SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM 10-Q
QUARTERLY REPORT UNDER SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For quarter ended June 30, 1994 Commission file number 1-467
------------------------
WILSHIRE OIL COMPANY OF TEXAS
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(Exact name of registrant as specified in its charter)
Delaware 84-0513668
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(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
921 Bergen Avenue - Jersey City, New Jersey 07306-4204
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number - including area code (201) 420-2796
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NO CHANGE
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Former name, former address and former fiscal year,
if changed since last reports.
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 [ ]
Indicate the number of shares outstanding of each of the issuer's classes
of common stock, as of the close of the period by this report.
Common Stock $1 Par Value -----9,660,173
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WILSHIRE OIL COMPANY OF TEXAS
INDEX
Page No.
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Part I Financial Information
Financial Information:
Consolidated Balance Sheets - 1
June 30, 1994 and December 31, 1993
Consolidated Statements of Operations - 2
Six months ended June 30, 1994 and 1993
Consolidated Statements of Operations - 3
Three months ended June 30, 1994 and 1993
Consolidated Statements of Cash Flows - 4
Six months ended June 30, 1994 and 1993
Notes to Consolidated Financial Statements 5
Management's Discussion and Analysis 6, 7 & 8
of Financial Condition and Results of Operations
Part II Other Information 9
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WILSHIRE OIL COMPANY OF TEXAS AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(000's Omitted, Except Share Data)
(Unaudited)
ASSETS June 30, December 31,
------ 1994 1993
-------- ------------
CURRENT ASSETS:
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Cash and cash equivalents $ 1,183 $ 1,566
Accounts receivable 4,482 4,644
Marketable securities, stated at market
value in 1993 and 1994 32,665 39,490
Prepaid expenses and other current assets 426 380
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Total current assets 38,756 46,080
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INVESTMENT IN PREFERRED STOCK OF
THE TRUST COMPANY OF NEW JERSEY 6,000 3,000
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PROPERTY AND EQUIPMENT
Oil and gas properties, using the
full cost method of accounting 126,501 125,135
Real estate properties 36,072 25,218
Other property and equipment 351 350
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162,924 150,703
Less - Accumulated depreciation,
depletion and amortization 97,212 95,131
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65,712 55,572
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$110,468 $104,652
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LIABILITIES AND SHAREHOLDERS' EQUITY
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CURRENT LIABILITIES:
Current portion of long-term debt $ 1,945 $ 1,839
Accounts payable 2,146 1,757
Income taxes payable 685 55
Accrued liabilities 1,060 677
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Total current liabilities 5,836 4,328
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LONG-TERM DEBT, less current portion 52,799 40,721
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DEFERRED INCOME TAXES 19,875 23,681
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COMMITMENTS AND CONTINGENCIES (Note 2)
SHAREHOLDERS' EQUITY
Common stock, $1 par value,
15,000,000 shares authorized;
issued 10,013,544 and 10,000,182
shares in 1994 and 1993 10,000 10,000
Capital in excess of par value 12,574 12,492
Unrealized gain on marketable
securities, net of deferred income taxes 12,514 17,537
Retained earnings (deficit) 1,810 (188)
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36,898 39,841
Less -
Treasury stock, 353,371 and 276,636
shares in 1994 and 1993, at cost 2,410 1,872
Cumulative foreign currency
translation adjustment 2,530 2,047
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31,958 35,922
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$110,468 $104,652
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1
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WILSHIRE OIL COMPANY OF TEXAS AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(000's Omitted, Except Share Data)
(Unaudited)
FOR THE SIX MONTHS ENDED
------------------------
June 30, June 30,
1994 1993
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REVENUES
Oil & Gas $ 4,021 $ 4,416
Real Estate 3,785 2,976
Non-recurring gas settlement -- 450
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Total Revenues 7,806 7,842
COSTS AND EXPENSES
Oil and Gas Production Expenses 1,331 1,277
Real Estate Operating Expenses 2,074 1,720
Depreciation, depletion and amortization 2,413 2,804
General and Administrative 712 468
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Total Costs and Expenses 6,530 6,269
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Income from Operations 1,276 1,573
INTEREST INCOME 2 39
OTHER INCOME 179 168
GAIN ON SALES OF MARKETABLE
SECURITIES (Note 1) 3,811 3,096
INTEREST EXPENSE (1,546) (1,312)
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Income before provision
for income taxes 3,722 3,564
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PROVISION FOR INCOME TAXES
Federal
Current 672 651
Deferred 401 383
Foreign
Current 46 67
Deferred 34 37
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1,153 1,138
