SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM 10-Q
QUARTERLY REPORT UNDER SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For quarter ended September 30, 1994 Commission file number 1-467
WILSHIRE OIL COMPANY OF TEXAS
(Exact name of registrants as specified in its charter)
Delaware 84-0513668
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
921 Bergen Avenue - Jersey City, New Jersey 07306-4204
(Address of principal executive offices) (Zip Code)
Registrant's telephone number - including area code (201) 420-2796
NO CHANGE
Former name, former address and former fiscal year, if changed since last
reports.
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act
of 1934 during the preceding 12 months (or for such shorter period that
the registrant was required to file such reports), and (2) has been subject
to such filing requirements for the past 90 days. Yes x No
Indicate the number of shares outstanding of each of the issuer's classes
of common stock, as of the close of the period by this report.
Common Stock $1 Par Value -----9,858,141
WILSHIRE OIL COMPANY OF TEXAS
INDEX
Page No.
Part I Financial Information
Financial Information:
Consolidated Balance Sheets - 1
September 30, 1994 and December 31, 1993
Consolidated Statements of Operations - 2
Nine months ended September 30, 1994 and 1993
Consolidated Statements of Operations - 3
Three months ended September 30, 1994 and 1993
Consolidated Statements of Cash Flows - 4
Nine months ended September 30, 1994 and 1993
Notes to Consolidated Financial Statements 5
Management's Discussion and Analysis 6, 7 & 8
of Financial Condition and Results of Operations
Part II Other Information 9
<PAGE>
WILSHIRE OIL COMPANY OF TEXAS AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(000's Omitted, Except Share Data)
(Unaudited)
ASSETS September 30, December 31,
1994 1993
CURRENT ASSETS:
Cash and cash equivalents $ 1,659 $ 1,566
Accounts receivable 3,293 4,644
Marketable securities, stated at market
value in 1993 and 1994 38,072 39,490
Prepaid expenses and other current assets 224 380
Total current assets 43,248 46,080
INVESTMENT IN PREFERRED STOCK OF
THE TRUST COMPANY OF NEW JERSEY 6,000 3,000
PROPERTY AND EQUIPMENT
Oil and gas properties, using the
full cost method of accounting 127,678 125,135
Real estate properties 35,372 25,218
Other property and equipment 351 350
163,401 150,703
Less-Accumulated depreciation,
depletion and amortization (98,899) 95,131
64,502 55,572
$113,750 $104,652
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Current portion of long-term debt $ 2,355 $ 1,839
Accounts payable 2,704 1,757
Accrued and other current liabilties 301 732
Total current liabilities 5,360 4,328
LONG - TERM DEBT, less current portion 50,871 40,721
DEFERRED INCOME TAXES 22,671 23,681
COMMITMENTS AND CONTINGENCIES (Note 2)
SHAREHOLDERS' EQUITY
Common stock, $1 par value,
15,000,000 shares authorized;
issued 10,013,544 and 10,000,182
shares in 1994 and 1993 10,013 10,000
Capital in excess of par value 10,473 12,492
Unrealized gain on marketable
securities ($27,101 in 1994 and $31,885 in 1993),
net of deferred income taxes 14,905 17,537
Retained earnings (deficit) 2,774 ( 188)
38,165 39,841
Less -
Treasury stock, 155,403 and 276,636
shares in 1994 and 1993, at cost 1,059 1,872
Cumulative foreign currency
translation adjustment 2,258 2,047
34,848 35,922
$113,750 $104,652
WILSHIRE OIL COMPANY OF TEXAS AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(000's Omitted, Except Share Data)
(Unaudited)
FOR THE NINE MONTHS ENDED
September 30, September 30,
1994 1993
REVENUES
Oil & Gas $ 6,222 $ 6,554
Real Estate 5,814 4,704
Non-recurring gas settlement - 450
Total Revenues 12,036 11,708
COSTS AND EXPENSES
Oil and Gas Production Expenses 1,977 2,021
Real Estate Operating Expenses 3,267 2,668
Depreciation, depletion and amortization 3,795 4,651
General and Administrative 1,066 825
Total Costs and Expenses 10,105 10,165
Income from Operations 1,931 1,543
INTEREST INCOME 5 66
OTHER INCOME 387 206
GAIN ON SALES OF MARKETABLE
SECURITIES (Note 1) 5,457 5,161
INTEREST EXPENSE (2,469) (2,022)
Income before provision
for income taxes 5,311 4,954
PROVISION FOR INCOME TAXES
Federal
Current 542 652
Deferred 1,190 719
Foreign
Current 106 124
Deferred ( 47) 87
