<PAGE>
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SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM 10-K
(Mark One)
[x] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE
SECURITIES EXCHANGE ACT OF 1934 (FEE REQUIRED)
For the fiscal year ended December 31, 1994
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE
SECURITIES ACT OF 1934 (NO FEE REQUIRED)
For the transition period from ________ to _______
Commission File Number 1-4673
WILSHIRE OIL COMPANY OF TEXAS
-----------------------------
(exact name of registrant as specified in its charter)
Delaware 84-0513668
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
921 Bergen Avenue
Jersey City, New Jersey 07306
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(Address of principal executive offices) (Zip code)
Registrant's telephone number, including area code: (201) 420-2796
----------------
Securities registered pursuant to Section 12(b) of the Act:
Name of each exchange
(Title of each class) On which registered
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COMMON STOCK, $1 PAR VALUE NEW YORK STOCK EXCHANGE
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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 and (2) has been subject to such filing requirements for
the past 90 days. Yes x No
------ ------
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. []
The aggregate market value of the shares of the voting stock held by non-
affiliates of the Registrant was approximately $57,249,000 based upon the
closing sale price of the stock, which was $6.125 on March 15, 1995.
The number of shares of the Registrant's $1 par value common stock outstanding
as of March 15, 1995 was 9,671,620.
Documents Incorporated by Reference
The information called for by Part III is incorporated by reference to the
definitive Proxy Statement for the Annual Meeting of Stockholders.
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<PAGE>
WILSHIRE OIL COMPANY OF TEXAS
ANNUAL REPORT ON FORM 10-K
DECEMBER 31, 1994
TABLE OF CONTENTS
PART I
PAGE
ITEM 1. BUSINESS .......................................... 1
ITEM 1a. EXECUTIVE OFFICERS OF THE REGISTRANT .............. 7
ITEM 2. PROPERTIES ........................................ 8
ITEM 3. LEGAL PROCEEDINGS ................................. 15
ITEM 4. SUBMISSION OF MATTERS TO A
VOTE OF SECURITY HOLDERS .......................... 15
PART II
ITEM 5. MARKET FOR THE REFISTRANT'S COMMON EQUITY
AND RELATED STOCKHOLDER MATTERS ................... 16
ITEM 6. SELECTED FINANCIAL DATA ........................... 17
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS ............... 18
ITEM 8. FINANCIAL STATEMENTS .............................. F-1
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURE ............... 28
PART III
ITEM 10. DIRECTORS OF THE REGISTRANT ....................... 28
ITEM 11. EXECUTIVE COMPENSATION ............................ 28
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL
OWNERS AND MANAGEMENT ............................. 28
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS .... 28
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND
REPORTS ON FORM 8-K ............................... 29
<PAGE>
PART I
ITEM 1. BUSINESS
BACKGROUND
Wilshire Oil Company of Texas (the "Company", "Registrant" or "Wilshire")
was incorporated under the laws of the State of Delaware on December 7, 1951.
The Company's principal executive offices are located at 921 Bergen Avenue,
Jersey City, New Jersey 07306, (201) 420-2796.
The Company is engaged in the exploration and development of oil and gas,
both in its own name and through several wholly-owned subsidiaries in the United
States and Canada. The Company's real estate division owns investment real
estate properties in Arizona, Texas, Florida and New Jersey.
At December 31, 1994 the Company held 1,412,960 common shares in
Jacobs Engineering Group, Inc. (NYSE: JEC).
FINANCIAL INFORMATION RELATING TO INDUSTRY SEGMENTS
For financial segment information please see Note 7, "Segment Information"
of the "Notes to Consolidated Financial Statements", presented elsewhere herein.
The Company has no export sales or sales to affiliated customers.
DESCRIPTION OF BUSINESS
OIL AND GAS OPERATIONS
For a glossary of oil and gas terms, see "Properties - Oil and Gas
Properties - Glossary."
The Company conducts its oil and gas operations on the North American
continent. Oil and gas operations in the United States are located in Arkansas,
California, Kansas, Nebraska, New Mexico, Ohio, Oklahoma, Pennsylvania, Texas
and Wyoming. In Canada, the Company conducts oil and gas operations in the
Provinces of Alberta, British Columbia and Saskatchewan.
As of March 15, 1995, 16 people are employed by the Company. Twelve
employees are directly engaged in the search for new oil and gas properties. In
addition, the Company also has consultants.
Prospects for lease acquisitions are developed by staff geologists or
acquired from various co-venturers and/or consultants.
1
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Once a property is acquired, the Company subcontracts for surveying
and drilling operations. Many of the Company's present producing oil and gas
properties are operated by independent contractors or under operating agreements
with other companies pursuant to which the Company pays a proportionate share of
operating expenses based upon its interests. The Company also acts as operator
of various properties, charging joint venture partners for their proportionate
share of expenses.
The Company does not engage in the refining of crude oil or the
distribution of petroleum products. Crude oil and natural gas productions are
sold to oil refineries and natural gas pipeline companies.
The Company participated in the drilling of 15 wells (2.7 net) in 1994
compared to 10 (2.5 net) in 1993.
The United States' program in 1994 consisted of the drilling of 8
development wells (1.4 net). All of these wells were successfully completed as
oil wells for a success ratio of 100%.
Three (1.3 net) out of the eight wells drilled were in Wyoming, four
(.1 net) were in Oklahoma and one (.02 net) was in Arkansas. The three
successful wells in Wyoming were the McConnaughey 1-14H, the Wyoming "C" State
1-H and the Sunlight 1-H. All of these wells were oil wells and used horizontal
drilling, which enables the driller to laterally intersect several vertical
fractures, as distinguished from conventional drilling methods which limit the
number of vertical fractures intersected. The four wells drilled in Oklahoma
were conventional in nature, as was the Arkansas well. Of the four Oklahoma
wells, three were gas wells and one oil. The Arkansas well was a gas well.
Drilling activities added 216,000 barrels of oil and 190,000 MCF gas to U.S.
proved reserves in 1994.
The Canadian drilling program in 1994 consisted of the drilling of 7
wells (1.3 net), 4 development and 3 exploration. All 4 development wells
(.4 net) were successfully completed, two as oil wells and two as gas wells.
Two of the exploration wells (.7 net) were successfully completed as gas wells.
The Canadian company had a success ratio of 86%, which enabled it to add 25,000
barrels to the oil reserves and 1,208,000 MCF to gas reserves located in
Canada.
The Company's crude oil and condensate production is sold at posted
field prices, primarily to major crude oil and condensate purchasers. For
average posted field prices, for both oil and gas, see "Properties - Oil and Gas
Properties - Production." The Company has two purchasers, Amoco Production
Company and Sinclair Oil Corporation, that purchased in excess of 10% of its
1994 consolidated oil and gas revenues. Amoco purchased 18% and Sinclair 12.9%.
Both companies are located in the United States.
The loss of any one customer in the domestic hydrocarbon market is not
considered material. The Company is not dependent on any patent, trademark or
license.
2
<PAGE>
The Company's oil and gas business is subject to all of the operating
risks normally associated with the exploration for and production of oil and
gas. In accordance with customary industry practices, the Company maintains
insurance coverage limiting financial loss resulting from certain of these
operating hazards.
COMPETITION
The oil and gas industry is intensely competitive and competes with
other industries in supplying the energy and fuel requirements of industrial,
commercial and individual customers.
The principal method of competition in the production of oil and gas
is the successful location and acquisition of properties which produce
commercially profitable quantities of oil and gas.
The Company competes with many other companies in the search for and
acquisition of oil and gas properties and leases for exploration and
development. Many of these companies have substantially greater financial,
technical and other resources than the Company. Competition among petroleum
companies for favorable oil and gas prospects can be expected to continue. The
Company is not a significant factor in the oil and gas industry.
The principal raw materials and resources necessary for the
exploration for, and the acquisition, development, production and sale of, crude
oil and natural gas are leasehold or freehold prospects under which oil and gas
reserves may be discovered, drilling rigs and related equipment to explore for
and develop such reserves, casing and other capital assets required for the
development and production of the reserves and knowledgeable personnel to
conduct all phases of oil and gas operations. The Company must compete for such
raw materials and resources with both major oil companies and independent
operators and also with other industries for certain personnel and materials.
Although the Company believes its current inventories of raw materials and
resources are adequate to preclude any significant disruption of operations in
the immediate future, the continued availability of such materials and resources
to the Company cannot be assured.
SEASONALITY
The oil business is generally not seasonal in nature. Gas demand and
prices paid for gas have become seasonal, showing a decrease during the summer
and fall.
3
<PAGE>
ENVIRONMENTAL MATTERS
The petroleum industry is subject to numerous federal, state and
provincial environmental statutes, regulations and other pollution controls in
both the United States and Canada. In general, the Company is and will continue
to be subject to present and future environmental statutes and regulations.
The Company's expenses relating to preserving the environment during
1994 were not significant in relation to operating costs and the Company expects
no material changes in 1995. Environmental regulations have had no materially
adverse effect on the Company's petroleum operations to date, but no assurance
can be given that environmental regulations will not, in the future, result in a
curtailment of production or otherwise have materially adverse effects on the
Company's operations or financial condition.
REGULATION - UNITED STATES OPERATIONS
The Company's operations are affected from time to time, in varying
degrees, by political developments, laws and regulations. In particular, oil
and gas production operations are affected by changes in taxes and other laws
relating to the petroleum industry and by constantly changing administrative
regulations. The long-term effects of all the federal enactments and programs,
whether beneficial or detrimental to the future operations and income of the
Company, cannot be predicted at this time.
Rates of production of oil and gas have for many years been subject to
conservation laws and regulations. State regulatory agencies set allowable
rates of production and limit the number of days a month a well can produce.
The petroleum industry has also been subject to tax laws dealing specifically
with it, such as the Crude Oil Windfall Profit Tax Act. In addition, oil and
gas operations are subject to extensive regulation or termination by government
authorities on account of ecological and other considerations. All of the
jurisdictions in which the Company operates have statutes and administrative
regulations governing the drilling and production of oil and gas.
REGULATION - CANADIAN OPERATIONS
The Company's Canadian subsidiary, Wilshire Oil of Canada, Ltd.,
operates primarily in the Province of Alberta, with some activity in the
Province of British Columbia and Saskatchewan.
The petroleum and natural gas industry operates under federal and
provincial legislation and regulations which govern land tenure, royalties,
production rates, environmental protection, exports and other matters. Federal
legislation monitors the price of oil and gas in export trade and the quantities
of such products exportable from Canada. Provincial legislation has been
enacted for the purpose of regulating operations in the Provinces.
4
<PAGE>
OIL PRICES
Oil prices actually being paid by purchasers in the United States are
publicly announced throughout the country and vary depending on locality and
qualitative specifications of the crude oil. All prices are subject to future
modification by appropriate agency action.
JACOBS ENGINEERING INVESTMENT
Wilshire made a significant investment in Jacobs Engineering Group, Inc.
("Jacobs") initially during 1986 by purchasing 278,300 shares of common stock at
an average price of $7.25 per share. Subsequently, the Company purchased
additional shares, the stock split, stock dividends were received and the
Company sold certain shares. On December 31, 1994 Wilshire held 1,412,960
shares at an average cost of $5.37 per share.
The Company realized gains on sales of common shares of Jacobs of
$5,457,000 in 1994 compared to $6,256,000 in 1993. The Company sold less
shares of Jacobs in 1994 than in 1993.
