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, 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
SEPTEMBER 30, 2001 and DECEMBER 31, 2000
September 30, December 31,
ASSETS 2001 2000
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(Unaudited)
Cash $ 183,771 $ 263,834
Temporary cash investments at cost which approximates market 3,550,000 1,350,000
Accounts receivable 586,746 587,109
Accrued interest receivable 411,487 379,383
Prepaid expenses 4,379 43,792
Notes receivable for land sales 11,653,696 8,591,998
Real estate acquired through foreclosure:
(7,791.86 acres at September 30, 2001 and 9,669.46 acres at December 31, 2000) 2,450,886 3,992,302
Water wells, leasehold improvements, furniture and
equipment - at cost less accumulated depreciation 218,259 120,898
Property, no value assigned:
Land (surface rights) situated in twenty-one counties in
Texas - 1,023,234.07 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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$ 19,059,224 $ 15,329,316
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LIABILITIES AND CAPITAL
Federal income taxes payable $ 1,349,542 $ 67,290
Other taxes 261,077 36,330
Other liabilities 47,030 51,071
Escrow deposits on land sales 8,000 640
Deferred taxes 4,478,760 3,905,678
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Total liabilities 6,144,409 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
$.16 2/3 each; outstanding 2,418,905 sub-shares in 2001 and
2,504,205 sub-shares in 2000 -- --
Net proceeds from all sources 12,914,815 11,268,307
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Total capital 12,914,815 11,268,307
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$ 19,059,224 $ 15,329,316
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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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2001 2000 2001 2000
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Income:
Rentals, royalties and sundry income $ 1,809,596 $ 1,517,098 $ 4,850,922 $ 3,828,737
Land sales 5,882,678 162,210 5,982,333 1,064,937
Interest 197,317 219,381 612,991 651,275
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7,889,591 1,898,689 11,446,246 5,544,949
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Expenses:
Taxes, other than Federal income taxes 136,172 142,886 437,250 409,446
Basis in real estate sold 1,525,595 4,025 1,541,416 592,840
General and administrative expenses 257,284 342,782 965,476 989,444
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1,919,051 489,693 2,944,142 1,991,730
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Income before
Federal income taxes 5,970,540 1,408,996 8,502,104 3,553,219
Federal income taxes 1,967,913 414,579 2,687,497 1,051,327
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Net income $ 4,002,627 $ 994,417 $ 5,814,607 $ 2,501,892
============ ============ ============ ============
Average number of sub-share certificates
and equivalent sub-share certificates
outstanding 2,460,288 2,542,355 2,482,094 2,565,398
============ ============ ============ ============
Basic earnings per sub-share certificate $ 1.62 $ .39 $ 2.34 $ .98
============ ============ ============ ============
Cash dividend per sub-share certificate -- -- $ .40 $ .40
============ ============ ============ ============
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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2001 2000
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Cash flows from operating activities:
Net income $ 5,814,607 $ 2,501,892
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation 35,100 32,400
Deferred taxes 573,082 (141,112)
(Increase) decrease in assets:
Accounts receivable 363 (677)
New notes receivable from land sales (4,357,519) (559,226)
Payments received on notes receivable 1,295,821 438,630
Accrued interest receivable (32,104) 53,894
Prepaid Federal income taxes -- 41,523
Prepaid expenses 39,413 36,146
Real estate acquired through foreclosure 1,541,416 592,840
Increase (decrease) in liabilities:
Federal income taxes payable 1,282,252 38,916
Other taxes payable 224,747 215,785
Escrow deposits on land sales 7,360 11,100
Other liabilities payable (4,041) (73,873)
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Total adjustments 605,890 686,346
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Net cash provided by operating activities 6,420,497 3,188,238
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Cash flows from investing activities-
Additions to water wells, leasehold improvements,
furniture and equipment (132,461) (38,241)
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Cash flows from financing activities:
Sub-shares purchased for retirement (3,164,577) (2,320,755)
Dividends paid (1,003,522) (1,033,842)
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Net cash used by financing activities (4,168,099) (3,354,597)
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Net increase (decrease) in cash and cash equivalents 2,119,937 (204,600)
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 $ 3,733,771 $ 1,667,939
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See accompanying notes to financial statements.
