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 September 30, 2000
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
SEPTEMBER 30, 2000 and DECEMBER 31, 1999
September 30, December 31,
ASSETS 2000 1999
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(Unaudited)
Cash $ 367,939 $ 222,539
Temporary cash investments at cost which approximates market 1,300,000 1,650,000
Accounts receivable 439,853 439,176
Accrued interest receivable 317,701 371,595
Prepaid expenses 4,016 40,162
Prepaid Federal income taxes -- 41,523
Notes receivable for land sales 8,513,603 8,393,007
Real estate acquired through foreclosure:
(10,010.96 acres at September 30, 2000 and 25,027.51 acres at December 31, 1999) 4,005,784 4,598,624
Water wells, leasehold improvements, furniture and
equipment - at cost less accumulated depreciation 125,821 119,980
Property, no value assigned:
Land (surface rights) situated in twenty-one counties in
Texas - 1,027,239.26 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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$15,074,717 $15,876,606
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LIABILITIES AND CAPITAL
Federal income taxes payable 38,916 --
Other taxes 243,168 27,383
Other liabilities 6,777 80,650
Escrow deposits on land sales 11,100 --
Deferred taxes 3,880,691 4,021,803
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Total liabilities 4,180,652 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 2,528,205 sub-shares in 2000 and
2,588,505 sub-shares in 1999 -- --
Net proceeds from all sources 10,894,065 11,746,770
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Total capital 10,894,065 11,746,770
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$15,074,717 $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 Nine Months Ended
September 30, September 30,
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2000 1999 2000 1999
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Income:
Rentals, royalties and sundry income $1,517,098 $ 956,486 $3,828,737 $3,065,588
Land sales 162,210 29,476 1,064,937 344,897
Interest 219,381 236,207 651,275 734,334
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1,898,689 1,222,169 5,544,949 4,144,819
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Expenses:
Taxes, other than Federal income taxes 142,886 112,707 409,446 326,319
Basis in real estate sold 4,025 -- 592,840 1,578
General and administrative expenses 342,782 287,874 989,444 914,817
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489,693 400,581 1,991,730 1,242,714
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Income before provision for
Federal income taxes 1,408,996 821,588 3,553,219 2,902,105
Provision for Federal income taxes 414,579 240,930 1,051,327 880,897
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Net income $ 994,417 $ 580,658 $2,501,892 $2,021,208
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Average number of sub-share certificates
and equivalent sub-share certificates
outstanding 2,542,355 2,637,388 2,565,398 2,650,527
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Basic earnings per sub-share certificate $ .39 $ .22 $ .98 $ .76
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Cash dividend per sub-share certificate -- -- $ .40 $ .40
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See accompanying notes to financial statements.
(2)
TEXAS PACIFIC LAND TRUST
STATEMENTS OF CASH FLOWS
(Unaudited)
Nine Months Ended
September 30,
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2000 1999
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Cash flows from operating activities:
Net income $ 2,501,892 $ 2,021,208
Adjustments to reconcile net income to net
cash provided by operating
activities:
Depreciation 32,400 32,400
Deferred taxes (141,112) (785,840)
(Increase) decrease in assets:
Accounts receivable (677) (671)
New notes receivable from land sales (559,226) (201,750)
Payments received on notes receivable 438,630 2,544,509
Accrued interest receivable 53,894 70,601
Prepaid Federal income taxes 41,523 --
Prepaid expenses 36,146 36,953
Real estate acquired through foreclosure 592,840 --
Increase (decrease) in liabilities:
Federal income taxes payable 38,916 (343,369)
Other taxes payable 215,785 196,403
Escrow deposits on land sales 11,100 (6,000)
Other liabilities payable (73,873) 28,589
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Total adjustments 686,346 1,571,825
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Net cash provided by operating activities 3,188,238 3,593,033
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Cash flows from investing activities -
Additions to water wells, leasehold improvements,
furniture and equipment (38,241) (32,585)
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Cash flows from financing activities:
Sub-shares purchased for retirement (2,320,755) (2,262,532)
Dividends paid (1,033,842) (1,067,202)
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Net cash used by financing activities (3,354,597) (3,329,734)
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Net (decrease) increase in cash and cash equivalents (204,600) 230,714
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 $ 1,667,939 $ 2,828,089
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See accompanying notes to financial statements.