Jacobs, headquartered in Pasadena, California, is listed on the New
York Stock Exchange. It is a world-wide leader in engineering design,
construction management and operation of industrial facilities, plants and
governmental projects.
For its fiscal year ended September 30, 1994, Jacobs reported revenues
of $1,165,754,100, net income of $18,767,000, and net income per share of $.75.
The closing price of Jacobs' common stock on the New York Stock Exchange on
March 15, 1995 was 3.6 times more than Wilshire's average cost of the shares it
currently holds. Wilshire's cost as of March 15, 1995 was $7,733,000. The
aggregate market value of the Jacobs common stock held by Wilshire on March 15,
1995 (based on the closing price on that date) was $27,519,000, or $19,786,000
in excess of Wilshire's cost basis.
The stock of Jacobs held by Wilshire continues to be important to
Wilshire as it broadens the Company's base and adds substantially to the value
of the Company's assets.
5
<PAGE>
REAL ESTATE OPERATIONS
The Company's real estate operations are conducted in the states of
Arizona, Texas, Florida and New Jersey. They are not seasonal in nature.
The Company added additional investment properties to its real estate
holdings in 1994. On March 31, 1994 the Company acquired various real estate
properties located in Arizona and New Jersey 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's Arizona properties include two garden apartment complexes, a
midrise apartment building, an office building, and a retail/medical use
complex. The garden apartment complexes consist of a 340 unit complex and a 378
unit complex. The midrise apartment building is a 70 unit, four story building.
The office building is a 53,000 square foot multi-tenant two story building.
The retail/medical use property consists of 65,000 square feet.
The Texas property is a 228 unit apartment complex.
The Florida property consists of two office buildings having a combined
area of 28,000 square feet.
The Company's properties in New Jersey include apartment properties having
274 units as well as various commercial/retail properties.
The Company utilizes property management companies to assist in the
management of its properties. Expenses incurred in operating the properties
include, among other things, administrative costs, utilities, repairs and
maintenance and property taxes.
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.
The real estate industry is intensely competitive in nature. The Company
competes with many other real estate operators and is not a significant factor
in the market it operates in.
The Company's real estate operations are subject to existing federal and
state laws regarding environmental quality and pollution control. Environmental
regulations had no materially adverse effect on the Company's real estate
operations during 1994, but no assurance can be given that environmental
regulations will not, in the future, have a materially adverse effect on the
Company's operations.
6
<PAGE>
ITEM 1A - EXECUTIVE OFFICERS OF THE REGISTRANT
The table below sets forth the names and ages of all executive
officers of the Registrant and the position(s) and offices with the Registrant
presently held by each and the periods during which each has served in such
position(s) and offices. There are no "family relationships" as defined in Item
401 (d) of Regulation S-K between any of these persons and any other executive
officer or director of the Company.
All executive officers have been elected or appointed to hold office
until their respective successors have been elected or appointed and qualified
or until their earlier resignation or removal.
<TABLE>
<CAPTION>
EXECUTIVE OFFICERS OF REGISTRANT
Name Age Position With Registrant
---- --- ------------------------
<S> <C> <C>
Sherry Wilzig Izak (a) 36 Chairman of the Board and
Chief Executive Officer
David C. George (b) 72 Senior Vice President and
Senior Land Attorney
Allen C. Knight (b) 70 Senior Vice President -
Canada
Steven A. Gelman (c) 38 Vice President and
Controller
<FN>
a) Ms. Izak was appointed Chairman of the Board on September 20, 1990.
She served as Executive Vice President of the Company from August 10,
1987 through September 20, 1990.
b) Mr. George and Mr. Knight were appointed Senior Vice Presidents on
May 2, 1985.
c) Mr. Gelman joined the Company April 26, 1993.
</TABLE>
7
<PAGE>
ITEM 2. PROPERTIES
OFFICES
The executive and administrative office of the Company consists of
approximately 2,000 square feet, located at 921 Bergen Avenue, Jersey City, New
Jersey. This office is leased at a monthly rental of $2,257.
The Company maintains its principal office for the United States oil
and gas operations in Oklahoma City, Oklahoma, leasing 3,618 square feet, at a
monthly cost of $2,110. The Company also owns a storage yard of approximately
five acres, situated near Will Rogers Airport in Oklahoma City.
The Company's Canadian subsidiary maintains an exploration office in
Calgary, Alberta, Canada. The Company leases 1,583 square feet at a monthly
rental of $1,102 Canadian.
OIL AND GAS PROPERTIES
GLOSSARY
The terms defined in this section are used throughout this report.
BBL. One stock tank barrel, or 42 U.S. gallons liquid volume, usually
used herein in reference to crude oil or other liquid hydrocarbons.
BOE. Equivalent barrels of oil in reference to natural gas. Natural
gas equivalents are determined using the ratio of six Mcf of natural gas to one
Bbl of crude oil, condensate or natural gas liquids.
DEVELOPED ACREAGE. The number of acres which are allocated or
assignable to producing wells or wells capable of production.
DEVELOPMENT WELL. A well drilled as an additional well to the same
reservoir as other producing wells on a lease, or drilled on an offset Lease not
more than one location away from a well producing from the same reservoir.
EXPLORATORY WELL. A well drilled in search of a new undiscovered pool
of oil or gas, or to extend the known limits of a field under development.
GROSS ACRES OR WELLS. The total acres or wells, as the case may be,
in which an entity has an interest, either directly or through an affiliate.
LEASE. Full or partial interests in an oil and gas lease, oil and gas
mineral rights, fee rights or other rights, authorizing the owner thereof to
drill for, reduce to possession and produce oil and gas upon payment of rentals,
bonuses and/or royalties. Oil and gas leases are generally acquired from
private landowners and federal, provincial and state
8
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governments.
Mcf. One thousand cubic feet. Expressed, where gas sales contracts
are in effect, in terms of contractual temperature and pressure bases and, where
contracts are nonexistent, at 60 degrees Fahrenheit and 14.65 pounds per square
inch absolute.
MMcf. One million cubic feet. Expressed, where gas sales contracts
are in effect, in terms of contractual temperature and pressure bases and, where
contracts are nonexistent, at 60 degrees Fahrenheit and 14.65 pounds per square
inch absolute.
NET ACRES OR WELLS. A party's interest in acres or a well calculated
by multiplying the number of gross acres or gross wells in which such party has
an interest by the fractional interest of such party in such acres or wells.
PRODUCTION COSTS. The expenses of producing oil or gas from a
formation, consisting of the costs incurred to operate and maintain wells and
related equipment and facilities, including labor costs, repair and maintenance,
supplies, insurance, production, severance and other production excise taxes.
PRODUCING PROPERTY. A property (or interest therein) producing oil
and gas in commercial quantities or that is shut-in but capable of producing oil
and gas in commercial quantities, to which Producing Reserves have been assigned
by an independent petroleum engineer. Interests in a property may include
working interests, production payments, royalty interests and other nonworking
interests.
PRODUCING RESERVES. Proved Developed reserves expected to be produced
from existing completion intervals open for production in existing wells.
PROSPECT. An area in which a party owns or intends to acquire one or
more oil and gas interests, which is geographically defined on the basis of
geological data and which is reasonably anticipated to contain at least one
reservoir of oil, gas or other hydrocarbons.
PROVED DEVELOPED RESERVES. Proved Reserves which can be expected to
be recovered through existing wells with existing equipment and operating
methods.
PROVED RESERVES. The estimated quantities of crude oil, natural gas
and other hydrocarbons which, based upon geological and engineering data, are
expected to be produced from known oil and gas reservoirs under existing
economic and operating conditions, and the estimated present value thereof based
upon the prices and costs on the date that the estimate is made and any price
changes provided for by existing conditions.
PROVED UNDEVELOPED RESERVES. Proved Reserves which can be expected to
be recovered from new wells on undeveloped acreage or from existing wells where
a relatively major expenditure is required for recompletion.
9
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UNDEVELOPED ACRES. Oil and gas acreage (including, in applicable
instances, rights in one or more horizons which may be penetrated by existing
well bores, but which have not been tested) to which proved reserves have not
been assigned by independent petroleum engineers.
WORKING INTEREST. The operating interest under a lease which gives
the owner the rights to drill, produce and conduct operating activities on the
property and a share of production, subject to all royalty interests and other
burdens and to all costs of exploration, development and operations and all
risks in connection therewith.
* * *
Following are certain tables and other statistical data concerning the
Company's reserves, production, acreage and other information with regard to the
Company's oil and gas properties and operations.
For information regarding costs incurred in 1994, please refer to the
"Segment Information" in Note 7 of the Notes to Consolidated Financial
Statements, presented elsewhere herein. For information regarding capitalized
costs relating to oil and gas producing activities, please refer to Note 8 of
the Notes to Consolidated Financial Statements, presented elsewhere herein.
Future revenues, net of development and production expenditures (Net
Revenues), from estimated production of proved and proved developed reserves,
based on existing economic conditions for each of the next three succeeding
years, are estimated as follows:
<TABLE>
<CAPTION>
United States Canada
(000's OMITTED) (000's OMITTED)
--------------------------------------------------------------------
Proved Proved Proved Proved
Reserves Developed Reserves Reserves Developed Reserves
-------- ------------------ -------- ------------------
<S> <C> <C> <C> <C>
1995 $ 4,515 $ 4,515 $ 1,879 $ 1,698
1996 3,542 3,542 2,601 2,147
1997 2,691 2,691 3,063 2,500
Remainder $21,915 $10,773 $37,440 $31,495
</TABLE>
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RESERVES
The quantities of natural gas and crude oil Proved and Proved
Developed Reserves presented herein include only those amounts which the Company
reasonably expects to recover in the future from known oil and gas reservoirs
under existing economic and operating conditions. Therefore, Proved and Proved
Developed Reserves are limited to those quantities which are recoverable
commercially at current prices and costs, under existing technology.
Accordingly, any changes in the future oil and gas prices, operating and
development costs, regulations, technology and other factors could significantly
increase or decrease estimates of Proved and Proved Developed Reserves.
The Company's net Proved and Proved Developed Reserves of oil and gas
and the present values thereof at December 31, 1992 and 1993 and 1994 were
estimated by the independent professional engineering consultants referred to on
page 27. Such estimates were utilized in the preparation of the Company's
consolidated financial statements for the applicable fiscal years and for
reporting purposes.
Set forth below are estimates of the Company's Proved and Proved
Developed Reserves and the present value of estimated future net revenues from
such reserves based upon the standardized measure of discounted future net cash
flows relating to proved oil and gas reserves in accordance with the provisions
of Statement of Financial Accounting Standards No. 69, "Disclosures about Oil
and Gas Producing Activities" (SFAS No. 69). The standardized measure of
discounted future net cash flows is determined by using estimated quantities of
Proved Reserves and the periods in which they are expected to be developed and
produced based on period-end economic conditions. The estimated future
production is priced at period-end prices, except where fixed and determinable
price escalations are provided by contract. The resulting estimated future cash
inflows are reduced further by estimated future costs to develop and produce
reserves based on period-end cost levels. No deduction has been made for
depletion, depreciation or income taxes or for indirect costs, such as general
corporate overhead. Present values were computed by discounting future net
revenues by 10 percent per annum.
11
<PAGE>
The following table sets forth summary information with respect to the
estimates of the Company's Proved and Proved Developed Reserves at December 31
of the years indicated.