1,791 1,582
Net income $ 3,520 $ 3,372
AVERAGE NUMBER OF SHARES OF
COMMON STOCK OUTSTANDING: 9,959,924 10,217,985
INCOME PER COMMON SHARE $ .35 $ .33
WILSHIRE OIL COMPANY OF TEXAS AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(000's Omitted, Except Share Data)
(Unaudited)
FOR THE THREE MONTHS ENDED
September 30, September 30,
1994 1993
REVENUES
Oil & Gas $ 2,201 $ 2,138
Real Estate 2,029 1,728
Total Revenues 4,230 3,866
COSTS AND EXPENSES
Oil and Gas Production Expenses 646 744
Real Estate Operating Expenses 1,193 948
Depreciation, depletion and amortization 1,382 1,847
General and Administrative 354 357
Total Costs and Expenses 3,575 3,896
Income from Operations 655 (30)
INTEREST INCOME 3 27
OTHER INCOME 208 38
GAIN ON SALES OF MARKETABLE
SECURITIES (Note 1) 1,646 2,065
INTEREST EXPENSE ( 923) (710)
Income before provision
for income taxes 1,589 1,390
PROVISION FOR INCOME TAXES
Federal
Current (130) 1
Deferred 789 336
Foreign
Current 60 57
Deferred ( 81) 50
638 444
Net income $ 951 $ 946
AVERAGE NUMBER OF SHARES OF
COMMON STOCK OUTSTANDING: 9,911,376 10,201,238
INCOME PER COMMON SHARE $ .10 $ .09
WILSHIRE OIL COMPANY OF TEXAS AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(000's Omitted)
(Unaudited)
For The Nine Months Ended
September 30, September 30,
1994 1993
CASH FLOWS FROM OPERATING ACTIVITIES
Net Income $ 3,520 $ 3,372
Adjustments to reconcile net income to net
cash provided by operating activities -
Depreciation, depletion and amortization 3,795 4,651
Deferred income tax provision 1,143 806
Amortization (adjustment) of deferred and
unearned compensation in connection
with non-qualified stock option plan, net (55) (335)
Gain on sales of marketable securities (5,457) (5,161)
Foreign currency transactions - (455)
Changes in operating assets and liabilities -
(Increase) decrease in receivables 1,933 (1,451)
(Increase) in prepaid expenses and other
current assets 156 (489)
Increase (decrease) in income taxes payable 117 (2,012)
Increase (decrease) in accounts payable,
accrued and other liabilities 1,243 55
Net cash provided by (used in)
operating activities $ 6,395 $ (1,019)
CASH FLOWS FROM INVESTING ACTIVITIES
Capital expenditures, net (12,698) (4,874)
Purchase of marketable securities ( 3,809) (125)
Purchase of Preferred Stock ( 3,000) -
Proceeds from sales of marketable securities 5,318 6,131
Net cash provided by (used in)
investing activities ($14,189) $ 1,132
CASH FLOWS FROM FINANCING ACTIVITIES
Purchase of Treasury Stock (1,137) (411)
Cash Dividends ( 580) (483)
Proceeds from issuance of long term debt 22,804 3,208
Principal payment of long term debt (13,011) (602)
Exercise of stock options 22 -
Other (192) 33
Net cash provided by (used in)
financing activities $ 7,906 $ 1,745
EFFECT OF EXCHANGE RATE CHANGES ON CASH (19) (32)
Net increase (decrease) in cash and
cash equivalents 93 1,826
CASH AND CASH EQUIVALENTS AT
BEGINNING OF PERIOD 1,566 3,051
CASH AND CASH EQUIVALENTS AT
END OF PERIOD $ 1,659 $ 4,877
SUPPLEMENTAL DISCLOSURES TO THE
STATEMENTS OF CASH FLOWS:
Cash paid during the period for -
Interest, net of amounts capitalized $ 2,296 $ 1,937
Income taxes, net 517 2,013
WILSHIRE OIL COMPANY OF TEXAS
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 1994 (Unaudited)
1. FINANCIAL STATEMENTS
The condensed financial statements included herein have been prepared by the
Registrant, without audit, pursuant to the rules and regulations of the
Securities and Exchange Commission. Certain information and footnote
disclosures normally included in financial statements prepared in
accordance with generally accepted accounting principles have been
condensed or omitted pursuant to such rules and regulations, although
the Registrant believes that the disclosures are adequate to make the
information presented not misleading. It is suggested that these condensed
financial statements be read in conjunction with the financial statements
and the notes thereto included in the Company's latest annual report
on Form 10-K. This condensed financial information reflects, in the
opinion of management, all adjustments necessary to present fairly the
results for the interim periods. The results of operations for such
interim periods are not necessarily indicative of the results for the
full year.
