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 June 30, 2000
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OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
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Commission file number 1-737
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TEXAS PACIFIC LAND TRUST
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(Exact name of registrant as specified in its charter)
NOT APPLICABLE 75-0279735
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(State or other jurisdiction of incorporation (I.R.S. Employer
or organization) Identification No.)
80 Broad Street, Suite 2700, New York, New York 10004
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(Address of principal executive offices)
(Zip Code)
212/269-2266
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(Registrant's telephone number, including area code)
NOT APPLICABLE
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(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
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Part I
FINANCIAL INFORMATION
TEXAS PACIFIC LAND TRUST
BALANCE SHEETS
JUNE 30, 2000 and DECEMBER 31, 1999
June 30, December 31,
ASSETS 2000 1999
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(Unaudited)
Cash $ 157,679 $ 222,539
Temporary cash investments at cost which approximates market 1,150,000 1,650,000
Accounts receivable 446,085 439,176
Accrued interest receivable 294,673 371,595
Prepaid expenses 16,065 40,162
Prepaid Federal income taxes -- 41,523
Notes receivable for land sales 8,635,411 8,393,007
Real estate acquired through foreclosure:
(10,112.98 acres at June 30, 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 125,405 119,980
Property, no value assigned:
Land (surface rights) situated in twenty-one counties in
Texas - 1,028,688.67 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 -- --
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$14,835,127 $15,876,606
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LIABILITIES AND CAPITAL
Federal income taxes payable $ 47,920 $ --
Other taxes payable 165,978 27,383
Other liabilities payable 54,974 80,650
Escrow deposits on land sales 2,000 --
Deferred taxes 3,924,108 4,021,803
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Total liabilities 4,194,980 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 2,546,505 sub-shares in 2000 and
2,588,505 sub-shares in 1999 -- --
Net proceeds from all sources 10,640,147 11,746,770
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Total capital 10,640,147 11,746,770
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$14,835,127 $15,876,606
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See accompanying notes to financial statements.
(1)
TEXAS PACIFIC LAND TRUST
STATEMENTS OF INCOME
(Unaudited)
Three Months Ended Six Months Ended
June 30 June 30
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2000 1999 2000 1999
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Income:
Rentals, royalties and sundry income $1,234,552 $ 952,052 $2,311,639 $2,109,102
Land sales 120,001 238,400 902,727 315,421
Interest 217,182 237,509 431,894 498,127
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1,571,735 1,427,961 3,646,260 2,922,650
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Expenses:
Taxes, other than Federal income taxes 135,534 110,065 266,560 213,612
General and administrative expenses 285,632 275,984 646,662 626,943
Basis in real estate sold -- -- 588,815 1,578
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421,166 386,049 1,502,037 842,133
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Income before provision for
Federal income taxes 1,150,569 1,041,912 2,144,223 2,080,517
Provision for Federal income taxes 339,768 317,547 636,748 639,967
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Net income $ 810,801 $ 724,365 $1,507,475 $1,440,550
========== ========== ========== ==========
Average number of sub-share certificates
and equivalent sub-share certificates
outstanding 2,568,283 2,648,305 2,576,919 2,657,097
========== ========== ========== ==========
Basic earnings per sub-share certificate $ .32 $ .27 $ .59 $ .54
========== ========== ========== ==========
Cash dividend per sub-share certificate -- -- $ .40 $ .40
========== ========== ========== ==========
See accompanying notes to financial statements.
(2)
TEXAS PACIFIC LAND TRUST
STATEMENTS OF CASH FLOWS
(Unaudited)
Six Months Ended
June 30
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2000 1999
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Cash flows from operating activities:
Net income $ 1,507,475 $ 1,440,550
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation 21,600 21,600
Deferred taxes (97,695) (512,181)
(Increase) decrease in assets:
Accounts receivable (6,909) (3,968)
New notes receivable from land sales (559,227) (201,750)
Payments received on notes receivable 316,823 1,727,981
Accrued interest receivable 76,922 49,653
Prepaid Federal income taxes 41,523 (229,647)
Prepaid expenses 24,097 24,635
Real estate acquired through foreclosure 588,815 --
Increase (decrease) in liabilities:
Federal income taxes payable 47,920 (348,311)
Other taxes payable 138,595 132,441
Escrow deposits on land sales 2,000 (7,000)
Other liabilities payable (25,676) 11,775
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Total adjustments 568,788 665,228
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Net cash provided by operating activities 2,076,263 2,105,778
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Cash flows from investing activities -
Additions to water wells, leasehold improvements,
furniture and equipment (27,025) (27,129)
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Cash flows from financing activities:
Sub-shares purchased for retirement (1,580,256) (1,531,985)
Dividends paid (1,033,842) (1,067,202)
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Net cash used by financing activities (2,614,098) (2,599,187)
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Net decrease in cash and cash equivalents (564,860) (520,538)
Cash and cash equivalents at beginning
of period 1,872,539 2,597,375
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Cash and cash equivalents at end
of period $ 1,307,679 $ 2,076,837
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See accompanying notes to financial statements.