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Net income $ 2,569 $ 2,426
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AVERAGE NUMBER OF SHARES OF
COMMON STOCK OUTSTANDING: 9,991,514 10,230,933
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INCOME PER COMMON SHARE $ .26 $ .24
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2
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WILSHIRE OIL COMPANY OF TEXAS AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(000's Omitted, Except Share Data)
(Unaudited)
FOR THE THREE MONTHS ENDED
--------------------------
June 30, June 30,
1994 1993
-------- --------
REVENUES
Oil & Gas $ 2,179 $ 2,206
Real Estate 2,014 1,493
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Total Revenues 4,193 3,699
COSTS AND EXPENSES
Oil and Gas Production Expenses 601 699
Real Estate Operating Expenses 1,102 904
Depreciation, depletion and amortization 1,352 1,397
General and Administrative 313 225
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Total Costs and Expenses 3,368 3,225
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Income from Operations 825 474
INTEREST INCOME 1 28
OTHER INCOME 96 95
GAIN ON SALES OF MARKETABLE
SECURITIES (Note 1) 1,709 1,829
INTEREST EXPENSE (854) (645)
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Income before provision
for income taxes 1,777 1,781
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PROVISION FOR INCOME TAXES
Federal
Current 392 570
Deferred 76 (79)
Foreign
Current (28) 100
Deferred 74 (12)
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514 579
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Net income 1,263 $ 1,202
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AVERAGE NUMBER OF SHARES OF
COMMON STOCK OUTSTANDING: 9,979,740 10,233,388
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INCOME PER COMMON SHARE $ .13 $ .12
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3
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WILSHIRE OIL COMPANY OF TEXAS AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(000's Omitted)
(Unaudited)
For The Six Months Ended
------------------------
June 30, June 30,
1994 1993
--------- ---------
CASH FLOWS FROM OPERATING ACTIVITIES
Net Income $ 2,569 $ 2,426
Adjustments to reconcile net income to net
cash provided by operating activities -
Depreciation, depletion and amortization 2,413 2,804
Deferred income tax provision 435 420
Amortization (adjustment) of deferred and
unearned compensation in connection
with non-qualified stock option plan, net 92 (165)
Gain on sales of marketable securities (3,811) (3,096)
Foreign currency transactions -- (40)
Changes in operating assets and liabilities -
(Increase) decrease in receivables (759) (449)
(Increase) in prepaid expenses and other
current assets (32) (65)
Increase (decrease) in income taxes payable 717 (1,785)
Increase (decrease) in accounts payable,
accrued and other liabilities (283) (377)
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Net cash provided by (used in)
operating activities $ 1,341 $ ( 327)
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CASH FLOWS FROM INVESTING ACTIVITIES
Capital expenditures, net (12,235) (4,619)
Purchases of marketable securities (2,584) (41)
Purchase of Preferred Stock (3,000) --
Proceeds from sales of marketable securities 4,414 4,157
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Net cash provided by (used in)
investing activities ($13,405) $ (503)
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CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from issuance of long term debt 22,804 3,209
Principal payment of long term debt (10,620) (402)
Purchase of treasury stock (538) --
Exercise of stock options -- --
Other -- 4
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Net cash provided by (used in)
financing activities $ 11,646 $ 2,811
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EFFECT OF EXCHANGE RATE CHANGES ON CASH 35 5
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Net increase (decrease) in cash and
cash equivalents (383) 1,986
CASH AND CASH EQUIVALENTS AT
BEGINNING OF PERIOD 1,566 3,051
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CASH AND CASH EQUIVALENTS AT
END OF PERIOD $ 1,183 $ 5,037
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SUPPLEMENTAL DISCLOSURES TO THE
STATEMENTS OF CASH FLOWS:
Cash paid during the period for -
Interest, net of amounts capitalized $ 1,437 $ 1,160
Income taxes, net 364 2,266
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4
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WILSHIRE OIL COMPANY OF TEXAS
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 1994 (Unaudited)
1. FINANCIAL STATEMENTS
--------------------
The condensed financial statements included herein have been prepared by
the Registrant, without audit, pursuant to the rules and regulations of
the Securities and Exchange Commission. Certain information and footnote
disclosures normally included in financial statements prepared in
accordance with generally accepted accounting principles have been
condensed or omitted pursuant to such rules and regulations, although the
Registrant believes that the disclosures are adequate to make the
information presented not misleading. It is suggested that these
condensed financial statements be read in conjunction with the financial
statements and the notes thereto included in the Company's latest annual
report on Form 10-K This condensed financial information reflects, in the
opinion of management, all adjustments necessary to present fairly the
results for the interim periods. The results of operations for such
interim periods are not necessarily indicative of the results for the
full year.