<TABLE>
<CAPTION>
United States Canada
------------- ------
Proved Proved
Proved Developed Proved Developed
------ --------- ------ ---------
(000's Omitted) (000's Omitted)
<S> <C> <C> <C> <C> <C> <C>
1994 Oil (Bbls) 2,113 1,165 1,267 893
Gas (Mcf) 7,050 7,050 25,002 23,622
Net present value @ 10% $23,154 $15,294 $20,081 $16,892
1993 Oil (Bbls) 1,709 1,209 1,335 923
Gas (Mcf) 8,023 8,023 22,292 21,366
Net present value @ 10% $15,855 $14,960 $19,970 $16,788
1992 Oil (Bbls) 1,096 955 1,112 803
Gas (Mcf) 7,514 6,759 25,328 24,411
Net present value @ 10% $14,614 $14,197 $15,667 $12,800
</TABLE>
The determination of oil and gas reserves is a complex and
interpretive process which is subject to continued revisions as additional
information becomes available. Reserve estimates prepared by different
engineers from the same data can vary widely. Therefore, the reserve data
presented herein should not be construed as being exact. Any reserve estimate,
especially when based upon volummetric calculations, depends in part on the
quality of available data, engineering and geologic interpretation and
judgement, and thus, represents only an informed professional judgement.
Subsequent reservoir performance may justify upward or downward revision of the
estimate.
No Proved or Proved Developed Reserve estimates for oil and gas were filed
with or included in reports to any other federal or foreign governmental
authority or agency since the beginning of fiscal 1994, other than with the
Securities and Exchange Commission.
PRODUCTION WELLS
The following tabulations indicate the number of productive wells (gross
and net) as of December 31, 1994.
Gas Oil Developed Acreage
--------------- ------------- -----------------
Gross Net Gross Net Gross Net
----- --- ----- --- ----- ---
United States 636 84.4 526 78.3 56,984 23,473
Canada 204 49.2 59 6.1 160,220 26,131
12
<PAGE>
PRODUCTION
The following table shows the Company's net production in barrels ("Bbls") of
crude oil and in thousands of cubic feet ("Mcf") of natural gas (computed after
deducting all outstanding interests, including basic royalties and overriding
royalties) for the past three years (note - all $ dollar amounts presented are
in U.S. dollars).
Oil and Condensate (Bbls) Gas (Mcf)
------------------------- ---------
United States Canada United States Canada
------------- ------ ------------- ------
1994 277,000 46,000 1,238,000 822,000
1993 223,000 51,000 1,287,000 961,000
1992 202,000 41,000 1,576,000 959,000
Average sales price per unit of oil or gas produced:
Oil Gas
----------------- ----------------------------
U.S. Canada U.S. Canada
---- ----- ---- ------
1994 $15.17 $12.79 $1.74 $1.36
1993 $16.47 $13.27 $1.79 $1.21
1992 $19.29 $17.17 $1.85 $1.09
Production as shown in the table, which is net after royalty interests due
others, is determined by multiplying the gross production volume of properties
in which the Company has an interest by the percentage of the leasehold or other
property interest owned by the Company.
The relative energy content of oil and gas (six Mcf of gas equals one
barrel of oil) was used to obtain a conversion factor to convert natural gas
production into equivalent barrels of oils.
There are no agreements with foreign governments.
Average Production Cost Per Equivalent Barrel
of Oil in the United States and Canada:
---------------------------------------------
1994 1993 1992
----- ----- -----
United States $4.99 $5.19 $4.56
Canada $2.38 $2.64 $2.89
Unit cost is computed on equivalent barrels of oil equating gas to oil
based on BTU content. This method is appropriate for the Registrant since
several properties produce both oil and gas and production costs are not
segregated.
13
<PAGE>
The components of production costs may vary substantially among wells
depending on the methods of recovery employed and other factors, but generally
include severance taxes, administrative overhead, maintenance and repair, labor
and utilities.
OIL AND GAS LEASES
The following tabulation indicates the undeveloped acreage leased by the
Registrant as of December 31 of the years indicated:
1994 1993
---- ----
Undeveloped Acres Undeveloped Acres
----------------- -----------------
Gross Net Gross Net
----- --- ----- ---
United States 7,645 2,854 8,692 3,048
Canada 26,760 4,522 36,160 5,973
A "gross" acre is an acre in which the Company owns a working interest. A
"net" acre is deemed to exist when the sum of the fractional working interests
owned by the Company in gross acres equals one.
DRILLING
The following table sets forth the results of the Registrant's drilling
programs for the years covered:
Exploratory Wells Development Wells
------------------------- -----------------------------------
Net Productive Net Dry Net Productive Net Dry
------------------------- -----------------------------------
U.S. Canada U.S. Canada U.S. Canada U.S. Canada
---- ------ ---- ------ ---- ------ ---- ------
1994 - - .7 - .2 1.4 .4 - -
1993 - - .2 - .1 1.9 .3 - -
1992 - .5 .1 - .7 1.3 .2 - -
1991 - .5 .6 .1 1.2 .8 - - -
1990 - 1.0 .6 1.0 .4 1.0 - - -
A dry hole is an exploratory or development well which is found to be
incapable of producing oil or gas in sufficient quantities to justify
completion. A productive well is an exploratory or development well that is
capable of commercial production. The number of wells drilled refers to the
number of wells completed during the fiscal year, regardless of when drilling
was initiated.
14
<PAGE>
REAL ESTATE PROPERTIES
The following table sets forth the location and general character of the
principal physical properties owned by the Company as part of its real estate
operations. The properties are subject to mortgages. For further information
with respect to these properties, see "Business - Real Estate Operations."
Location General Character
-------- -----------------
Arizona 378 Unit Apartment Complex
Arizona 340 Unit Apartment Complex
Arizona 70 Unit Apartment Building
Arizona Office Building
Arizona Retail/Medical use Complex
Texas 228 Unit Apartment Complex
Florida Office Building
New Jersey Apartment Properties (274 units)
New Jersey Commercial/Retail Properties
The Company considers all of its properties both owned and leased,
together with the related furniture, fixtures and equipment contained therein,
to be well maintained, in good operating condition, and adequate for its present
and foreseeable future needs.
ITEM 3. LEGAL PROCEEDINGS
At December 31, 1994, the Company was not a party to any actions or
proceedings which management believes are reasonably likely to have a material
adverse effect upon the Company.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No matter was submitted by the Company to a vote of its security holders
during the fourth quarter of the year ended December 31, 1994.
15
<PAGE>
PART II
ITEM 5. MARKET PRICE OF THE REGISTRANT'S COMMON EQUITY
AND RELATED STOCKHOLDER MATTERS
The Company's Common Stock is traded on the New York Stock Exchange. The
following table indicates the high and low sales prices of the Company's common
stock for the quarters indicated during the past two years:
(All in ($) Dollars)
Quarter 1 Quarter 2 Quarter 3 Quarter 4
High - Low High - Low High - Low High - Low
------------- ------------ ------------- --------------
1994 7 - 6-3/8 7-1/8 - 6-3/8 7-1/4 - 6-1/8 7 - 6-1/4
1993 7-3/8 - 6-1/2 7-5/8 - 6-5/8 7-1/4 - 6-5/8 7 - 6-3/8
As of March 15, 1995 there were 10,790 common shareholders of records.
The Company declared a $.06 per common share cash dividend on June
17, 1994 to shareholders of record on July 29, 1994, payable on August 19, 1994.
The Company declared a $.05 per common share cash dividend on June 11, 1993, to
shareholders of record on July 30, 1993, payable on August 27, 1993. There was
no cash dividend in 1992.
The Company declared 3% stock dividends in 1994, 1993, and 1992.
These are deemed to constitute stock distributions to the extent that such
distributions exceeded retained earnings. Wilshire's Board authorized these
stock distributions in recognition of the increased value of the Jacob's common
stock currently held by the Company which has not been reflected in the
Company's earnings.
<PAGE>
ITEM 6. SELECTED FINANCIAL DATA
<TABLE>
<CAPTION>
(Not covered by Report of Independent Public Accountants)
(In thousands of dollars except per share amounts)
For the Year Ended December 31
-------------------------------------------------------------
1994(a) 1993(a) 1992(a) 1991 1990
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Oil/Gas Revenues $ 7,926 $ 8,505 $ 8,803 $ 7,344 $ 9,500
-------- -------- -------- -------- -------
Real Estate Revenues $ 7,885 $ 6,526 $ 2,604 $ - $ -
-------- -------- -------- -------- -------
Total Revenues $ 15,811 $ 15,031 $ 11,407 $ 7,344 $ 9,500
-------- -------- -------- -------- -------
Gross Profit
Oil/Gas (b) $ 1,930 $ 1,740 $ 443 $(1,251) $ 3,064
-------- -------- -------- -------- -------
Gross Profit
Real Estate (c) $ 2,415 $ 2,200 $ 832 $ - $ -
-------- -------- -------- -------- -------
Total Gross
Profit (loss) $ 4,345 $ 3,940 $ 1,275 $(1,251) $ 3,064
-------- -------- -------- -------- -------
Net Income (loss) $ 3,577 $ 4,573 $ 3,523 ($ 3,409)e $ 843
-------- -------- -------- -------- -------
Net income (loss
per share of
common stock(d) $ .36 $ .45 $ .35 ($ .34) $ .08
-------- -------- -------- -------- -------
Total assets at
year-end (f) $103,198 $104,652 $ 68,527 $ 47,209 $52,366
-------- -------- -------- -------- -------
Long-term
obligations $ 50,160 $ 40,721 $ 39,634 $ 23,450 $25,555
-------- -------- -------- -------- -------
Cash dividends
declared per share $ .06 $ .05 $ -0- $ - 0 - $ - 0 -
-------- -------- -------- -------- -------
<FN>
a- 1994,1993 and 1992 amounts reflect the acquisition and operations of income
producing real estate properties.
b- Gross profit relating to oil and gas represents oil and gas revenues less
production costs and related depreciation, depletion and amortization.
c- Gross profit relating to real estate represents total real estate
revenues less real estate operating costs and related depreciation.
d- Restated to give effect to stock distributions.
</TABLE>
17
<PAGE>
e- The net loss in 1991 includes a pretax charge of $3,000,000 as additional
depreciation, depletion and amortization to reflect the effect of
substantial declines in the worldwide prices received for oil and gas,
coupled with the increased capitalized costs during this period. These
price declines also had a direct adverse impact on the Company's oil and gas
revenues in 1991 as compared to prior years. In addition, the comparability
of net income is affected by the Company's stock option plan.
f- Total assets at December 31, 1994 and 1993 reflect investments in equity
securities stated at market value. See Note 1 to the consolidated financial
statements regarding this change in accounting.
WILSHIRE OIL COMPANY OF TEXAS AND SUBSIDIARIES
QUARTERLY FINANCIAL DATA
(Unaudited)
(In thousands $ except per share amounts)
1994
1st 2nd 3rd 4th Year
-----------------------------------------------------------
Oil/Gas Revenues $1,842 $2,179 $2,201 $1,704 $ 7,926
Real Estate
Revenues $1,771 $2,014 $2,029 $2,071 $ 7,885
------ ------ ------ ------ -------
Total Revenues $3,613 $4,193 $4,230 $3,775 $15,811
Gross Profit
Oil/Gas (a) $ 234 $ 433 $ 367 $ 896 $ 1,930
Gross Profit
Real Estate (b) $ 616 $ 706 $ 642 $ 451 $ 2,415
------ ------ ------ ------ -------
Total Gross
Profit $ 850 $1,139 $1,009 $1,347 $ 4,345
------ ------ ------ ------ -------
Net Income $1,306 $1,263 $ 951 $ 57 $ 3,577
------ ------ ------ ------ -------
Net Income
Per Share $ .13 $ .13 $ .10 $ .01 $ .36
------ ------ ------ ------ -------
Cash Dividends
Per Share $ -0- $ -0- $ .06 $ -0- $ .06
------ ------ ------ ------ -------
a - Gross profit relating to oil and gas represents oil and gas revenues less
production costs and related depreciation, depletion and amortization.
b - Gross profit relating to real estate represents total real estate revenues
less real estate operating costs and related depreciation.
