campo  Santo,  Inc.  and member of the  Disclaimer  Committee.  Ms.  Castillo is
retired from the Human Services Department of the State of New Mexico.

CARLOS SAAVEDRA.  Alternate member of the Executive Committee,  Alternate Member
of El Campo Santo, Inc. and Chairman of the Disclaimer  Committee.  Dr. Saavedra
is a former  director of  bilingual  education  for the Colorado  Department  of
Education and the Oakland  Unified School  District,  Oakland,  California.  Dr.
Saavedra retired from education in 1985.

JOE S. CHAVEZ.  Alternate  member of the  Disclaimer  Committee.  Mr.  Chavez is
employed at Galles Chevrolet.

CHARLES V. PENA.  Member of El Campo Santo,  Inc. Mr. Pea owns and operates CJ's
New Mexican Food Restaurant.