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, 2001
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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.)
1700 Pacific Avenue, Suite 1670, Dallas, Texas 75201
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(Address of principal executive offices)
(Zip Code)
214/969-5530
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(Registrant's telephone number, including area code)
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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, 2001 and DECEMBER 31, 2000
June 30, December 31,
ASSETS 2001 2000
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(Unaudited)
Cash $ 205,463 $ 263,834
Temporary cash investments at cost which approximates market 2,150,000 1,350,000
Accounts receivable 586,580 587,109
Accrued interest receivable 279,454 379,383
Prepaid expenses 17,517 43,792
Notes receivable for land sales 7,438,696 8,591,998
Real estate acquired through foreclosure:
(9,268.43 acres at June 30, 2001 and 9,669.46 acres at December 31, 2000) 3,976,482 3,992,302
Water wells, leasehold improvements, furniture and
equipment - at cost less accumulated depreciation 222,992 120,898
Property, no value assigned:
Land (surface rights) situated in twenty-one counties in
Texas - 1,024,733.42 acres in 2001 and 1,025,894.27 acres in 2000 -- --
Town lots in Iatan, Loraine and Morita - 628 lots in 2001 and 2000 -- --
1/16 nonparticipating perpetual royalty interest in 386,987.70 acres in 2001 and 2000 -- --
1/128 nonparticipating perpetual royalty interest in 85,413.60 acres in 2001 and 2000 -- --
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$ 14,877,184 $ 15,329,316
=============== ===============
LIABILITIES AND CAPITAL
Federal income taxes payable $ 317,828 $ 67,290
Other taxes 170,594 36,330
Other liabilities 76,070 51,071
Escrow deposits on land sales 4,300 640
Deferred taxes 3,542,561 3,905,678
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Total liabilities 4,111,353 4,061,009
Capital:
Certificates of Proprietary Interest, par value $100
each; outstanding one certificate in 2001 and 2000 -- --
Sub-share Certificates in Certificates of Proprietary Interest, par value
$.16 2/3 each; outstanding 2,468,805 sub-shares in 2001 and
2,504,205 sub-
shares in 2000 -- --
Net proceeds from all sources 10,765,831 11,268,307
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Total capital 10,765,831 11,268,307
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$ 14,877,184 $ 15,329,316
=============== ===============
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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2001 2000 2001 2000
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Income:
Rentals, royalties and sundry income $1,625,758 $1,234,552 $3,041,326 $2,311,639
Land sales 81,115 120,001 99,655 902,727
Interest 202,053 217,182 415,674 431,894
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1,908,926 1,571,735 3,556,655 3,646,260
---------- ---------- ---------- ----------
Expenses:
Taxes, other than Federal income taxes 141,739 135,534 301,078 266,560
Basis in real estate sold -- -- 15,821 588,815
General and administrative expenses 322,183 285,632 708,192 646,662
---------- ---------- ---------- ----------
463,922 421,166 1,025,091 1,502,037
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Income before
Federal income taxes 1,445,004 1,150,569 2,531,564 2,144,223
Federal income taxes 419,755 339,768 719,584 636,748
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Net income $1,025,249 $ 810,801 $1,811,980 $1,507,475
========== ========== ========== ==========
Average number of sub-share certificates
and equivalent sub-share certificates
outstanding 2,484,855 2,568,283 2,492,997 2,576,919
========== ========== ========== ==========
Basic earnings per sub-share certificate $ .41 $ .32 $ .72 $ .59
========== ========== ========== ==========
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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2001 2000
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Cash flows from operating activities:
Net income $ 1,811,980 $ 1,507,475
Adjustments to reconcile net income to net cash provided by operating
activities:
Depreciation 23,400 21,600
Deferred taxes (363,117) (97,695)
(Increase) decrease in assets:
Accounts receivable 529 (6,909)
New notes receivable from land sales (74,735) (559,227)
Payments received on notes receivable 1,228,037 316,823
Accrued interest receivable 99,929 76,922
Prepaid Federal income taxes -- 41,523
Prepaid expenses 26,275 24,097
Real estate acquired through foreclosure 15,820 588,815
Increase (decrease) in liabilities:
Federal income taxes payable 250,538 47,920
Other taxes payable 134,264 138,595
Escrow deposits on land sales 3,660 2,000
Other liabilities payable 24,999 (25,676)
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Total adjustments 1,369,599 568,788
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Net cash provided by operating activities 3,181,579 2,076,263
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Cash flows from investing activities-
Additions to water wells, leasehold improvements,
furniture and equipment (125,494) (27,025)
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Cash flows from financing activities:
Sub-shares purchased for retirement (1,310,934) (1,580,256)
Dividends paid (1,003,522) (1,033,842)
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Net cash used by financing activities (2,314,456) (2,614,098)
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Net increase (decrease) in cash and cash equivalents 741,629 (564,860)
Cash and cash equivalents at beginning
of period 1,613,834 1,872,539
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Cash and cash equivalents at end
of period $ 2,355,463 $ 1,307,679
============ ============
See accompanying notes to financial statements.
(3)
TEXAS PACIFIC LAND TRUST
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2001
(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, 2001 and the results of its
operations for the three and six months ended June 30, 2001 and 2000
and its cash flows for the six months ended June 30, 2001 and 2000,
respectively. These financial statements and footnotes included herein
should be read in conjunction with the Trust's annual financial
statements as of December 31, 2000 and 1999 and for each of the years
in the three year period ended December 31, 2000 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,
2001 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,
2001 and 2000 is summarized as follows:
2001 2000
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Federal income taxes paid $832,163 $645,000
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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.