18
<PAGE>
ITEM 7. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
GENERAL
The Company's oil and gas operating performance is influenced by several
factors. The most significant are the prices received for the sale of oil and
gas and the sales volume. The entire energy industry, along with the Company,
experienced declines in 1994 in the prices received for crude oil. For 1994,
the average price of oil that the Company received was $14.83 compared to $15.87
for 1993, a price decline of 6.6%. Average gas prices received by the Company
in 1994 were slightly higher than 1993 average gas prices. The average price
of gas for 1994 was $1.59 compared to $1.54 for 1993.
Wilshire's oil production in 1994 increased in volume by 17.9%, from
274,000 Bbls produced in 1993 to 323,000 Bbls produced in 1994. This increase
was due to the successful horizontal drilling program in the U.S. and the
successful drilling in Canada that together resulted in a total of 14 new wells
for 1994, adding 241,000 barrels of oil and 1,398,000 MCF of natural gas to
proved reserves in 1994.
The following table reflects the average prices received by the
Company for oil and gas, the average production cost per BOE, and the amount of
the Company's oil and gas production for the fiscal years presented:
Fiscal Year Ended December 31
-------------------------------------
Crude Oil and Natural Gas Production: 1994 1993 1992
---- ---- ----
Oil (Bbls) . . . . . . . . . . . 323,000 274,000 243,000
Gas (Mcf) . . . . . . . . . . . . 2,060,000 2,248,000 2,535,000
Average sales prices:
Oil (per Bbl) . . . . . . . . . $14.83 $15.87 $18.94
Gas(per MCF) . . . . . . . . . . $ 1.59 $ 1.54 $ 1.56
Average production costs per BOE $ 4.27 $ 4.36 $ 4.06
Sales prices received by the Company for oil and gas have fluctuated
significantly from period to period. The fluctuations in oil prices during
these periods primarily reflected market uncertainty regarding the inability of
the Organization of Petroleum Exporting Countries ("OPEC") to control the
production of its member countries, as well as concerns related to global supply
and demand for crude oil. Gas prices received by the Company fluctuate
generally with changes in the spot market price for gas. It is impossible to
predict future price movements with certainty.
The Company added 14 investment real estate properties in 1994 to its
assets. These properties were acquired March 31, 1994, and are located in New
Jersey and Arizona.
19
<PAGE>
RESULTS OF OPERATIONS
YEAR ENDED DECEMBER 31, 1994 ("1994") COMPARED WITH YEAR ENDED DECEMBER 31,
1993 ("1993").
Net income was $3,577,000 in 1994 as compared with $4,573,000 in
1993. The 1994 operations included the revenues and expenses of real estate
properties acquired on March 31,1994 and gains on the sales of marketable
securities. Gains on sales of marketable securities were $853,000 less in 1994
than in 1993.
Oil and gas revenues were $7,926,000 in 1994 compared to $8,055,000 in
1993. Despite a substantial increase (17.9%) in oil production from the
successful horizontal drilling program during 1994, revenues decreased slightly
due to a drop in the price of crude oil from $15.87 in 1993 to $14.83 in 1994.
Consolidated revenues in 1993 also included a non-recurring gas settlement of
$450,000.
Real estate revenues increased from $6,526,000 in 1993 to $7,885,000
in 1994, an increase of $1,359,000. This increase was principally due to the
acquisition of additional investment properties in March 1994 as well as
generally higher rents and increased occupancy.
Oil and gas production expense was comparable in 1994 and 1993. Oil
and gas production expense was $2,846,000 in 1994 compared with $2,829,000 in
1993. Average cost per BOE decreased by 2% in 1994.
Depreciation, depletion and amortization of oil and gas assets amounted to
$3,150,000 in 1994 compared to $3,936,000 in 1993. This decrease is
principally attributable to an increase in the estimated value of the
Company's oil and gas reserves. Real estate depreciation was $870,000 in 1994
compared to $653,000 in 1993. This increase is principally attributable to the
newly acquired properties discussed above.
General and administrative expense was $1,386,000 in 1994 compared to
$1,097,000 in 1993. The increase is principally attributable to increased
charges in 1994 related to the Company's non-qualified stock option plan.
The Company realized gains on sales of common shares of Jacobs Engineering
Group, Inc.("Jacobs") of $5,457,000 in 1994 compared to $6,256,000 in 1993. The
Company sold less shares of Jacobs in 1994 than in 1993. As of December 31,
1994, the Company held 1,412,960 shares of Jacobs.
Interest expense increased from $2,776,000 in 1993 to $3,638,000 in 1994
due to the addition of $8,704,000 of new financing related to the acquisition
of real estate properties in March 1994 as well as substantially higher
interest rates in general in 1994.
20
<PAGE>
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.
1993 COMPARED WITH YEAR ENDED DECEMBER 31, 1992 ("1992")
Net income increased from $3,523,000 in 1992 to $4,573,000 in 1993, an
increase of approximately 30%. The 1993 operations included the revenues and
expenses of income producing real estate properties acquired on December 31,
1992 and June 30, 1993 and gains on the sales of marketable securities. Gains
on sales of marketable securities were $1.3 million less in 1993 than in 1992.
Oil and gas revenues were $8,505,000 in 1993 compared to $8,803,000 in
1992 a decrease of 3.4%. This was primarily due to lower worldwide oil prices
received during most of 1993, compared to 1992. This decrease in price was
offset, for the most part, by an increased volume of oil produced in 1993, due
to the continued success of the Company's horizontal drilling program in the
United States. Consolidated crude oil production increased by 12.8% in 1993
compared to 1992.
Real estate revenues increased from $2,604,000 in 1992 to $6,526,000
in 1993, an increase of $3,922,000. This increase was principally due to the
operations of the income producing real estate properties acquired in December
1992 and June 1993 as well as generally higher rents and increased occupancy.
Oil and gas production expense increased by 4.8% in 1993, from
$2,700,000 in 1992 to $2,829,000 in 1993. Production expense increased
principally as a result of increased level of volume of oil production in 1993.
Average cost per BOE increased by approximately 7% in 1993 from 1992.
Depreciation, depletion and amortization of oil and gas assets in 1993
amounted to $3,936,000 compared to $5,660,000 in 1992. This decrease is
principally attributable to an increase in the estimated value of the Company's
oil and gas reserves. Real estate depreciation was $653,000 in 1993, compared
to $233,000 in 1992. This increase is principally attributable to the newly
acquired properties discussed above.
General and administrative expense was $1,097,000 in 1993, compared to
$1,278,000 in 1992. The decrease is principally attributable to decreased
charges in 1993 related to the Company's non-qualified stock option plan.
The Company sold 285,000 shares of its investment in Jacobs
Engineering Group, Inc. in 1993. These sales generated a gain on sale of
marketable securities of $6,256,000. As of December 31, 1993, the Company held
1,572,760 shares of Jacobs.
Interest expense increased from $2,133,000 in 1992 to $2,776,000 in
1993 due to the addition of $3,209,000 of new financing related to the
acquisition of income producing real estate properties in June 1993 and the
additional interest in 1993 for the properties the Company acquired in December
1992. Lower interest rates in 1993, compared to 1992, partially offset the
increases.
21
<PAGE>
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 and, in 1992, settlement of the Revenue Canada tax audit.
EFFECTS OF INFLATION
The effects of inflation on the Company's financial condition are not
considered to be material by management.
ACCOUNTING FOR INCOME TAXES
Statement of Finanancial 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 its
consolidated financial statements.
ACCOUNTING FOR CERTAIN INVESTMENTS IN DEBT AND EQUITY SECURITIES
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
December 31, 1994, the net unrealized gain on marketable securities was
$18,487,000. This amount, net of related deferred income taxes of $8,319,000,
is included as a credit to shareholders' equity in the Company's 1994
consolidated financial statements.
LIQUIDITY AND CAPITAL RESOURCES
At December 31, 1994 the Company had approximately $11,500,000 in
marketable securities at cost, with a market value of approximately $30,000,000.
The current ratio at December 31, 1994 was 5.4 to 1 on a market basis, which
management considers adequate for the Company's current business. The Company's
working capital was approximately $26 million at December 31, 1994.
The Company anticipates that cash provided by operating activities and
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.
22
<PAGE>
As discussed under "Results of Operations" above, the Company acquired
additional investment real estate properties on March 31, 1994. The aggregate
purchase price of these transactions approximated $10,240,000. These purchases
were financed with long-term mortgage loans of $8,704,000.
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.
Net cash provided by operating activities was $4,446,000, $2,489,000,
and $5,049,000 in 1994, 1993 and 1992, respectively. The increase in 1994 was
primarily due to a reduction in outstanding receivables as well as an increase
in accounts payable and accrued and other liabilities. The decrease in 1993 was
primarily due to the payment in 1993 of Canadian tax liabilities settled in
1992.
Net cash used in investing activities was $12,266,000, $4,165,000 and
$20,401,000 in 1994, 1993 and 1992, respectively. The variations principally
relate to purchases of real estate properties and transactions in securities.
Purchases of real estate properties amounted to $10.2 million in 1994, $3.8
million in 1993 and $19.9 million in 1992. Proceeds from sales of marketable
securities amounted to $6,710,000 in 1994, $6,730,000 in 1993 and $5,217,000 in
1992. Proceeds from receivables from securities sales amounted to $3,409,000 in
1994. Purchases of marketable securities amounted to $5,204,000 in 1994,
$2,170,000 in 1993, and $1,149,000 in 1992. Additionally, the Company acquired
$3,000,000 of preferred stock of The Trust Company of New Jersey in 1994.
Net cash provided by financing activities was $7,167,000, $233,000
and $15,977,000 in 1994, 1993 and 1992, respectively. The variations
principally relate to the issuance and renegotiation of long-term debt. As
previously discussed, in 1994, 1993 and 1992 the Company acquired real estate
properties, which were financed with long-term mortgage loans. Long-term
mortgage loans incurred in connection with these acquisitions amounted to
approximately $8,704,000 in 1994, $3,209,000 in 1993 and $17,212,000 in 1992.
In 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.
23
<PAGE>
FINANCIAL ACCOUNTING STANDARDS BOARD STATEMENT NO. 69 DISCLOSURES
The following disclosures are those required to be made by publicly
traded enterprises under Financial Accounting Standards Board Statement No. 69,
Disclosures About Oil and Gas Producing Activities.
The SEC defines proved oil and gas reserves as those estimated quantities
of crude oil, natural gas and natural gas liquids which geological and
engineering data demonstrate with reasonable certainty to be recoverable in
future years from known reservoirs under existing economic and operating
conditions. Proved developed oil and gas reserves are those that can be
recovered through existing wells with existing equipment and operating methods.