2. GAIN ON SALES OF MARKETABLE SECURITIES
--------------------------------------
The Company realized gains from the sales of shares of Jacobs Engineering
Group, Inc. of $3,811,000 and $ 3,096,000 for the six months ended June
30, 1994 and 1993, respectively, and $1,709,000 and $1,829,000 for the
three months ended June 30, 1994 and 1993, respectively .
3. COMMITMENTS AND CONTINGENCIES
-----------------------------
Federal income tax returns of the Company and its subsidiaries for the
years 1975 through 1983 are under review by the Internal Revenue Service.
The Company believes that final settlement of its Federal tax liability
for those years will not have a significant effect on its consolidated
financial position.
The Company is a defendant in a lawsuit by a co-owner on one of its oil
and gas properties. The lawsuit seeks an unspecified amount of royalties
and interest for prior year production at the property. While the
ultimate outcome of this litigation cannot be predicted at this time,
management believes that this matter will not have a material adverse
effect on the Company's consolidated financial position or its results of
operations.
5
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MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Results of Operations
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Net income for the six months ended June 30 increased from $2,426,000 in
1993 to $2,569,000 in 1994. Net income for the quarter ended June 30 increased
from $1,202,000 in 1993 to $1,263,000 in 1994.
Oil and gas revenues decreased by $395,000 in the first half of 1994 as
compared to 1993 due to sharp declines in crude oil prices. Consolidated
revenues were lower in 1994 than in 1993 as the 1993 amounts included a
non-recurring gas settlement of $450,000.
Real estate revenues increased from $2,976,000 in the first half of 1993
to $3,785,000 in 1994. This increase was principally attributable to the
operations of the income producing real estate properties acquired June 30,
1993 and March 31, 1994 as well as generally higher rents and occupancy.
Oil and gas production expense increased in the first half of 1994 over
1993 principally as a result of new wells completed in the second half of
1993.
Real estate operating expenses increased in the first half of 1994 over
1993 principally due to the newly acquired properties in the second half of
1993 and the first half of 1994.
Depreciation, depletion, and amortization expense decreased in the first
half of 1994 compared with 1993 principally as a result of the increase in the
estimated value of the Company's oil and gas reserves. This increase in
reserves is due to the Company's successful horizontal oil drilling program.
The gain on sales of marketable securities is derived from sales of
shares of Jacobs Engineering Group, Inc.
Interest expense increased in the first half of 1994 over 1993
principally due to the addition of the new real estate properties in the second
half of 1993 and the first half of 1994.
The provision for income taxes includes Federal and Canadian taxes.
Differences between the effective tax rate and the statutory income tax rates
are due to foreign resource tax credits in Canada and the dividend exclusion
in the United States.
Accounting for Income Taxes
- - ---------------------------
Statement of Financial Accounting Standard No. 109- "Accounting for
Income Taxes" became effective for the Company beginning in the first quarter
of 1993. SFAS 109 requires, among other things, an asset and liability
approach to accounting for income taxes. SFAS 109 did not have a material
impact on the Company's consolidated financial statements.
