FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2000
------------------------------------------------
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
---------------------- -----------------------
Commission file number 1-737
---------------------------------------------------------
TEXAS PACIFIC LAND TRUST
- --------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
NOT APPLICABLE 75-0279735
- --------------------------------------------------------------------------------
(State or other jurisdiction of incorporation (I.R.S. Employer
or organization) Identification No.)
80 Broad Street, Suite 2700, New York, New York 10004
- --------------------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
212/269-2266
- --------------------------------------------------------------------------------
(Registrant's telephone number, including area code)
NOT APPLICABLE
- --------------------------------------------------------------------------------
(Former name, former address and former fiscal year,
if changed since last report)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 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
--- ---
Part I
FINANCIAL INFORMATION
TEXAS PACIFIC LAND TRUST
BALANCE SHEETS
MARCH 31, 2000 and DECEMBER 31, 1999
------------------------------------
ASSETS March 31, December 31,
2000 1999
------------- -------------
(Unaudited)
Cash $ 97,304 $ 222,539
Temporary cash investments at cost which approximates market 1,350,000 1,650,000
Accounts receivable 444,961 439,176
Accrued interest receivable 380,997 371,595
Prepaid expenses 28,113 40,162
Prepaid Federal income taxes -- 41,523
Notes receivable for land sales 8,820,324 8,393,007
Real estate acquired through foreclosure:
(10,112.98 acres at March 31, 2000 and 25,027.51 acres at December 31, 1999) 4,009,809 4,598,624
Water wells, leasehold improvements, furniture and
equipment - at cost less accumulated depreciation 115,519 119,980
Property, no value assigned:
Land (surface rights) situated in twenty-one counties in
Texas - 1,029,648.67 acres in 2000 and 1,030,388.67 acres in 1999 -- --
Town lots in Iatan, Loraine and Morita - 628 lots in 2000 and 1999 -- --
1/16 nonparticipating perpetual royalty interest in 386,987.70 acres in 2000 and 1999 -- --
1/128 nonparticipating perpetual royalty interest in 85,413.60 acres in 2000 and 1999 -- --
------------- -------------
$ 15,247,027 $ 15,876,606
============= =============
LIABILITIES AND CAPITAL
Federal income taxes payable $ 294,263 $ --
Other taxes payable 98,925 27,383
Other liabilities payable 40,180 80,650
Deferred taxes 3,982,997 4,021,803
------------- -------------
Total liabilities 4,416,365 4,129,836
Capital:
Certificates of Proprietary Interest, par value $100
each; outstanding one certificate in 2000 and 1999 -- --
Sub-share Certificates in Certificates of Proprietary Interest, par value
$.16 2/3 each; outstanding 2,573,605 sub-shares in 2000 and
2,588,505 sub-shares in 1999 -- --
Net proceeds from all sources 10,830,662 11,746,770
------------- -------------
Total capital 10,830,662 11,746,770
------------- -------------
$ 15,247,027 $ 15,876,606
============= =============
See accompanying notes to financial statements.
(1)
TEXAS PACIFIC LAND TRUST
STATEMENTS OF INCOME
(Unaudited)
Three Months Ended
March 31
---------------------------
2000 1999
------------ ------------
Income:
Rentals, royalties and sundry income $ 1,077,087 $ 1,157,050
Land sales 782,726 77,021
Interest 214,712 260,618
------------ ------------
2,074,525 1,494,689
------------ ------------
Expenses:
Taxes, other than Federal income taxes 131,026 103,547
General and administrative expenses 361,030 350,959
Basis in real estate sold 588,815 1,578
------------ ------------
1,080,871 456,084
------------ ------------
Income before provision for
Federal income taxes 993,654 1,038,605
Provision for Federal income taxes 296,980 322,420
------------ ------------
Net income $ 696,674 $ 716,185
============ ============
Average number of sub-share certificates
and equivalent sub-share certificates
outstanding 2,585,555 2,665,888
============ ============
Basic earnings per sub-share certificate $ .27 $ .27
============ ============
Cash dividend per sub-share certificate $ .40 $ .40
============ ============
See accompanying notes to financial statements.