24
<PAGE>
Estimated quantities of proved oil and gas reserves are as follows:
Disclosures of Oil and Gas Producing Activities as
Required by Financial Accounting Standards
Board Statement No. 69
(000's Omitted)
<TABLE>
<CAPTION>
CRUDE OIL, CONDENSATE AND NATURAL GAS LIQUIDS
(BARRELS)
United States Canada
------------- ------
1994 1993 1992 1994 1993 1992
---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
Proved Reserves-Beginning of Year 1,709 1,096 987 1,335 1,112 1,069
Revisions of previous estimates 465 327 (38) (47) 46 60
Sale of minerals in place -0- (1) -0- -0- -0- -0-
Extensions and discoveries 216 510 349 25 228 24
Production (277) (223) (202) (46) ( 51) (41)
----- ----- ----- ----- ----- -----
Proved Reserves-End of Year 2,113 1,709 1,096 1,267 1,335 1,112
----- ----- ----- ----- ----- -----
Proved Developed Reserves-
Beginning of Year 1,209 955 831 923 803 772
----- ----- ----- ----- ----- -----
End of Year 1,165 1,209 955 893 923 803
----- ----- ----- ----- ----- -----
----- ----- ----- ----- ----- -----
<CAPTION>
NATURAL GAS
MCF
United States Canada
------------- ------
1994 1993 1992 1994 1993 1992
---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
Proved Reserves-Beginning of Year 8,023 7,514 9,542 22,292 25,328 27,417
Revisions of previous estimates 75 1,814 (457) 2,324 (2,075) (1,149)
Sale of minerals in place -0- (111) -0- -0- -0- -0-
Extensions and discoveries 190 93 5 1,208 -0- 19
Production (1,238) (1,287) (1,576) (822) (961) (959)
----- ----- ----- ------ ------ ------
Proved Reserves-End of Year 7,050 8,023 7,514 25,002 22,292 25,328
----- ----- ----- ------ ------ ------
Proved Developed Reserves-
Beginning of Year 8,023 6,759 8,704 21,366 24,411 26,468
----- ----- ----- ------ ------ ------
End of Year 7,050 8,023 6,759 23,622 21,366 24,411
----- ----- ----- ------ ------ ------
----- ----- ----- ------ ------ ------
</TABLE>
25
<PAGE>
Standardized Measure of Discounted Future Net Cash Flows
Related to Proved Oil and Gas Reserves
December 31, 1994
(000's Omitted)
<TABLE>
<CAPTION>
United States Canada
------------- ------
1994 1993 1994 1993
---- ---- ---- ----
<S> <C> <C> <C> <C>
Future cash flows $47,784 $37,359 $62,743 $61,379
------- ------- ------- -------
Future costs:
Production 13,595 14,288 15,707 15,398
Development, dismantlement
& abandonment 1,526 923 2,053 2,032
------- ------- ------- -------
Total Future Costs $15,121 $15,211 $17,760 $17,430
------- ------- ------- -------
Future net inflows-Before
income tax $32,663 $22,148 $44,983 $43,949
Future income taxes $ 9,298 $ 6,317 $16,218 $16,039
------- ------- ------- -------
Future net cash flows $23,365 $15,831 $28,765 $27,910
10% Discount factor 6,802 4,498 15,924 15,228
------- ------- ------- -------
Standardized measure of
discounted future net
cash flows $16,563 $11,333 $12,841 $12,682
------- ------- ------- -------
</TABLE>
Estimated future cash inflows are computed by applying year-end prices of
oil and gas to year-end quantities of proved reserves. Future price changes are
considered only to the extent provided by contractual arrangements. Estimated
future development and production costs are determined by estimating the
expenditures to be incurred in developing and producing the proved oil and gas
reserves at the end of the year, based on year-end costs and assuming
continuation of existing economic conditions. Estimated future income tax
expenses are calculated by applying year-end statutory tax rates (adjusted for
permanent differences and tax credits) to estimated future pretax net cash flows
related to proved oil and gas reserves, less the tax basis of the properties
involved.
These estimates are furnished and calculated in accordance with
requirements of the Financial Accounting Standards Board and the SEC. Due to
unpredictable variances in expenses and capital forecasts, crude oil and natural
gas price changes and the fact that the basis for such estimates vary
significantly, management believes the usefulness of these projections is
limited. Estimates of future net cash flows do not represent management's
assessment of future profitability or future cash flow to the Company.
Management's investment and operating decisions are based upon reserve estimates
that include proved reserves prescribed by the SEC as well as probable reserves,
and upon different price and cost assumptions from those used here. It should
be recognized that applying current costs and prices at a 10 percent standard
discount rate allows for
26
<PAGE>
comparability but does not convey absolute value. The discounted amounts
arrived at are only one measure of financial quantification of proved reserves.
There were no oil and gas estimates filed with or included in reports to
any other federal or foreign governmental authority or agency within the last
twelve months.
Reserves in the United States were estimated by Ramsey Engineering Inc.
and the Company. Reserves in Canada were estimated by Citidal Engineering, Ltd.
"Total Costs Both Capitalized and Expensed, Incurred in Oil and Gas
Producing Activities" (including capitalized interest), "Cost Incurred in
Property Acquisition, Exploration and Development Activities" and "Results of
Operations from Oil and Gas Producing Activities" during the three years ended
December 31, 1994, 1993 and 1992 are included in Note 8 of the Notes to
Consolidated Financial Statements, presented elsewhere herein.
The standardized measure of discounted estimated future net cash flows and
changes therein related to proved oil and gas reserves is as follows:
Changes in Standardized Measure of
Discounted Future Net Cash Flow from Proved Reserve Quantities
(000's Omitted)
<TABLE>
<CAPTION>
1994 1993 1992
---- ---- ----
<S> <C> <C> <C>
Standardized Measure - $24,015 $20,704 $20,661
Beginning of Year
Sales and transfers - Net
of Production Costs and
Windfall Profit Tax (5,556) (5,676) (6,103)
Extensions and discoveries 2,517 5,734 5,105
Net change in sales price 1,199 525 2,149
Revision of quantity estimates 7,956 2,864 (566)
Proceeds from Sales of
Minerals in Place -0- (300) -0-
Accretion of discount 2,794 3,197 2,538
Net change in income taxes 2,193 (2,056) (656)
Change in production rates-
Other (5,714) $ (977) $(2,424)
------- ------- -------
Standardized measure -
End of year $29,404 $24,015 $20,704
------- ------- -------
------- ------- -------
</TABLE>
27
<PAGE>
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURE
None
PART III
ITEM 10. DIRECTORS OF THE REGISTRANT
Information required under this Item with respect to Directors is
incorporated by reference from the Company's Definitive Proxy Statement for the
1995 Annual Meeting of Shareholders.
Information regarding executive officers is found in Part I,
Item 1 (a)
ITEM 11. EXECUTIVE COMPENSATION
Information required under this Item is incorporated by reference from the
Company's Definitive Proxy Statement for the 1995 Annual Meeting of
Shareholders.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT
Information required under this Item is incorporated by reference from the
Company's Definitive Proxy Statement for the 1995 Annual Meeting of
Shareholders.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Information required under this Item is incorporated by reference from the
Company's Definitive Proxy Statement for the 1995 Annual Meeting of
Shareholders.
28
<PAGE>
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT, SCHEDULES AND
REPORTS ON FORM 8-K
-------------------
(A) 1. FINANCIAL STATEMENTS
The Financial statements filed as part of this report are listed on
the Index to Consolidated Financial Statements on page F-1.
(A) 2. FINANCIAL STATEMENT SCHEDULES
Index to Consolidated Financial Statement Schedules F-1
All schedules are omitted because they are
not required, inapplicable or the information is
otherwise shown in the financial statements or
notes thereto.
(A) 3. EXHIBITS
Exhibit
NUMBER DESCRIPTION
------ -----------
3.1 Restated Certificate of Incorporation of Wilshire Oil Company of
Texas, as amended. (Incorporated by reference to Exhibit 3.1 of
Item 14 of the Registrant's Annual Report on Form 10-K for the year
ended December 31, 1992.)
3.2 Amended By-Laws of Wilshire Oil Company of Texas (Incorporated by
reference to Exhibit 3.3 of Item 14 of the Registrant's Annual Report
on Form 10-K for the year ended December 31, 1991.)
4.1 Copy of Indenture relating to 6% subordinated debentures
(incorporated by reference to Form S-1, registration statement
number 2-37974, dated August 20, 1970).
4.2 Oil and Gas Loan between Wilshire Oil Company of Texas and Midlantic
National Bank dated March 24,1994.
10.1 General Assignments and Assignments of Leases dated March 31, 1992
with respect to the purchase of income producing real estate
properties (incorporated by reference to Exhibit 1 and 2 of Form 8
dated December 9, 1992, filed with the Commission).
29
<PAGE>
10.2 General Assignments, Assignments of Leases, and Escrow Agreements
and Early Possession Agreements with respect to the purchase of four
income producing real estate properties, (incorporated by reference
to Exhibits 1 (a) through 4(c) on the Company's Form 8-K dated
December 31, 1992 filed with the Commission).
10.3 Wilshire Oil Company of Texas 1978 Stock Option Plan. (Incorporated
by reference to Exhibit 10.3 of Item 14 of the Registrant's Annual
Report on Form 10-K for the year ended December 31, 1992.)
10.4 Wilshire Oil Company of Texas 1980 Stock Option Plan. (Incorporated
by reference to Exhibit 10.4 of Item 14 of the Registrant's Annual
Report on Form 10-K for the year ended December 31, 1992.)
10.5 Wilshire Oil Company of Texas 1984 Stock Option Plan. (Incorporated
by reference to Exhibit 10.5 of Item 14 of the Registrant's Annual
Report on Form 10-K for the year ended December 31, 1992.)
11. Computation of Earnings Per Share
22. List of significant subsidiaries of the Registrant
24. Consent of Arthur Andersen LLP
14(B) REPORTS ON FORM 8
There were no Form 8-K filings by the Company during the fourth
quarter of 1994.
30
<PAGE>
EXHIBIT 11 - STATEMENT RE: COMPUTATION OF PER SHARE EARNINGS:
NET INCOME PER SHARE -
Net income per share is based upon the weighted average number of shares
outstanding during the year, after deduction of Treasury Stock, as well as the
dilutive effect of stock options, if material. Net income per share for 1993
has been restated to reflect the 3% stock dividend declared in 1994.
1994 1993
Shares -
Weighted average shares outstanding 9,925,307 10,163,314
Dilutive effect of stock options outstanding -0- -0-
---------- ----------
9,925,307 10,163,314
Net income $3,577,000 $4,573,000
---------- ----------
Net income per share $ .36 $ .45
----------- ----------
31
<PAGE>
EXHIBIT 22 - LIST OF SUBSIDIARIES
JURISDICTION OF
INCORPORATION
Wilshire Oil of Canada, Ltd. Alberta, Canada
Calgary, Alberta, Canada
Britalata Venezolano, Ltd. Alberta, Canada
Calgary, Alberta, Canada
32
<PAGE>
S I G N A T U R E S
Pursuant to the requirements of Section 13 or 15(d) of the
Securities Exchange Act of 1934, the Registrant has duly caused
the report to be signed on its behalf by the undersigned
thereunto duly authorized.
WILSHIRE OIL COMPANY OF TEXAS
(Registrant)
Directors:
-----------
By:
/s/Sherry Wilzig Izak
---------------------------------
Sherry Wilzig Izak, Director
By:
/s/William Schwartz, M.D.
