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, 2002
-------------------------------------------------
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 (I.R.S. Employer
incorporation or organization) Identification No.)
1700 Pacific Avenue, Suite 1670, Dallas, Texas 75201
- --------------------------------------------------------------------------------
(Address of principal executive offices)
(Zip Code)
214/969-5530
- --------------------------------------------------------------------------------
(Registrant's telephone number, including area code)
- --------------------------------------------------------------------------------
(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, 2002 and DECEMBER 31, 2001
March 31, December 31,
ASSETS 2002 2001
------------ ------------
(Unaudited)
Cash $ 191,816 $ 85,065
Temporary cash investments at cost which approximates market 2,700,000 2,500,000
Accounts receivable 344,091 334,888
Accrued interest receivable 417,520 417,817
Prepaid expenses 42,796 61,138
Notes receivable for land sales 10,740,020 11,421,331
Real estate acquired through foreclosure:
(7,791.86 acres at March 31, 2002 and December 31, 2001) 2,450,886 2,450,886
Water wells, leasehold improvements, furniture and
equipment - at cost less accumulated depreciation 203,282 207,388
Prepaid Federal income taxes -- 149,668
Property, no value assigned :
Land (surface rights) situated in twenty-one counties in
Texas - 1,010,811.14 acres in 2002 and 1,013,792.00 acres in 2001 -- --
Town lots in Iatan, Loraine and Morita - 628 lots in 2002 and 2001 -- --
1/16 nonparticipating perpetual royalty interest in 386,987.70 acres in 2002 and 2001 -- --
1/128 nonparticipating perpetual royalty interest in 85,413.60 acres in 2002 and 2001 -- --
------------ ------------
$ 17,090,411 $ 17,628,181
============ ============
LIABILITIES AND CAPITAL
Federal income taxes payable $ 360,825 $ --
Other taxes 76,021 20,521
Other liabilities 45,656 2,537
Escrow deposits on land sales -- 5,000
Deferred taxes 4,193,579 4,402,481
------------ ------------
Total liabilities 4,676,081 4,430,539
Capital:
Certificates of Proprietary Interest, par value $100
each; outstanding no certificates in 2002 and 2001 -- --
Sub-share Certificates in Certificates of Proprietary Interest, par value
$.16 2/3 each; outstanding 2,383,687 sub-shares in 2002 and
2,398,393 sub-shares in 2001 -- --
Net proceeds from all sources 12,414,330 13,197,642
------------ ------------
Total capital 12,414,330 13,197,642
------------ ------------
$ 17,090,411 $ 17,628,181
============ ============
See accompanying notes to financial statements.
(1)
TEXAS PACIFIC LAND TRUST
STATEMENTS OF INCOME
(Unaudited)
Three Months Ended
March 31
-----------------------------
2002 2001
------------ ------------
Income:
Rentals, royalties and sundry income $ 1,079,512 $ 1,415,568
Land sales 193,756 18,540
Interest 249,376 213,621
------------ ------------
1,522,644 1,647,729
------------ ------------
Expenses:
Taxes, other than Federal income taxes 104,903 149,971
Basis in real estate sold -- 15,821
General and administrative expenses 405,059 395,377
------------ ------------
509,962 561,169
------------ ------------
Income before
Federal income taxes 1,012,682 1,086,560
Federal income taxes 301,592 299,829
------------ ------------
Net income $ 711,090 $ 786,731
============ ============
Average number of sub-share certificates
and equivalent sub-share certificates
outstanding 2,391,273 2,501,138
============ ============
Basic earnings per sub-share certificate $ .30 $ .31
============ ============
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,
------------------------------
2002 2001
------------ ------------
Cash flows from operating activities:
Net income $ 711,090 $ 786,731
Adjustments to reconcile net income to net cash provided by operating
activities:
Depreciation 10,201 11,700
Deferred taxes (208,902) (43,673)
(Increase) decrease in assets:
Accounts receivable (9,203) (9,033)
New notes receivable from land sales (145,000) (13,900)
Payments received on notes receivable 826,311 142,225
Accrued interest receivable 297 11,151
Prepaid Federal income taxes 149,668 --
Prepaid expenses 18,342 13,138
Real estate acquired through foreclosure -- 15,820
Increase (decrease) in liabilities:
Federal income taxes payable 360,825 276,339
Other taxes payable 55,500 66,791
Escrow deposits on land sales (5,000) (640)
Other liabilities payable 43,119 (35,306)
------------ ------------
Total adjustments 1,096,158 434,612
------------ ------------
Net cash provided by operating activities 1,807,248 1,221,343
------------ ------------
Cash flows from investing activities-
Additions to water wells, leasehold improvements,
furniture and equipment (6,095) (7,278)
------------ ------------
Cash flows from financing activities:
Sub-shares purchased for retirement (537,407) (578,716)
Dividends paid (956,995) (1,003,522)
------------ ------------
Net cash used by financing activities (1,494,402) (1,582,238)
------------ ------------
Net increase (decrease) in cash and cash equivalents 306,751 (368,173)
Cash and cash equivalents at beginning
of period 2,585,065 1,613,834
------------ ------------
Cash and cash equivalents at end
of period $ 2,891,816 $ 1,245,661
============ ============
See accompanying notes to financial statements.