(3)
TEXAS PACIFIC LAND TRUST
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 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 June 30, 2000 and the results of its
operations for the three and six months ended June 30, 2000 and 1999
and its cash flows for the six months ended June 30, 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 and six months ended June 30,
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 six months ended June 30,
2000 and 1999 is summarized as follows:
2000 1999
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Federal income taxes paid $645,000 $1,730,106
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Non - cash operating activity -
Notes receivable plus accrued interest converted to
real estate acquired through foreclosure $ -- $ 230,795
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(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
Six Months Ended
June 30, 2000 and 1999
Results of Operations for Quarter Ended June 30, 2000 Compared to Quarter Ended
June 30, 1999
Earnings per sub-share were $.32 for the second quarter of 2000 compared to $.27
in the second quarter of 1999. Total revenues were $1,571,735 compared to
$1,427,961, an increase of 10.1%.
Land sales for the second quarter of 2000 were 960 acres at an average price of
approximately $125 per acre for a total of $120,001. This compares to 665 acres
at an average price of approximately $358 per acre for a total of $238,400 in
the second 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 amounted to $1,234,552 for the second
quarter of 2000 compared to $952,052 for the second quarter of 1999, up 29.7%.
Oil and gas royalty revenue was $918,204 for the second quarter of 2000, up
56.8% compared to the second quarter of 1999. Oil royalty revenue was $613,237,
up 53.4% for the 2000 period. Crude oil production subject to the Trust's
royalty interest was down 20.5% in the second quarter of 2000 which was offset
by a 93.0% increase in the average price per barrel. Gas royalty revenue was
$304,967 in the second quarter of 2000, up 64.0% on a volume increase of 9.8%
and a price increase of 50.0%.
Easement and other sundry income was $129,711 for the second quarter of 2000,
down 25.7% from the second quarter of 1999. This income is unpredictable and may
vary greatly from quarter to quarter.
Interest revenue was down 8.6% in the second quarter of 2000 compared to the
same period of 1999. Interest from notes receivable amounted to $198,597, a 7.7%
decrease from the 1999 period. Notes receivable for land sold were $8,635,411 as
of June 30, 2000, down 6.7% from June 30, 1999, due to payments received from
note makers. Sundry interest was $18,585 for the second quarter of 2000, down
16.5% from the second quarter of 1999. Sundry interest income fluctuates based
on cash on hand for investment, and interest rates on short term investments.
Taxes, other than Federal income taxes, were up 23.1% due to an increase in land
inventory and increase in royalty income production taxes in the second quarter
of 2000 compared to the second quarter of 1999.
General and administrative expenses were up 3.5% for the second quarter of 2000
compared with the same period of 1999.
(6)
Management's Discussion (cont'd)
Results of Operations for Six Months Ended June 30, 2000 Compared to Six Months
Ended June 30, 1999
Earnings per sub-share for the first six months of 2000 were $.59 compared to
$.54 in the first six months of 1999. Total revenues were $3,646,260 compared to
$2,922,650, an increase of 24.8%. The main reason for earnings being up only
9.3% and revenues being up 24.8% is due to land sold with a basis of $588,815
which shows as an expense against earnings.
Land sales for the first six months of 2000 were 16,614.53 acres at an average
price of approximately $54 per acre for a total of $902,727. This compares to
2,111.43 acres at an average price of approximately $149 per acre for a total of
$315,421 in the first six months of 1999.
Rentals, royalties, and sundry income amounted to $2,311,639 for the first six
months of 2000 compared to $2,109,102 for the first six months of 1999, up 9.6%.
Oil and gas royalty revenue for the first six months of 2000 was $1,779,066, up
69.5% compared to the first six months of 1999. Oil royalty revenue was
$1,210,515, up 77.7% for the 2000 period. Crude oil production was down 16.8% in
the first six months of 2000, and the average price per barrel was up 113.6%.
Gas royalty revenue was $568,551 in the first six months of 2000, up 54.5% on a
volume increase of 5.6%, and a price increase of 46.1%.
Easement and other sundry income was $259,809 in the first six months of 2000,
down 66.7% from the first six months of 1999. This was mainly due to reduction
of pipeline easement and seismic permit income which are unpredictable and vary
greatly from one period to another.
Interest revenue was $431,894 for the first six months of 2000, down 13.3% from
the 1999 period. Interest from notes receivable was $388,613, down 11.4% from
the 1999 period. Sundry interest was $43,281 for the first six months, down
27.0% from the 1999 period.
Taxes, other than Federal income taxes in the first six months of 2000 were up
24.8%. This is due to the increase in land ad valorem taxes and royalty income
taxes.
General and administrative expenses for the first six months of 2000 were up
3.1% from the first six months of 1999.
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.
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
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(Registrant)
Date August 10, 2000 By /s/ ROY THOMAS
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Roy Thomas, General Agent,
Authorized Signatory and Principal
Financial Officer
(8)
INDEX TO EXHIBITS
EXHIBIT
NUMBER DESCRIPTION
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27 Financial Data Schedule