(2)
TEXAS PACIFIC LAND TRUST
STATEMENTS OF CASH FLOWS
(Unaudited)
Three Months Ended
March 31
------------------------------
2000 1999
------------- -------------
Cash flows from operating activities:
Net income $ 696,674 $ 716,185
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation 10,800 10,800
Deferred taxes (38,806) (343,160)
(Increase) decrease in assets:
Accounts receivable (5,785) (7,137)
New notes receivable from land sales (559,227) (51,750)
Payments received on notes receivable 131,910 1,064,510
Accrued interest receivable (9,402) (34,186)
Prepaid Federal income taxes 41,523 --
Prepaid expenses 12,049 12,317
Real estate acquired through foreclosure 588,815 --
Increase (decrease) in liabilities:
Federal income taxes payable 294,263 315,474
Other taxes payable 71,542 67,444
Escrow deposits on land sales -- (2,000)
Other liabilities payable (40,470) 17,419
------------- -------------
Total adjustments 497,212 1,049,731
------------- -------------
Net cash provided by operating activities 1,193,886 1,765,916
------------- -------------
Cash flows from investing activities-
Additions to water wells, leasehold improvements,
furniture and equipment (6,339) (6,744)
------------- -------------
Cash flows from financing activities:
Sub-shares purchased for retirement (578,940) (1,010,440)
Dividends paid (1,033,842) (1,067,202)
------------- -------------
Net cash used by financing activities (1,612,782) (2,077,642)
------------- -------------
Net decrease in cash and cash equivalents (425,235) (318,470)
Cash and cash equivalents at beginning
of period 1,872,539 2,597,375
------------- -------------
Cash and cash equivalents at end
of period $ 1,447,304 $ 2,278,905
============= =============
See accompanying notes to financial statements.
(3)
TEXAS PACIFIC LAND TRUST
NOTES TO FINANCIAL STATEMENTS
MARCH 31, 2000
(1) In the opinion of management, the accompanying unaudited financial
statements contain all adjustments (consisting of only normal recurring
accruals) necessary to present fairly the financial position of Texas
Pacific Land Trust (Trust) as of March 31, 2000 and the results of its
operations and its cash flows for the three months ended March 31, 2000
and 1999, respectively. These financial statements and footnotes
included herein should be read in conjunction with the Trust's annual
financial statements as of December 31, 1999 and 1998 and for each of
the years in the three year period ended December 31, 1999 included in
the Trust's Form 10-K.
(2) No value is assigned to the land, unless acquired through foreclosure;
consequently, no allowance for depletion is computed, and no charge to
income is made therefore, and no cost is deducted from the proceeds of
the land sales in computing gain or loss thereon.
(3) The Sub-shares and the Certificates of Proprietary Interest are freely
interchangeable in the ratio of one Certificate of Proprietary Interest
for 600 Sub-shares or 600 Sub-shares for one Certificate of Proprietary
Interest.
(4) The Trust's effective Federal income tax rate is less than the 34%
statutory rate because taxable income is reduced by statutory
percentage depletion allowed on mineral royalty income.
(5) The results of operations for the three months ended March 31, 2000 are
not necessarily indicative of the results to be expected for the full
year.
(6) Cash in excess of daily requirements is invested in money market
instruments with maturities of ninety days or less. Such investments
are deemed to be cash equivalents for purposes of the statements of
cash flows.
Supplemental cash flow information for the three months ended March 31,
2000 and 1999 is summarized as follows:
2000 1999
------------ ------------
Federal income taxes paid $ -- $ 350,106
============ ============
Non-cash operating activity -
Notes receivable plus accrued interest converted to
real estate acquired through foreclosure $ -- $ 230,795
============ ============
(4)
(7) The Trust has adopted SFAS No. 131, Disclosures about Segments of an
Enterprise and Related Information which establishes standards for the
way public business enterprises are to report information about
operating segments. SFAS No. 131 utilizes the management approach as a
basis for identifying reportable segments. The management approach is
based on the way that management organizes the segments within the
enterprise for making operating decisions and assessing performance.
The Trust's management views its operations as one segment and believes
the only significant activity is managing the land which was conveyed
to the Trust in 1888. Trust management makes decisions about resource
allocation and performance assessment based on the same financial
information presented in these financial statements. Managing the land
includes sales and leases of such land, and the retention of oil and
gas royalties.
