SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM 10-Q
QUARTERLY REPORT UNDER SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For quarter ended June 30, 1996 Commission file number 1-467
-------------------------------
WILSHIRE OIL COMPANY OF TEXAS
- --------------------------------------------------------------------------------
(Exact name of registrants as specified in its charter)
Delaware 84-0513668
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(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
921 Bergen Avenue - Jersey City, New Jersey 07306-4204
- --------------------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number - including area code (201) 420-2796
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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 -----9,288,602
<PAGE>
WILSHIRE OIL COMPANY OF TEXAS
INDEX
Page No.
Part I Financial Information
Financial Information: 1
Consolidated Balance Sheets -
June 30, 1996 and December 31, 1995
Consolidated Statements of Operations - 2
Six months ended June 30, 1996 and 1995
Consolidated Statements of Operations - 3
Three months ended June 30, 1996 and 1995
Consolidated Statements of Cash Flows - 4
Six months ended June 30, 1996 and 1995
Notes to Consolidated Financial Statements 5
Management's Discussion and Analysis 6,7
of Financial Condition and Results of Operations
Part II Other Information 8
<PAGE>
WILSHIRE OIL COMPANY OF TEXAS AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(000'S OMITTED, EXCEPT SHARE DATA)
(UNAUDITED)
ASSETS JUNE 30, DECEMBER 31,
1996 1995
---------- -----------
CURRENT ASSETS:
Cash and cash equivalents $ 1,011 $ 1,601
Accounts receivable 752 1,013
Marketable securities, stated at market
value in 1996 and 1995 25,707 30,521
Prepaid expenses and other current assets 338 341
-------- --------
Total current assets 27,808 33,476
-------- --------
INVESTMENT IN PREFERRED STOCK OF
THE TRUST COMPANY OF NEW JERSEY 6,000 6,000
-------- --------
PROPERTY AND EQUIPMENT
Oil and gas properties, using the
full cost method of accounting 131,628 130,280
Real estate properties 39,956 36,535
Other property and equipment 420 410
-------- --------
172,004 167,225
Less - Accumulated depreciation,
depletion and amortization 104,422 102,515
-------- --------
67,582 64,710
-------- --------
$101,390 $104,186
======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Current portion of long-term debt $ 3,150 $ 3,514
Accounts payable 2,914 2,042
Accrued liabilities 3,455 4,170
-------- --------
Total current liabilities 9,519 9,726
-------- --------
LONG - TERM DEBT, less current portion 45,167 47,298
-------- --------
DEFERRED INCOME TAXES AND OTHER
NONCURRENT LIABILITIES 16,565 17,688
-------- --------
SHAREHOLDERS' EQUITY
Common stock, $1 par value,
15,000,000 shares authorized;
issued 10,013,544
shares in 1996 and 1995 10,014 10,014
Capital in excess of par value 10,176 9,925
Unrealized gain on marketable
securities ($13,507 in 1996 and $17,174 in 1995),
net of deferred income taxes 7,402 9,446
Retained earnings 9,458 6,459
-------- --------
37,050 35,844
Less -
Treasury stock, 724,942 and 621,313
shares in 1996 and 1995, at cost 4,596 4,010
Cumulative foreign currency
translation adjustment 2,315 2,360
-------- --------
30,139 29,474
-------- --------
$101,390 $104,186
======== ========
1
<PAGE>
WILSHIRE OIL COMPANY OF TEXAS AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(000'S OMITTED, EXCEPT SHARE DATA)
(UNAUDITED)
FOR THE SIX MONTHS ENDED
-----------------------------
JUNE 30, JUNE 30,
1996 1995
----------- -------------
REVENUES
Oil & gas $ 2,730 $ 3,013
Real estate 4,586 4,239
----------- -----------