(3)
TEXAS PACIFIC LAND TRUST
NOTES TO FINANCIAL STATEMENTS
MARCH 31, 2002
(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, 2002 and the results of its
operations for the three months ended March 31, 2002 and 2001 and its
cash flows for the three months ended March 31, 2002 and 2001,
respectively. These financial statements and footnotes included herein
should be read in conjunction with the Trust's annual financial
statements as of December 31, 2001 and 2000 and for each of the years
in the three year period ended December 31, 2001 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, 2002 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,
2002 and 2001 is summarized as follows:
2002 2001
-------- -------
Federal income taxes paid $ -- $67,163
======== =======
(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) Effective January 1, 2002, the Trust adopted SFAS No. 144, "Accounting
for the Impairment of Disposal of Long Lived Assets." SFAS No. 144
supersedes and amends SFAS No. 121 and the relevant portions of APB
Opinion No. 30. The adoption of SFAS No. 144 had no material impact on
the financial position, results of operations or cash flows.
(5)
Management's Discussion and
Analysis of Financial Condition and
Results of Operations for the
Three Months Ended
March 31, 2002 and 2001
Results of Operations for Quarter Ended March 31, 2002 Compared to Quarter Ended
March 31, 2001
Earnings per sub-share were $.30 for the first quarter of 2002 compared to $.31
for the first quarter of 2001. Total revenues were $1,522,644 compared to
$1,647,729, a decrease of 7.6%.
The Trust sold 2,980.86 acres of land for $193,756, ($65 per acre) in the first
quarter of 2002. This compares to 2.06 acres at $9,000 per acre for a total of
$18,540 in the first quarter of 2001.
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 $1,079,512 in the first quarter of
2002 compared to $1,415,568 in the first quarter of 2001, a decrease of 23.7%.
This decrease was mainly from a decrease in oil and gas royalty revenue.
Oil and gas royalty revenue was $698,357, down 41.3% compared to the first
quarter of 2001. Oil royalty revenue was $473,933, down 28.0% compared to 2001.
Crude oil production subject to the Trust's royalty interest was up 16.6% for
the first quarter and the average price per royalty barrel was down 38.3%
compared to 2001. Gas royalty revenue was $224,424 in the first quarter, down
57.7% on a volume increase of 14.3% and price decrease of 63.0%.
Easement and sundry income was $292,433, up 110.4% from the first quarter of
2001. This is not a predictable source of income and amounts vary greatly in any
one reporting period.
Interest revenue increased 16.7% in the first quarter of 2002 compared to 2001.
Interest from notes receivable was $233,750, up 21.7% from the first quarter of
2001. Notes receivable were $10,740,020 as of March 31, 2002 up 26.9% from March
31, 2001. Sundry interest was $15,626, down 27.4% from the first quarter of
2001.
Taxes, other than Federal income taxes were down 30.1%. This is due to decrease
in oil and gas production taxes and decrease of ad valorem taxes due to land
sold in 2001.
General and administrative expenses increased 2.4% compared to the first quarter
of 2001.
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.
(6)
Management's Discussion (cont'd)
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, 2001.
(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
-------------------------------------
(Registrant)
Date May 9, 2002 By /S/ ROY THOMAS
------------------------------- -------------------------------------
Roy Thomas, General Agent,
Authorized Signatory and Principal
Financial Officer
(8)