2. GAIN ON SALES OF MARKETABLE SECURITIES
The Company realized gains from the sales of shares of Jacobs Engineering
Group, Inc. of $5,457,000 and $ 5,161,000 for the nine months ended
September 30, 1994 and 1993, respectively, and $1,646,000 and $2,065,000
for the three months ended September 30, 1994 and 1993, respectively .
3. COMMITMENTS AND CONTINGENCIES
Federal income tax returns of the Company and its subsidiaries for the years
1975 through 1983 are under review by the Internal Revenue Service.
The Company believes that final settlement of its Federal tax liability
for those years will not have a significant effect on its consolidated
financial position.
The Company is a defendant in a lawsuit by a co-owner on one of its oil
and gas properties. The lawsuit seeks an unspecified amount of royalties
and interest for prior year production at the property. While the ultimate
outcome of this litigation cannot be predicted at this time, management
believes that this matter will not have a material adverse effect on the
Company's consolidated financial position or its results of operations.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Results of Operations
Net income for the nine months ended September 30 increased from $3,372,000
in 1993 to $3,520,000 in 1994. Net income for the quarter ended
September 30 increased from $946,000 in 1993 to $951,000 in 1994.
Consolidated revenues increased from $11,708,000 in the first nine months
of 1993 to $12,036,000 in 1994. Oil and gas revenues decreased by
$332,000 in the first nine months of 1994 as compared to 1993 due to
declines in crude oil prices. Revenues in 1993 included a non-recurring
gas settlement of $450,000.
Real estate revenues increased from $4,704,000 in the first nine months of
1993 to $5,814,000 in 1994. This increase was attributable to the
operations of the income producing real estate properties acquired
June 30, 1993 and March 31, 1994 as well as generally higher rents and
occupancy.
Oil and gas production expense decreased slightly in the first nine months
of 1994 as compared with 1993.
Real estate operating expenses increased in the first nine months of 1994
over 1993 principally due to the newly acquired properties in 1993 and 1994.
Depreciation, depletion, and amortization expense decreased in the first
nine months of 1994 compared with 1993 primarily as a result of the increase
in the estimated value of the Company's oil and gas reserves. This increase
in reserves is due to the Company's successful horizontal oil drilling
program.
The gain on sales of marketable securities is derived from sales of shares
of Jacobs Engineering Group, Inc.
Interest expense increased in the first nine months of 1994 over 1993
principally due to the addition of the new real estate properties in 1993
and 1994 and to an increase in the prime rate.
The provision for income taxes includes Federal and Canadian taxes.
Differences between the effective tax rate and the statutory income tax
rates are due to foreign resource tax credits in Canada and the dividend
exclusion in the United States.
Accounting for Income Taxes
Statement of Financial Accounting Standard No. 109- "Accounting for Income
Taxes" became effective for the Company beginning in the first quarter of
1993. SFAS 109 requires, among other things, an asset and liability
approach to accounting for income taxes. SFAS 109 did not have a material
impact on the Company's consolidated financial statements.