---------------------------------
William Schwartz, M.D., Director
By:
/s/Joseph K. Schwartz
---------------------------------
Joseph K. Schwartz, Director
By:
/s/Milton Donnenberg
---------------------------------
Milton Donnenberg, Director
By:
/s/Ernest Wachtel
---------------------------------
Ernest Wachtel, Director
Officers:
---------
By:
/s/Sherry Wilzig Izak
---------------------------------
Sherry Wilzig Izak
Chairman of the Board and Chief
Executive Officer
(Duly Authorized Officer and
Chief Financial Officer)
Date: March 29, 1995
<PAGE>
S I G N A T U R E S
Pursuant to the requirements of Section 13 or 15(d) of the
Securities Exchange Act of 1934, the Registrant has duly caused
the report to be signed on its behalf by the undersigned
thereunto duly authorized.
WILSHIRE OIL COMPANY OF TEXAS
(Registrant)
Directors:
-----------
By:
--------------------------------
Sherry Wilzig Izak, Director
By:
--------------------------------
William Schwartz, M.D., Director
By:
--------------------------------
Joseph K. Schwartz, Director
By:
--------------------------------
Milton Donnenberg, Director
By:
--------------------------------
Ernest Wachtel, Director
Officers:
----------
By:
--------------------------------
Sherry Wilzig Izak
Chairman of the Board and Chief
Executive Officer
(Duly Authorized Officer and
Chief Financial Officer)
Date: March 29, 1995
<PAGE>
ITEM 8 -- FINANCIAL STATEMENTS
WILSHIRE OIL COMPANY OF TEXAS AND SUBSIDIARIES
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
Page
------
CONSOLIDATED FINANCIAL STATEMENTS:
Report of Independent Public Accountants F-2
Consolidated Balance Sheets as of December 31, 1994 and 1993 F-3
Consolidated Statements of Operations for the Years Ended
December 31, 1994, 1993 and 1992 F-4
Consolidated Statements of Shareholders' Equity for the
Years Ended December 31, 1994, 1993 and 1992 F-5
Consolidated Statements of Cash Flows for the Years Ended
December 31, 1994, 1993 and 1992 F-6
Notes to Consolidated Financial Statements F-8
F-1
<PAGE>
ARTHUR ANDERSEN LLP
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Shareholders and
Board of Directors of
Wilshire Oil Company of Texas:
We have audited the accompanying consolidated balance sheets of Wilshire Oil
Company of Texas (a Delaware corporation) and subsidiaries as of December 31,
1994 and 1993, and the related consolidated statements of operations,
shareholders' equity and cash flows for each of the three years in the period
ended December 31, 1994. These financial statements are the responsibility of
the Company's management. Our responsibility is to express an opinion on these
financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Wilshire Oil Company of Texas
and subsidiaries as of December 31, 1994 and 1993, and the results of their
operations and their cash flows for each of the three years in the period ended
December 31, 1994, in conformity with generally accepted accounting principles.
As discussed in Note 1 to the consolidated financial statements, in 1993 the
Company changed its method of accounting for investments in equity securities.
ARTHUR ANDERSEN LLP
Roseland, New Jersey
March 18, 1995
F-2
<PAGE>
WILSHIRE OIL COMPANY OF TEXAS AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS AS OF DECEMBER 31, 1994 AND 1993
<TABLE>
<CAPTION>
ASSETS 1994 1993
------ ------------- -------------
<S> <C> <C>
CURRENT ASSETS:
Cash and cash equivalents $907,000 $1,566,000
Accounts receivable 934,000 1,235,000
Receivables from securities sales 0 3,409,000
Marketable securities, at fair value (Notes 3 and 9) 29,989,000 39,490,000
Prepaid expenses and other current assets 450,000 380,000
------------- -------------
Total current assets 32,280,000 46,080,000
------------- -------------
INVESTMENT IN PREFERRED STOCK OF
THE TRUST COMPANY OF NEW JERSEY (Notes 2, 3 and 7) 6,000,000 3,000,000
------------- -------------
PROPERTY AND EQUIPMENT (Notes 1, 3, 7, 8 and 10):
Oil and gas properties, using the full cost method of
accounting 127,880,000 125,135,000
Real estate properties 35,523,000 25,218,000
Other property and equipment 391,000 350,000
------------- -------------
163,794,000 150,703,000
Less- Accumulated depreciation, depletion and
amortization 98,876,000 95,131,000
------------- -------------
64,918,000 55,572,000
------------- -------------
$103,198,000 $104,652,000
============= =============
<CAPTION>
LIABILITIES AND SHAREHOLDERS' EQUITY 1994 1993
------------------------------------ ------------ ------------
<S> <C> <C>
CURRENT LIABILITIES:
Current portion of long-term debt (Note 3) $2,484,000 $1,839,000
Accounts payable 2,853,000 1,757,000
Accrued liabilities 626,000 732,000
------------- -------------
Total current liabilities 5,963,000 4,328,000
------------- -------------
LONG-TERM DEBT, less current portion (Note 3) 50,160,000 40,721,000
DEFERRED INCOME TAXES (Note 5) 18,636,000 23,681,000
------------- -------------
COMMITMENTS AND CONTINGENCIES (Note 6)
SHAREHOLDERS' EQUITY (Notes 1, 3 and 4):
Common stock, $1 par value, 15,000,000 shares authorized;
issued 10,013,544 and 10,000,182 shares in 1994 and 1993 10,014,000 10,000,000
Capital in excess of par value 10,399,000 12,492,000
Unrealized gain on marketable securities of $18,487,000
and $31,885,000 in 1994 and 1993, respectively, net of
income taxes 10,168,000 17,537,000
Accumulated earnings (deficit) 2,822,000 (188,000)
------------- -------------
33,403,000 39,841,000
Less-
Treasury stock, 341,818 and 276,636 shares in 1994 and
1993, at cost 2,290,000 1,872,000
Cumulative foreign currency translation adjustment 2,674,000 2,047,000
------------- -------------
28,439,000 35,922,000
------------- -------------
$103,198,000 $104,652,000
============= =============
</TABLE>
The accompanying notes to consolidated financial statements
are an integral part of these balance sheets.
F-3
<PAGE>
WILSHIRE OIL COMPANY OF TEXAS AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE YEARS ENDED DECEMBER 31, 1994, 1993 AND 1992
<TABLE>
<CAPTION>
1994 1993 1992
---------- ------------ ------------
<S> <C> <C> <C>
REVENUES (Notes 7 and 8):
Oil and gas $7,926,000 $8,055,000 $8,803,000
Real estate 7,885,000 6,526,000 2,604,000
Non-recurring gas settlement 0 450,000 0
---------- ------------ ------------
Total revenues 15,811,000 15,031,000 11,407,000
---------- ------------ ------------
COSTS AND EXPENSES (Notes 4, 7 and 8):
Oil and gas production expenses 2,846,000 2,829,000 2,700,000
Real estate operating expenses 4,600,000 3,673,000 1,539,000
Depreciation, depletion and amortization 4,041,000 4,608,000 5,912,000
General and administrative 1,386,000 1,097,000 1,278,000
---------- ------------ ------------
Total costs and expenses 12,873,000 12,207,000 11,429,000
---------- ------------ ------------
Income (loss) from operations 2,938,000 2,824,000 (22,000)
GAIN ON SALES OF MARKETABLE
SECURITIES (Note 9) 5,403,000 6,256,000 7,602,000
OTHER INCOME (Note 2) 435,000 413,000 410,000
INTEREST EXPENSE (Note 3) (3,638,000) (2,776,000) (2,133,000)
---------- ------------ -------------
Income before provision
for income taxes 5,138,000 6,717,000 5,857,000
--------- ------------ -------------
PROVISION FOR INCOME TAXES (Note 5):
Federal-
Current 333,000 563,000 484,000
Deferred 1,076,000 1,413,000 1,228,000
Foreign-
Current 72,000 55,000 114,000
Deferred 80,000 113,000 508,000
--------- ------------ -------------
1,561,000 2,144,000 2,334,000
--------- ------------ -------------
Net income $3,577,000 $4,573,000 $3,523,000
========== ============ =============
AVERAGE NUMBER OF SHARES OF COMMON
STOCK OUTSTANDING 9,925,307 10,163,314 10,189,664
========== ============ =============
NET INCOME PER COMMON SHARE $.36 $.45 $.35
========== ============ =============
</TABLE>
The accompanying notes to consolidated financial statements
are an integral part of these statements.
F-4
<PAGE>
WILSHIRE OIL COMPANY OF TEXAS AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
FOR THE YEARS ENDED DECEMBER 31, 1994, 1993 AND 1992
<TABLE>
<CAPTION>
Cumulative
Unrealized Gain Foreign
Common Stock Capital in on Marketable Accumulated Currency
----------------------- Excess of Securities, Net Earnings Treasury Translation
Shares Amount Par Value of Income Taxes (Deficit) Stock Adjustment
----------- ------------ ----------- ---------------- -------------- -------- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
BALANCE, December 31, 1991 9,311,921 $9,312,000 $13,749,000 $0 ($7,802,000) ($431,000) ($727,000)
Add (deduct):
Net income 0 0 0 0 3,523,000 0 0
Stock distribution (Note 4) 277,889 278,000 (319,000) 0 0 0 0
Amortization of deferred
compensation in connection
with nonqualified stock option
plans (Note 4) 0 0 143,000 0 0 0 0
Exercise of stock options
(Note 4) 114,532 114,000 (267,000) 0 0 368,000 0
Issuance of shares in exchange
for 6% Convertible Subordinated
Debentures 10,652 11,000 40,000 0 0 0 0
Purchase of treasury stock 0 0 0 0 0 (445,000) 0
Net translation adjustment,
current year 0 0 0 0 0 0 (914,000)
----------- ----------- ---------- --------------- ----------- --------- -----------
BALANCE, December 31, 1992 9,714,994 9,715,000 13,346,000 0 (4,279,000) (508,000) (1,641,000)
Add (deduct):
Net income 0 0 0 0 4,573,000 0 0
Stock distribution (Note 4) 285,147 285,000 (316,000) 0 0 0 0
Amortization of deferred
compensation in connection
with nonqualified stock option
plans (Note 4) 0 0 (535,000) 0 0 0 0
Exercise of stock options (Note 4) 0 0 (3,000) 0 0 45,000 0
Issuance of shares in exchange
for 6% Convertible Subordinated
Debentures 41 0 0 0 0 0 0
Purchase of treasury stock 0 0 0 0 0 (1,409,000) 0
Payment of cash dividends,
$.05 per common share 0 0 0 0 (482,000) 0 0
Net translation adjustment,
current year 0 0 0 0 0 0 (406,000)
Unrealized gain on marketable
securities, net of income taxes 0 0 0 17,537,000 0 0 0
----------- ----------- ---------- --------------- ----------- --------- -----------
BALANCE, December 31, 1993 10,000,182 10,000,000 12,492,000 17,537,000 (188,000) (1,872,000) (2,047,000)
Add (deduct):
Net income 0 0 0 0 3,577,000 0 0
Stock distribution (Note 4) 0 0 (1,958,000) 0 0 1,929,000 0
Amortization of deferred
compensation in connection
with nonqualified stock option
plans (Note 4) 0 0 (175,000) 0 0 0 0
Exercise of stock options (Note 4) 0 0 (5,000) 0 0 50,000 0
Issuance of shares in exchange
for 6% Convertible Subordinated
Debentures 13,362 14,000 45,000 0 0 0 0
Purchase of treasury stock 0 0 0 0 0 (2,397,000) 0
Payment of cash dividends, $.06
per common share 0 0 0 0 (567,000) 0 0
Net translation adjustment,
current year 0 0 0 0 0 0 (627,000)
Change in unrealized gain on
marketable securities, net of
income taxes 0 0 0 (7,369,000) 0 0 0
----------- ----------- ----------- ---------------- ----------- --------- -----------
BALANCE, December 31, 1994 10,013,544 $10,014,000 $10,399,000 $10,168,000 $2,822,000 ($2,290,000) ($2,674,000)
=========== =========== =========== ================ =========== ========= ===========
</TABLE>
The accompanying notes to consolidated financial statements
are an integral part of these statements.