(3)
TEXAS PACIFIC LAND TRUST
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 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 September 30, 2001 and the results of
its operations for the three and nine months ended September 30, 2001
and 2000 and its cash flows for the nine months ended September 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 nine months ended September
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 nine months ended September
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.
(5)
Management's Discussion and
Analysis of Financial Condition and
Results of Operations for the
Nine and Three Months Ended
September 30, 2001 and 2000
Results of Operations for Quarter Ended September 30, 2001 Compared to Quarter
Ended September 30, 2000
Earnings per sub-share certificate for the third quarter of 2001 were $1.62
compared to $.39 in the third quarter of 2000. Total revenues were $7,889,591
compared to $1,898,689, an increase of 315%.
In the third quarter of 2001, land sales totaled $5,882,678 which was 2,975.92
acres at an average price of $1,977 per acre. In the comparable period of 2000,
1,551.43 acres were sold for $162,210, an average of $105 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 $1,809,596 for the third quarter of
2001 compared to $1,517,098 for the third quarter of 2000, an increase of 19.3%.
Oil and gas royalty revenue was $1,057,493 compared to $1,083,586 for the third
quarter of 2000, down 2.4%. Oil royalty revenue was $674,501, down 5.0% from the
third quarter of 2000. Oil royalty production subject to the Trust's royalty
interest was up 6.1% in the third quarter of 2001, while the average price per
royalty barrel of crude oil was down 10.5%. Gas royalty revenue for the third
quarter was $382,992, up 2.6% on a volume decrease of 3.5% and price increase of
6.4%.
Easement and sundry income was $630,716 for the third quarter of 2001, up 105%
from the third quarter of 2000. These categories of income are not predictable
and commonly have large swings in any given period.
Interest revenue was down 10.1% for the third quarter of 2001 compared to the
third quarter of 2000. Interest from notes receivable was $172,647, down 12.7%
for the 2001 period due to a decrease in average note receivable balances for
the period. Notes receivable for land sold were $11,653,696 as of September 30,
2001, an increase of 36.9% from the end of the third quarter of 2000. Sundry
interest was $24,670 for the third quarter of 2001, which was up 13.7% from the
third quarter of 2000.
Taxes, other than Federal income taxes, were down 4.7% for the third quarter of
2001 compared to the third quarter of 2000.
General and administrative expenses were down 24.9% over the third quarter of
2000. This is mainly due to a decrease in professional fees and administrative
expenses.
(6)
Management's Discussion (cont'd)
Results of Operations for Nine Months Ended September 30, 2001 Compared to Nine
Months Ended September 30, 2000
Earnings per sub-share for the first nine months of 2001 were $2.34 compared to
$.98 for the first nine months of 2000. Total revenues were $11,446,246 compared
to $5,544,949, an increase of 106%.
The first nine months of 2001 had total land sales of 4,136.77 acres for
$5,982,333, an average of $1,446 per acre, compared to 18,165.96 acres for
$1,064,937, an average of $59 per acre in 2000.
Rentals, royalties, and sundry income were $4,850,922 for the first nine months
compared to $3,828,737 for the first nine months of 2000, an increase of 26.7%.
Oil and gas royalty revenue for the first nine months was $3,496,400 compared to
$2,862,652 for the first nine months of 2000, up 22.1%. Oil royalty revenue was
$2,077,889, up 8.2% for the 2001 period. Crude oil production subject to the
Trust's royalty interest was up 9.1% for the first nine months of 2001, while
the average price per barrel of crude oil was down .9%. Gas royalty revenue was
$1,418,511 for the first nine months of 2001, up 50.6% on a volume decrease of
5.5%, and a price increase of 59.5%.
Easement and sundry income was $954,881 for the first nine months of 2001, up
68.3% from the first nine months of 2000. These categories of income are not
predictable, and may have large increases or decreases in any given period or
year.
Interest revenue was down 5.9% for the first nine months of 2001 compared to the
first nine months of 2000. Interest from notes receivable was $549,285, down
6.3% for the 2001 period and sundry interest was $63,706, down 2.0%.
Taxes, other than Federal income taxes were up 6.8% for the first nine months of
2001 from the first nine months of 2000.
General and administrative expenses were down 2.4% for the first nine months of
2001 over the comparable 2000 period.
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 11-9-01 By /s/ ROY THOMAS
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Roy Thomas, General Agent,
Authorized Signatory and Principal
Financial Officer
(8)