(5)
Management's Discussion and
Analysis of Financial Condition and
Results of Operations for the
Three Months Ended
March 31, 2000 and 1999
Results of Operations for Quarter Ended March 31, 2000 Compared to Quarter Ended
March 31, 1999
Earnings per sub-share were $.27 for the first quarter of 2000 compared to $.27
for the first quarter of 1999. Total revenues were $2,074,525 compared to
$1,494,689, an increase of 38.8%. The main reason for earnings being the same
while revenues were up 38.8% is that land sold in the first quarter of 2000 had
a basis of $587,237 more than land sold in the first quarter of 1999.
The Trust sold 15,654.53 acres of land for a total of $782,726, an average of
$50 per acre in the first quarter of 2000. This compares to 1,446 acres at an
average price of $53 per acre for a total of $77,021 in the first quarter of
1999.
Land Sales may vary widely from year to year and quarter to quarter. The total
dollar amount, the average price per acre, and the number of acres sold in any
one year or quarter should not be assumed to be indicative of land sales in the
future. The Trust is a passive seller of land; it does not actively solicit
sales of land. The demand for and the sales price of any particular tract of the
Trust's land is influenced by many factors including the national and local
economies, the rate of residential and commercial development in nearby areas,
livestock carrying capacity, and the conditions of the local agricultural
industry which itself is influenced by range conditions and prices for livestock
and other agricultural products. Approximately 99% of the Trust's land is
classified as ranch land and intermingled with other ownerships to form ranching
units. Ranch land sales are, therefore, largely dependent on the actions of the
adjoining landowners.
Rentals, royalties and sundry income were $1,077,087 in the first quarter of
2000 compared to $1,157,050 in the first quarter of 1999, a decrease of 6.9%.
Oil and gas royalty revenue was $860,862, up 85.6% compared to the first quarter
of 1999. Oil royalty revenue was $597,279, up 112.0% compared to 1999. Crude oil
production subject to the Trust's royalty interest was down 13.0% in the first
quarter and the average price per royalty barrel was up 143.6% compared to 1999.
Gas royalty revenue was $263,583 in the first quarter, up 44.7% on a volume
increase of 1.4% and a price increase of 42.9%.
Easement and Sundry income was $130,098 down 78.5% from the first quarter of
1999. This drop is due to an exceptionally large amount of easement and seismic
permit income being received in the first quarter of 1999. Both seismic and
easement income are not predictable as sources of income.
Interest revenue decreased 17.6% in the first quarter of 2000 compared to 1999.
Interest from notes receivable was $190,016 a decrease of 15.0% from the first
quarter of 1999. Notes receivable were $8,820,324 as of March 31, 2000 down 9.8%
from March 31, 1999. Sundry interest was $24,696, down 33.4% from the first
quarter of 1999. The decrease is due to the decrease of average cash on hand
during this first quarter compared to the first quarter of 1999.
Taxes, other than Federal income taxes were up 26.5% over the first quarter of
1999. This is due mainly to the increase in oil and gas production taxes and ad
valorem taxes.
General and administrative expenses were increased 2.9% compared to the first
quarter of 1999.
(6)
Management's Discussion (cont'd)
Liquidity and Capital Resources
The Trust's oil and gas royalty revenues, lease rentals and receipts of interest
and principal on notes receivable has generated more than adequate amounts of
cash to meet the Trust's needs and should continue to do so in the predictable
future.
Words or phrases when used in this Form 10-Q or other filings with the
Securities and Exchange Commission, such as "does not believe" and "believes",
or similar expressions are intended to identify "forward-looking statements"
within the meaning of the Private Securities Litigation Reform Act of 1995.
Quantitative and Qualitative
Disclosures About Market Risk
There have been no material changes in the information related to market risk of
the Trust since December 31, 1999.
(7)
PART II
OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits. Interim report furnished to shareholders upon
request per sub-part Item 601 (19) Regulation S-K.
Exhibit 27 - Financial Data Schedule.
(b) Reports on Form 8-K. The registrant has filed no reports on
Form 8-K during the quarter for which this report is filed.
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.
TEXAS PACIFIC LAND TRUST
------------------------------------
(Registrant)
Date 05/10/00 By /s/ ROY THOMAS
------------------------------------ -----------------------------------
Roy Thomas, General Agent,
Authorized Signatory and Principal
Financial Officer
(8)
INDEX TO EXHIBITS
EXHIBIT
NUMBER EXHIBIT
- ------- -----------
27 Financial Data Schedule