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 September 30, 1994, the gross unrealized gain on
marketable securities was $27.1 million. This amount, net of related deferred
income taxes of $12.2 million, is included as a credit to shareholders'
equity in the Company's September 30, 1994 consolidated balance sheet.
Liquidity and Capital Resources
At September 30, 1994 the Company had approximately $10.9 million in
marketable securities at cost, with a market value of approximately
$38 million. The current ratio at September 30, 1994 was 8 to 1 on
a market basis, which management considers adequate for the Company's
current business. The Company's working capital was approximately
$38 million at September 30, 1994.
The Company anticipates that cash provided by operating activities,
principally from oil and gas sales as well as investing activities, will
be sufficient to meet its capital requirements to acquire oil and gas
properties and to drill and evaluate these and other oil and gas properties
presently held by the Company. The level of oil and gas capital
expenditures will vary in future periods depending on market conditions,
including the price of oil and the demand for natural gas, and other related
factors. As the Company has no material long-Term commitments with respect
to its oil and gas capital expenditure plans, the Company has a
significant degree of flexibility to adjust the level of its expenditures
as circumstances warrant.
The Company plans to actively continue its exploration and production
activities as well as search for the acquisition of oil and gas producing
properties and of companies with desirable oil and gas producing properties.
There can be no assurance that the Company will in fact locate any such
acquisitions.
On March 31, 1994 the Company acquired various real estate properties at
an aggregate purchase price of $10,240,000 from The Trust Company of New
Jersey, which also provided the long-term financing of $8,704,000.
The Company will explore other real estate acquisitions as they arise.
The timing of any such acquisition will depend on, among other things,
economic conditions and the favorable evaluation of specific opportunities
presented to the Company. Accordingly, while the Company anticipates that
it will actively explore real estate acquisition opportunities, no
assurance can be given that any such acquisition will occur.
Net cash provided by ( used in) operating activities was $6,395,000 and
($1,019,000) in the first nine months of 1994 and 1993, respectively.
The increase in 1994 was due to the payment in 1993 of Canadian tax
liabilities settled in 1992 as well as changes in accounts receivable
and accounts payable.
Net cash provided by (used in) investing activities was ($14,189,000) and
$1,132,000 in the first nine months of 1994 and 1993, respectively.
The Company acquired $10.2 million of real estate properties during the
first nine months of 1994 and $3.8 million during the first nine months of
1993. Additionally, the Company acquired approximately $3.8 million of
marketable securities and $3 million of preferred stock in 1994.
Net cash provided by financing activities was $7,906,000 and $1,745,000
in the first nine months of 1994 and 1993, respectively. The variation
principally relates to the issuance of long-term debt in connection with
purchases of real estate properties during 1993 and 1994.
During the first nine months of 1994 the Company renegotiated all of
its secured bank loans (other than mortgage notes). Among other things,
more favorable principal amortization was obtained and the maturity
dates of these loans were extended.
The Company believes it has adequate capital resources to fund operations
for the foreseeable future.
PART II - OTHER INFORMATION
Item 1, 2, 3, 4, 5 - Not applicable
Item 6 - Exhibits and Reports on Form 8-K
No Form 8-K was filed during the quarter ended September 30, 1994.
S I G N A T U R E S
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf
by the undersigned thereunto duly authorized.
WILSHIRE OIL COMPANY OF TEXAS
(Registrant)
/s/Sherry Wilzig Izak
By: Sherry Wilzig Izak
Chairman of the Board and Chief Executive Officer
(Duly Authorized Officer and Chief Financial Officer)
Date: November 14, 1994
S I G N A T U R E S
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
WILSHIRE OIL COMPANY OF TEXAS
(Registrant)
By: Sherry Wilzig Izak
Chairman of the Board and Chief Executive Officer
(Duly Authorized Officer and Chief Financial Officer)
Date: November 14, 1994
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<S> <C> <C>
<PERIOD-TYPE> 9-MOS 3-MOS
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<PERIOD-END> SEP-30-1994 SEP-30-1994
<CASH> 1,659 1,659
<SECURITIES> 38,072 38,072
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