F-5
<PAGE>
WILSHIRE OIL COMPANY OF TEXAS AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 1994, 1993 AND 1992
<TABLE>
<CAPTION>
1994 1993 1992
------------ ------------ -----------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $3,577,000 $4,573,000 $3,523,000
Adjustments to reconcile net income to
net cash provided by operating activities-
Depreciation, depletion and amortization 4,041,000 4,608,000 5,912,000
Deferred income tax provision 1,156,000 1,526,000 1,736,000
Amortization (adjustment) of deferred and
unearned compensation in connection with
nonqualified stock option plan, net (49,000) (124,000) 193,000
Gain on sales of marketable securities (5,403,000) (6,256,000) (7,602,000)
Foreign currency transactions (18,000) (18,000) 97,000
Changes in operating assets and liabilities-
Decrease (increase) in accounts receivable 289,000 (931,000) 177,000
(Increase) decrease in prepaid expenses and
other current assets (231,000) 37,000 (238,000)
Increase (decrease) in accounts payable,
accrued and other liabilities 1,084,000 (926,000) 1,251,000
----------- ------------ -----------
Net cash provided by operating activities 4,446,000 2,489,000 5,049,000
----------- ------------ -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures, net (14,181,000) (8,725,000) (24,469,000)
Purchases of marketable securities (5,204,000) (2,170,000) (1,149,000)
Proceeds from sales of marketable securities 6,710,000 6,730,000 5,217,000
Decrease in receivables from securities sales 3,409,000 0 0
Purchase of preferred stock of The Trust
Company of New Jersey (3,000,000) 0 0
------------- ----------- -------------
Net cash used in investing activities (12,266,000) (4,165,000) (20,401,000)
------------- ----------- ------------
</TABLE>
F-6
<PAGE>
<TABLE>
<CAPTION>
1994 1993 1992
------------- ----------- ----------
<S> <C> <C> <C>
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of long-term debt $22,083,000 $3,209,000 $21,097,000
Principal payments of long-term debt (11,997,000) (1,127,000) (4,892,000)
Purchase of treasury stock (2,397,000) (1,409,000) (445,000)
Payment of cash dividends (567,000) (482,000) 0
Exercise of stock options 45,000 42,000 217,000
----------- ---------- ---------
Net cash provided by financing
activities 7,167,000 233,000 15,977,000
----------- ----------- ----------
EFFECT OF EXCHANGE RATE CHANGES ON CASH (6,000) (42,000) (158,000)
----------- ---------- ----------
Net (decrease) increase in cash
and cash equivalents (659,000) (1,485,000) 467,000
CASH AND CASH EQUIVALENTS AT
BEGINNING OF YEAR 1,566,000 3,051,000 2,584,000
------------ ---------- ----------
CASH AND CASH EQUIVALENTS AT
END OF YEAR $907,000 $1,566,000 $3,051,000
============ ========== ==========
SUPPLEMENTAL DISCLOSURES TO THE
STATEMENTS OF CASH FLOWS:
Cash paid during the year for-
Interest $3,594,000 $2,846,000 $2,051,000
Income taxes paid (refunded), net 680,000 2,085,000 (1,402,000)
============= =========== ===========
</TABLE>
The accompanying notes to consolidated financial statements
are an integral part of these statements.
F-7
<PAGE>
WILSHIRE OIL COMPANY OF TEXAS AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
Significant accounting policies followed by Wilshire Oil Company of Texas
(the Company) and its subsidiaries are as follows-
PRINCIPLES OF CONSOLIDATION-
The consolidated financial statements include the accounts of the
Company and its wholly-owned subsidiaries. Intercompany account
balances and transactions among subsidiaries have been eliminated.
CASH AND CASH EQUIVALENTS-
The Company considers cash and cash equivalents to include deposits
with banks having a maturity of three months or less.
MARKETABLE SECURITIES-
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). As of December 31, 1994
and 1993, the marketable securities of the Company subject to the
provisions of SFAS 115 consist primarily of equity securities.
These securities are held for indefinite periods of time and are thus
carried at fair value in accordance with the standard. Differences
between an investment's cost and its fair value are charged (credited)
directly to shareholders' equity, net of related deferred income
taxes. The cost of securities sold is determined on a specific
identification basis.
As of December 31, 1994 and 1993, the net unrealized holding gains
were $18,487,000 and $31,885,000, respectively. The net unrealized
holding gains are included as a credit to shareholders' equity, net
of deferred income taxes of $8,319,000 and $14,348,000 for 1994 and
1993, respectively.
PROPERTY AND EQUIPMENT-
OIL AND GAS PROPERTIES-
The Company follows the accounting policy, generally known in the oil
industry as "full cost accounting," of capitalizing all costs,
including interest costs, relating to the exploration for and
development of its mineral reserves. Under the Company's method,
all costs incurred in the United States and Canada are accumulated in
separate cost centers and are amortized using the gross revenue method
based on total future estimated recoverable oil and gas reserves.
F-8
<PAGE>
Capitalized costs are subject to a "ceiling" test that limits such
costs to the aggregate of the estimated present value of the future
net revenues of proved reserves and the lower of cost or fair value
of unproved properties. Management is of the opinion that, based on
reserve reports of petroleum engineers and geologists, the fair value
of the estimated recoverable oil and gas reserves exceeds the
unamortized cost of oil and gas properties at December 31, 1994 and
1993.
REAL ESTATE AND OTHER PROPERTIES-
Real estate properties and other property and equipment are stated at
cost. Depreciation is provided on the straight-line method using an
estimated useful life of 30 to 35 years for real estate buildings and
at various rates based upon the estimated useful lives of the other
property and equipment.
As of December 31, 1994 and 1993, real estate properties consist of
land with an aggregate cost of $7,928,000 and $3,171,000, buildings
with an aggregate cost of $26,257,000 and $21,148,000 and furniture
and fixtures with an aggregate cost of $1,338,000 and $899,000,
respectively.
DEFERRED INCOME TAXES-
Certain transactions are recorded in the accounts in a period
different from that in which these transactions are reported for
income tax purposes, thereby resulting in deferred income taxes.
The principal transactions are those related to intangible drilling
costs, exploration costs, expired leases, depreciation and
nonproducing well costs.
As of January 1, 1993, the Company adopted Statement of Financial
Accounting Standards No. 109, "Accounting for Income Taxes." The
new standard requires comprehensive tax allocation using the liability
method of accounting. Under this method, deferred income taxes are
provided on temporary differences based upon the expected tax rates
in the year in which payment of taxes is anticipated. Subsequent
changes in income tax rates would require adjustment of the deferred
income tax liability to reflect the new rates. The cumulative effect
of adopting this standard was not significant to the consolidated
financial condition or results of operations of the Company.
INCOME TAXES ON UNREMITTED EARNINGS-
Unremitted earnings of the Canadian subsidiary are intended to be
permanently invested in Canada and are subject to foreign taxes
substantially equivalent to United States Federal income taxes.
The unremitted earnings on which the Company has not been required
to provide Federal income taxes amounted to approximately $15,547,000
at December 31, 1994.
FOREIGN CURRENCY TRANSLATION-
The assets and liabilities of the Canadian subsidiary have been
translated at current exchange rates, and related revenues and
expenses have been translated at average annual exchange rates.
The aggregate effect of translation losses have been deferred as
a separate component of shareholders' equity until the sale or
liquidation of the underlying foreign investment.
F-9
<PAGE>
NET INCOME PER COMMON SHARE-
Net income per common share is based upon the weighted average
number of shares outstanding during the year, after deduction
of treasury stock, as well as the dilutive effect of stock
options, if material. Per share amounts for 1993 and 1992 have
been restated to reflect the 3% stock distribution declared in
1994.
RECLASSIFICATIONS-
Certain reclassifications have been made to the 1993 and 1992
amounts in order to conform with the 1994 presentation.
(2) INVESTMENT IN PREFERRED STOCK OF THE TRUST COMPANY OF NEW JERSEY:
The Company owns 60,000 shares of The Trust Company of New Jersey's
(The Trust Company) 9-3/4% preferred stock, which is stated at its
original cost. Annual dividends of $439,000, $293,000 and $293,000
were received on the preferred shares in 1994, 1993 and 1992,
respectively. In accordance with the agreements, the preferred shares
are callable in whole or in part at the option of The Trust Company
and there are certain restrictions on the payment and accumulation of
dividends. In addition, the Company has agreed to waive its voting
rights with respect to these shares.
(3) LONG-TERM DEBT:
Long-term debt as of December 31 consisted of the following-
<TABLE>
<CAPTION>
1994 1993
----------- -----------
<S> <C> <C>
Term loan payable (a) $ 3,900,000 $ 4,400,000
Note payable (b) 17,850,000 4,400,000
Term loans payable (c) 2,880,000 13,205,000
Mortgage notes payable (d) 28,014,000 20,399,000
Other 0 156,000
----------- -----------
52,644,000 42,560,000
Less- Current portion 2,484,000 1,839,000
----------- -----------
$50,160,000 $40,721,000
----------- -----------
----------- -----------
<FN>
(a) The term loan payable bears interest at the prime lending rate
(8.5% at December 31, 1994). The loan agreement provides for
repayment of principal in quarterly installments with the balance
due in April, 1999. It also restricts the addition of new debt
without the bank's approval. The loan is secured by substantially
all of the domestic oil and gas producing properties as well as
marketable securities with a market value of approximately
$1,480,000 at December 31, 1994.
(b) The note bears interest at the prime lending rate. The note is
payable in quarterly installments and matures in September, 1999
and is secured by 30,000 shares of the preferred stock of The
Trust Company and marketable securities with a market value of
approximately $19,061,000 at December 31, 1994.
F-10
<PAGE>
(c) At December 31, 1994, the Company had a term loan payable to The
Trust Company totaling $2,880,000 payable in quarterly
installments and maturing in August, 1997. The term loan bears
interest at the prime lending rate and is collateralized by
marketable securities with a market value of approximately
$2,871,000 at December 31, 1994.
(d) At December 31, 1994, the Company had mortgage notes payable to
The Trust Company totaling $28,014,000, payable in installments,
bearing interest at a weighted average effective interest rate of
7.1%. These mortgage notes are secured by a first mortgage
interest in the Company's real estate properties (Note 10).
</TABLE>
The aggregate maturities of the long-term debt in each of the five years
subsequent to 1994 are-
<TABLE>
<S> <C>
1995 $ 2,484,000
1996 2,864,000
1997 4,669,000
1998 2,928,000
1999 13,071,000
Thereafter 26,628,000
-----------
$52,644,000
-----------
-----------
</TABLE>
(4) STOCK OPTIONS:
Under various stock option plans, stock options to purchase up to an
aggregate of 349,641 shares of common stock at December 31, 1994 were
reserved for grants to officers, key consultants and employees. The
number and terms of the options granted are determined by the
Company's Stock Option Committee (the Committee) based on the fair
market value of the Company's common stock on the date of grant. The
period during which an option may be exercised varies, but no option
may be exercised after ten years from the date of grant.