(3)
TEXAS PACIFIC LAND TRUST
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 2000
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(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 September 30, 2000 and the results of
its operations for the three and nine months ended September 30, 2000
and 1999 and its cash flows for the nine months ended September 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 nine months ended September
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 nine months ended September
30, 2000 and 1999 is summarized as follows:
2000 1999
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Federal income taxes paid $ 1,112,000 $2,010,106
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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
Nine and Three Months Ended
September 30, 2000 and 1999
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Results of Operations for Quarter Ended September 30, 2000 Compared to Quarter
Ended September 30, 1999
Earnings per sub-share certificate for the third quarter of 2000 were $.39
compared to $.22 in the third quarter of 1999. Total revenues were $1,898,689
compared to $1,122,169, an increase of 69.2%.
In the third quarter of 2000, land sales totaled $162,210 which was 1,551.43
acres at $105 per acre. In the comparable period of 1999, 6.55 acres were sold
for $29,476, an average of $4,500 per acre.
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 $1,517,098 for the third quarter of
2000 compared to $956,486 for the third quarter of 1999, an increase of 58.6%.
Oil and gas royalty revenue was $1,083,586 compared to $646,704 for the third
quarter of 1999, up 67.6%. Oil royalty revenue was $710,358, up 81.5% from the
third quarter of 1999. Oil royalty production subject to the Trust's royalty
interest was up 16.5% in the third quarter of 2000, while the average price per
royalty barrel of crude oil was up 55.7%. Gas royalty revenue for the third
quarter was $373,228, up 46.2% on a volume decrease of .3% and price increase of
46.3%.
Easement and sundry income was $307,620 for the third quarter of 2000, up 67.5%
from the third quarter of 1999. These categories of income are not predictable
and commonly have large swings in any given period.
Interest revenue was down 7.1% for the third quarter of 2000 compared to the
third quarter of 1999. Interest from notes receivable was $197,681, down 5.2%
for the 2000 period due to a decrease in average note receivable balances for
the period. Notes receivable for land sold were $8,513,603 as of September 30,
2000, an increase of .8% from the end of the third quarter of 1999. Sundry
interest was $21,700 for the third quarter of 2000, which was down 21.9% from
the third quarter of 1999.
Taxes, other than Federal income taxes, were up 26.8% for the third quarter of
2000 compared to the third quarter of 1999. This is due to an increase in oil
and gas royalty production taxes and ad valorem taxes.
General and administrative expenses were up 19.1% over the third quarter of
1999. This is mainly due to increases in professional fees and administrative
expenses.
(6)
Management's Discussion (cont'd)
Results of Operations for Nine Months Ended September 30, 2000 Compared to Nine
Months Ended September 30, 1999
Earnings per sub-share for the first nine months of 2000 were $.98 compared to
$.76 for the first nine months of 1999. Total revenues were $5,544,949 compared
to $4,144,819, an increase of 33.8%.
The first nine months of 2000 had total land sales of 18,165.96 acres for
$1,064,937, an average of $59 per acre, compared to 2,117.98 acres for $344,897,
an average of $163 per acre in 1999.
Rentals, royalties, and sundry income were $3,828,737 for the first nine months
compared to $3,065,588 for the first nine months of 1999, an increase of 24.9%.
Oil and gas royalty revenue for the first nine months was $2,862,652 compared to
$1,696,141 for the first nine months of 1999, up 68.8%. Oil royalty revenue was
$1,920,874, up 79.0% for the 2000 period. Crude oil production subject to the
Trust's royalty interest was down 7.6% for the first nine months of 2000, while
the average price per barrel of crude oil was up 93.7%. Gas royalty revenue was
$941,778 for the first nine months of 2000, up 51.1% on a volume increase of
3.5%, and a price increase of 45.7%.
Easement and sundry income was $567,429 for the first nine months of 2000, down
41.1% from the first nine months of 1999. These categories of income are not
predictable, and may have large increases or decreases in any given period or
year.
Interest revenue was down 11.3% for the first nine months of 2000 compared to
the first nine months of 1999. Interest from notes receivable was $586,294, down
9.4% for the 2000 period and sundry interest was $64,981, down 25.4%.
Taxes, other than Federal income taxes were up 25.5% for the first nine months
of 2000 from the first nine months of 1999. These are increases in ad valorem
taxes and oil and gas production taxes mainly.
General and administrative expenses were up 8.2% for the first nine months of
2000 over the comparable 1999 period.
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
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(Registrant)
Date November 13, 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