(8) In July 2001 the Trust entered into a contract to sell approximately
560 acres in El Paso county for approximately $5,600,000. The contract
is subject to certain contingencies that allows purchaser to cancel
until September 10, 2001, but all contracts should close in the third
quarter. The Trust's basis in the real estate to be sold is
approximately $1,450,000.00.
(5)
Management's Discussion and
Analysis of Financial Condition and
Results of Operations for the
Six Months Ended
June 30, 2001 and 2000
-----------------------------------
Results of Operations for Quarter Ended June 30, 2001 Compared to Quarter Ended
June 30, 2000
Earnings per sub-share were $.41 for the second quarter of 2001 compared to $.32
in the second quarter of 2000. Total revenues were $1,908,926 compared to
$1,571,735, an increase of 21.5%.
Land sales for the second quarter of 2001 were 1,159 acres at an average price
of approximately $70 per acre for a total of $81,115. This compares to 960 acres
at an average price of approximately $125 per acre for a total of $120,001 in
the second quarter of 2000. In looking forward the Trust has made land sale
contracts thus far in the third quarter for $5,900,000. One contract totaling
$5,600,000 in El Paso county is subject to certain contingencies that allows
purchaser to cancel until September 10, 2001, but all contracts should close in
the third quarter.
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 $1,625,758 for the second
quarter of 2001 compared to $1,234,552 for the second quarter of 2000, up 31.7%.
Oil and gas royalty revenue was $1,250,190 for the second quarter of 2001, up
36.2% compared to the second quarter of 2000. Oil royalty revenue was $745,129,
up 21.5% for the 2001 period. Crude oil production subject to the Trust's
royalty interest was up 25.2% in the second quarter of 2001. The average price
of crude oil was decreased 3.0%. Gas royalty revenue was $505,061 in the second
quarter of 2001, up 65.6% on a volume decrease of 6.7% and a price increase of
77.2%.
Easement and other sundry income was $185,148 for the second quarter of 2001, up
42.7% from the second quarter of 2000. This income is unpredictable and may vary
greatly from quarter to quarter.
Interest revenue was down 7.0% in the second quarter of 2001 compared to the
same period of 2000. Interest from notes receivable amounted to $184,552, a 7.0%
decrease from the 2000 period. Notes receivable for land sold were $7,438,696 as
of June 30, 2001, down 13.9% from June 30, 2000, due to payments received from
note makers. Sundry interest was $17,501 for the second quarter of 2001, down
5.8% from the second quarter of 2000. 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 4.6% due to an increase in
royalty income production taxes in the second quarter of 2001 compared to the
second quarter of 2000.
General and administrative expenses were up 12.8% for the second quarter of 2001
compared with the same period of 2000.
(6)
Management's Discussion (cont'd)
Results of Operations for Six Months Ended June 30, 2001 Compared to Six Months
Ended June 30, 2000
Earnings per sub-share for the first six months of 2001 were $.72 compared to
$.59 in the first six months of 2000. Total revenues were $3,556,655 compared to
$3,646,260, a decrease of 2.5%. The main reason for earnings per sub-share being
up 22.0% and revenues being down 2.5% is due to land sold in 2000 with a basis
of $588,815 which shows as an expense against earnings.
Land sales for the first six months of 2001 were 1,160.85 acres at an average
price of approximately $86 per acre for a total of $99,655. This compares to
16,614.53 acres at an average price of approximately $54 per acre for a total of
$902,727 in the first six months of 2000.
Rentals, royalties, and sundry income amounted to $3,041,326 for the first six
months of 2001 compared to $2,311,639 for the first six months of 2000, up
31.6%.
Oil and gas royalty revenue for the first six months of 2001 was $2,438,907, up
37.1% compared to the first six months of 2000. Oil royalty revenue was
$1,403,389, up 15.9% for the 2001 period. Crude oil production was up 10.8% in
the first six months of 2001, and the average price per barrel was up 4.7%. Gas
royalty revenue was $1,035,518 in the first six months of 2001, up 82.1% on a
volume decrease of 6.5%, and a price increase of 94.6%.
Easement and other sundry income was $324,165 in the first six months of 2001,
up 24.8% from the first six months of 2000. This was mainly due to increase of
pipeline easement and seismic permit income which are unpredictable and vary
greatly from one period to another.
Interest revenue was $415,674 for the first six months of 2001, down 3.8% from
the 2000 period. Interest from notes receivable was $376,638, down 3.1% from the
2000 period. Sundry interest was $39,036 for the first six months, down 9.8%
from the 2000 period.
Taxes, other than Federal income taxes in the first six months of 2001 were up
12.9%. This is due to the increase in royalty income taxes.
General and administrative expenses for the first six months of 2001 were up
9.5% from the first six months of 2000.
Liquidity and Capital Resources
The Trust's oil and gas royalty revenues, lease rentals and receipts of interest
and principal on notes receivable have 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, 2000.
(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.
(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, 2001 By /s/ ROY THOMAS
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Roy Thomas, General Agent,
Authorized Signatory and Principal
Financial Officer
(8)