The following table summarizes stock option activity for 1994 and
1993-
<TABLE>
<CAPTION>
1994 1993
------------------------------ -----------------------------
Price Price
Shares Low-High Shares Low-High
--------- ----------- -------- -----------
<S> <C> <C> <C> <C>
Options outstanding at beginning of year 502,932 $1.00-$6.92 620,530 $1.00-$7.13
Adjustment for stock dividend (b) 10,895 0 14,880 0
Options exercised (b) (5,983) $2.39-$5.34 (6,654) $1.00-$5.18
Options terminated and expired (b) (133,353) $1.00-$5.34 (125,824) $1.00-$7.13
--------- ----------- -------- -----------
Options outstanding at end of year (a), (b) 374,491 $1.00-$6.71 502,932 $1.00-$6.92
--------- ----------- -------- -----------
--------- ----------- -------- -----------
Options exercisable at end of year (b) 346,841 $1.00-$6.71 450,103 $1.00-$6.92
--------- ----------- -------- -----------
--------- ----------- -------- -----------
F-11
<PAGE>
<FN>
(a) At December 31, 1994, options outstanding include 236,667 options
($1.00 to $4.44 per share) granted to certain employees or key
consultants whereby the initial option price as determined by the
Committee is subject to reduction (to a minimum of $1) by an
amount equal to the increase in market value from the date of
grant. Included in these options are 212,841 options with
attached stock appreciation rights, pursuant to which the Company
may elect to grant cash, stock or a combination of cash and stock
in lieu of the stock appreciation value. Additional compensation
attributable to these options is charged to income or capitalized
as exploration and development costs over calculated periods of
employment based on the duties performed by the individuals
awarded the options. During 1994, 1993 and 1992, ($49,000),
($124,000) and $193,000, respectively, was charged (credited) to
operations, and ( $113,000), ($379,000) and $560,000,
respectively, was capitalized (credited) to oil and gas
properties relating to such options.
(b) Option prices in 1994 have been adjusted to reflect the 3% stock
dividend declared in 1994.
</TABLE>
(5) INCOME TAXES:
A reconciliation of the differences between the effective tax
rate and the statutory U. S. income tax rate is as follows-
<TABLE>
<CAPTION>
1994 1993 1992
---------- ---------- ----------
<S> <C> <C> <C>
Income tax provision at statutory rate $1,798,000 $2,351,000 $1,991,000
Foreign resource tax credits, net (112,000) (170,000) (183,000)
Dividend exclusion (139,000) (86,000) (76,000)
Settlement of Canadian tax audit 0 0 480,000
Other 14,000 49,000 122,000
---------- ---------- ----------
$1,561,000 $2,144,000 $2,334,000
---------- ---------- ----------
---------- ---------- ----------
Effective tax rate 30.4% 31.9% 39.9%
---------- ---------- ----------
---------- ---------- ----------
</TABLE>
The deferred income tax provision in 1994, 1993 and 1992 amounted
to $1,156,000, $1,526,000 and $1,736,000, respectively.
Significant components of deferred tax assets and liabilities as
of December 31, 1994 and 1993 were as follows-
<TABLE>
<CAPTION>
1994 1993
----------- -----------
<S> <C> <C>
Deferred tax assets-
Net operating loss carryforwards $ 0 $ 755,000
Other 215,000 131,000
----------- -----------
Total deferred tax assets $215,000 $886,000
----------- -----------
----------- -----------
Deferred tax liabilities-
Tax over book depreciation, depletion and amortization-
Oil and gas properties -- U. S. $ 5,050,000 $ 5,254,000
Oil and gas properties -- Canada 5,482,000 4,965,000
Unrealized gain on marketable securities 8,319,000 14,348,000
----------- -----------
18,851,000 24,567,000
----------- -----------
Total deferred tax liabilities, net $18,636,000 $23,681,000
----------- -----------
----------- -----------
</TABLE>
F-12
<PAGE>
(6) 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 or results of operations.
The Company does not have significant lease commitments or post
retirement benefits.
(7) SEGMENT INFORMATION:
Segment information by industry and geographic area is as follows-
<TABLE>
<CAPTION>
1994 1993 1992
------------ ------------ -----------
<S> <C> <C> <C>
Identifiable assets-
Oil and gas-United States $18,559,000 $18,722,000 $19,940,000
Oil and gas-Canada 13,164,000 13,274,000 13,507,000
Real estate (Note 10) 34,159,000 24,989,000 20,132,000
Corporate 37,316,000 47,667,000 14,948,000
------------ ------------ -----------
$103,198,000 $104,652,000 $68,527,000
------------ ------------ -----------
------------ ------------ -----------
Gross revenues-
Oil and gas-United States $6,148,000 $6,579,000 $6,992,000
Oil and gas-Canada 1,778,000 1,926,000 1,811,000
Real estate (Note 10) 7,885,000 6,526,000 2,604,000
------------ ------------ -----------
$15,811,000 $15,031,000 $11,407,000
------------ ------------ -----------
------------ ------------ -----------
Depreciation, depletion and amortization-
Oil and gas-United States $2,754,000 $3,613,000 $5,200,000
Oil and gas-Canada 396,000 323,000 460,000
Real estate (Note 10) 870,000 653,000 233,000
Corporate 21,000 19,000 19,000
------------ ------------ -----------
$4,041,000 $4,608,000 $5,912,000
------------ ------------ -----------
------------ ------------ -----------
Capital expenditures-
Oil and gas-United States $2,822,000 $2,760,000 $3,861,000
Oil and gas-Canada 1,055,000 676,000 485,000
Real estate (Note 10) 11,162,000 5,150,000 20,066,000
Corporate 18,000 20,000 31,000
------------ ------------ -----------
$15,057,000 $8,606,000 $24,443,000
------------ ------------ -----------
------------ ------------ -----------
Income (loss) from operations-
Oil and gas-United States $334,000 $330,000 $(797,000)
Oil and gas-Canada 692,000 827,000 529,000
Real estate (Note 10) 2,415,000 2,200,000 832,000
Corporate (503,000) (533,000) (586,000)
------------ ------------ -----------
$2,938,000 $2,824,000 $(22,000)
------------ ------------ -----------
------------ ------------ -----------
</TABLE>
F-13
<PAGE>
All of the Company's investments in marketable securities and
preferred stock are held by the United States segment and are included
as corporate assets.
During the years ended December 31, 1994, 1993 and 1992, sales to the
following customers accounted for the following percentages of
consolidated oil and gas revenues-
<TABLE>
<CAPTION>
1994 1993 1992
---- ---- ----
<S> <C> <C> <C>
Texaco 0 6.7% 11.5%
Sinclair Oil 12.9% 11.0% 0
Amoco 18.0% 0 0
</TABLE>
(8) OIL AND GAS PRODUCING ACTIVITIES:
The following data represents the Company's oil and gas producing
activity for 1994 and 1993-
<TABLE>
<CAPTION>
1994 1993
------------ ------------
<S> <C> <C>
Capitalized costs (all being amortized)-
Productive and nonproductive properties $124,820,000 $121,510,000
Unevaluated properties 3,647,000 3,625,000
------------ ------------
Total capitalized costs being amortized 128,467,000 125,135,000
------------ ------------
Less- Accumulated depreciation,
depletion and amortization 96,820,000 93,954,000
------------ ------------
Net capitalized costs $31,647,000 $31,181,000
------------ ------------
------------ ------------
</TABLE>
The following data summarizes the costs incurred in property
acquisition, exploration and development activities and the results of
operations from oil and gas producing activities-
<TABLE>
<CAPTION>
United States Canada
---------------------------------------- ----------------------------------------
1994 1993 1992 1994 1993 1992
---------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Acquisition of unproved
properties $110,000 $425,000 $125,000 $147,000 $87,000 $132,000
Exploration 654,000 287,000 1,196,000 108,000 136,000 110,000
Development 2,058,000 2,048,000 2,540,000 800,000 453,000 243,000
---------- ---------- ---------- ---------- ---------- ----------
Total costs incurred $2,822,000 $2,760,000 $3,861,000 $1,055,000 $676,000 $485,000
---------- ---------- ---------- ---------- ---------- ----------
---------- ---------- ---------- ---------- ---------- ----------
Revenues from oil and
gas producing activities $6,148,000 $6,579,000 $6,992,000 $1,778,000 $1,926,000 $1,811,000
Production costs 2,410,000 2,272,000 2,119,000 436,000 557,000 581,000
Technical support
and other 650,000 364,000 470,000 254,000 219,000 241,000
Depreciation, depletion
and amortization 2,754,000 3,613,000 5,200,000 396,000 323,000 460,000
---------- ---------- ---------- ---------- ---------- ----------
Total expenses 5,814,000 6,249,000 7,789,000 1,086,000 1,099,000 1,282,000
---------- ---------- ---------- ---------- ---------- ----------
Pretax income (loss)
from oil and gas
producing activities 334,000 330,000 (797,000) 692,000 827,000 529,000
Income tax provision
(benefit) 117,000 116,000 (271,000) 152,000 168,000 142,000
---------- ---------- ---------- ---------- ---------- ----------
Results of oil and gas
producing activities $217,000 $214,000 ($526,000) $540,000 $659,000 $387,000
---------- ---------- ---------- ---------- ---------- ----------
---------- ---------- ---------- ---------- ---------- ----------
</TABLE>
F-14
<PAGE>
(9) GAIN ON SALES OF MARKETABLE SECURITIES:
The Company realized gains from the sales of common shares of Jacobs
Engineering Group, Inc. (Jacobs) of $5,457,000 in 1994 and $6,256,000
in 1993. As of December 31, 1994 and 1993, the Company continued to
hold 1,412,960 and 1,572,760 shares of Jacobs stock at an aggregate
cost of $7,587,000 and $6,051,000 and an aggregate market value of
$26,140,000 and $37,550,000, respectively.
(10) PURCHASE OF REAL ESTATE PROPERTIES:
During 1994 and 1993, the Company acquired various real estate
properties from The Trust Company at an aggregate cost of
$14,015,000. The purchase prices for these properties were based
upon, among other things, independent MAI appraisals. Based on these
appraisals, the Company has allocated the acquisition cost as
follows-
Land $5,228,000
Building 8,787,000
-----------
$14,015,000
-----------
-----------
F-15
<PAGE>
[Letterhead - ARTHUR ANDERSEN LLP]
EXHIBIT (24)
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
To Wilshire Oil Company of Texas:
As independent public accountants, we hereby consent to the incorporation of our
report included in this Form 10-K, into the Company's previously filed
Registration Statement File No. 33-40324.
ARTHUR ANDERSEN LLP
Roseland, New Jersey
March 30, 1995
F-16
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1994
<PERIOD-START> JAN-01-1994
<PERIOD-END> DEC-31-1994
<CASH> 907,000
<SECURITIES> 29,989,000
<RECEIVABLES> 934,000
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 32,280,000
<PP&E> 163,794,000
<DEPRECIATION> (98,876,000)
<TOTAL-ASSETS> 103,198,000
<CURRENT-LIABILITIES> 5,963,000
<BONDS> 50,160,000
<COMMON> 10,014,000
0
0
<OTHER-SE> 18,429
<TOTAL-LIABILITY-AND-EQUITY> 103,198
<SALES> 7,926,000
<TOTAL-REVENUES> 15,811,000
<CGS> 2,846,000
<TOTAL-COSTS> 12,873,000
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 3,638,000
<INCOME-PRETAX> 5,138,000
<INCOME-TAX> 1,561,000
<INCOME-CONTINUING> 3,577,000
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 3,577,000
<EPS-PRIMARY> .36
<EPS-DILUTED> .36
</TABLE>