6
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Accounting for Certain Investments in Debt and Equity Securities
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On December 31, 1993 the Company adopted Statement of Financial
Accounting Standards No. 115 "Accounting for Certain Investments in Debt and
Equity Securities" (SFAS 115). The investments of the Company are principally
equity securities, held for indefinite periods of time. These securities are
carried at fair value and the difference between cost and fair value is
charged/credited directly to shareholders' equity net of income taxes. As of
June 30, 1994, the gross unrealized gain on marketable securities was
$22.8 million. This amount, net of related deferred income taxes of $10.2
million, is included as a credit to shareholders' equity in the Company's June
30, 1994 consolidated balance sheet.
Liquidity and Capital Resources
- - -------------------------------
At June 30, 1994 the Company had approximately $9.9 million in marketable
securities at cost, with a market value of approximately $33 million. The
current ratio at June 30, 1994 was 6.6 to 1 on a market basis, which management
considers adequate for the Company's current business. The Company's working
capital was approximately $33 million at June 30, 1994.
The Company anticipates that cash provided by operating activities,
principally from oil and gas sales as well as investing activities, will be
sufficient to meet its capital requirements to acquire oil and gas properties
and to drill and evaluate these and other oil and gas properties presently
held by the Company. The level of oil and gas capital expenditures will vary
in future periods depending on market conditions, including the price of oil
and the demand for natural gas, and other related factors. As the Company has
no material long-term commitments with respect to its oil and gas capital
expenditure plans, the Company has a significant degree of flexibility to
adjust the level of its expenditures as circumstances warrant.
The Company plans to actively continue its exploration and production
activities as well as search for the acquisition of oil and gas producing
properties and of companies with desirable oil and gas producing properties.
There can be no assurance that the Company will in fact locate any such
acquisitions.
On March 31, 1994 the Company acquired various real estate properties at
an aggregate purchase price of $10,240,000 from The Trust Company of New
Jersey, which also provided the long-term financing of $8,704,000.
The Company will explore other real estate acquisitions as they arise.
The timing of any such acquisition will depend on, among other things,
economic conditions and the favorable evaluation of specific opportunities
presented to the Company. Accordingly, while the Company anticipates that it
will actively explore real estate acquisition opportunities, no assurance can
be given that any such acquisition will occur.
7
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Net cash provided by (used in) operating activities was $1,341,000 and
$(327,000) in the first six months of 1994 and 1993, respectively. The
increase in 1994 was primarily due to the payment in 1993 of Canadian tax
liabilities settled in 1992.
Net cash used in investing activities was $13,405,000 and $503,000 in the
first six months of 1994 and 1993, respectively. The Company acquired $10.2
million of real estate properties during the first half of 1994 and $3.8
million during the first half of 1993. Additionally, the Company acquired
approximately $5.6 million of securities in 1994.
Net cash provided by financing activities was $11,646,000 and $2,811,000
in the first half of 1994 and 1993, respectively. The variation principally
relates to the issuance of long-term debt in connection with purchases of real
estate properties during 1993 and 1994.
During the first half of 1994 the Company renegotiated all of its secured
bank loans (other than mortgage notes). Among other things, more favorable
principal amortization was obtained and the maturity dates of these loans were
extended.
The Company believes it has adequate capital resources to fund operations
for the foreseeable future.
8
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PART II - OTHER INFORMATION
Item 1, 2, 3, 4, 5 - Not applicable
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Item 6 - Exhibits and Reports on Form 8-K
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No Form 8-K was filed during the quarter ended June 30, 1994.
9
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S I G N A T U R E S
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.
WILSHIRE OIL COMPANY OF TEXAS
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(Registrant)
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Date: August 12, 1994 /s/ Sherry Wilzig Izak
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By: Sherry Wilzig Izak
Chairman of the Board and Chief Executive Officer
(Duly Authorized Officer and Chief Financial Officer)
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S I G N A T U R E S
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.
WILSHIRE OIL COMPANY OF TEXAS
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(Registrant)
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Date: August 12, 1994 /s/ SHERRY WILZIG IZAK
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By: Sherry Wilzig Izak
Chairman of the Board and Chief Executive Officer
(Duly Authorized Officer and Chief Financial Officer)
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