Total revenues 7,316 7,252
COSTS AND EXPENSES
Oil and gas production expenses 1,225 1,362
Real estate operating expenses 2,634 2,372
Depreciation, depletion and amortization 1,901 2,077
General and administrative 853 689
----------- -----------
Total costs and expenses 6,613 6,500
----------- -----------
Income from operations 703 752
OTHER INCOME 101 328
GAIN ON SALES OF MARKETABLE
SECURITIES (Note 3) 5,673 4,900
INTEREST EXPENSE (1,984) (2,111)
----------- -----------
Income before provision
for income taxes 4,493 3,869
----------- -----------
PROVISION FOR INCOME TAXES 1,438 1,235
----------- -----------
Net income $ 3,055 $ 2,634
----------- -----------
AVERAGE NUMBER OF SHARES OF
COMMON STOCK OUTSTANDING: 9,314,238 9,651,016
----------- -----------
INCOME PER COMMON SHARE $ .33 $ .27
----------- -----------
2
<PAGE>
WILSHIRE OIL COMPANY OF TEXAS AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(000'S OMITTED, EXCEPT SHARE DATA)
(UNAUDITED)
FOR THE THREE MONTHS ENDED
---------------------------
JUNE 30, JUNE 30,
1996 1995
----------- ----------
REVENUES
Oil & gas $ 1,381 $ 1,378
Real estate 2,395 2,155
---------- ----------
Total revenues 3,776 3,533
COSTS AND EXPENSES
Oil and gas production expenses 614 676
Real estate operating expenses 1,396 1,156
Depreciation, depletion and amortization 1,003 1,130
General and administrative 621 433
---------- ----------
Total costs and expenses 3,634 3,395
---------- ----------
Income from operations 142 138
OTHER INCOME 164 168
GAIN ON SALES OF MARKETABLE
SECURITIES (NOTE 3) 2,633 2,698
INTEREST EXPENSE (987) (1,051)
---------- ----------
Income before provision
for income taxes 1,952 1,953
---------- ----------
PROVISION FOR INCOME TAXES 549 649
---------- ----------
Net income 1,403 $ 1,304
---------- ----------
AVERAGE NUMBER OF SHARES OF
COMMON STOCK OUTSTANDING: 9,298,313 9,637,942
---------- ----------
INCOME PER COMMON SHARE $ .15 $ .14
---------- ----------
3
<PAGE>
WILSHIRE OIL COMPANY OF TEXAS AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(000'S OMITTED)
(UNAUDITED)
FOR THE SIX MONTHS ENDED
------------------------
JUNE 30, JUNE 30,
1996 1995
--------- ---------
CASH FLOWS FROM OPERATING ACTIVITIES
Net income $ 3,055 $ 2,634
Adjustments to reconcile net income
to net cash provided by operating
activities -
Depreciation, depletion and amortization 1,901 2,077
Deferred income tax provision 549 696
Amortization (adjustment) of deferred
and unearned compensation in connection
with non-qualified stock option plan, net 236 (296)
Gain on sales of marketable securities (5,673) (4,900)
Foreign currency transactions -- --
Changes in operating assets and liabilities -
(Increase) decrease in receivables 261 (215)
(Increase) decrease in prepaid expenses and
other current assets 3 (161)
Increase (decrease) in accounts payable,
accrued and other liabilities 164 161
------ ------
Net cash provided by (used in)
operating activities $ 496 $ (4)
------- -------
CASH FLOWS FROM INVESTING ACTIVITIES
Capital expenditures, net (4,779) (1,415)
Purchase of marketable securities (167) (1,918)
Proceeds from sales of marketable
securities 6,881 5,044
------- -------
Net cash provided by (used in)
investing activities $ 1,935 $ 1,711
------- -------
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from issuance of long term debt 3,950 --
Principal payment of long term debt (6,445) (1,159)
Purchase of treasury stock (593) (425)
Exercise of stock options 22 --
Other -- --
------- -------
Net cash provided by (used in)
financing activities ($3,066) ($1,584)
------- -------
EFFECT OF EXCHANGE RATE CHANGES ON CASH 45 3
------- -------
Net increase (decrease) in cash and
cash equivalents (590) 126
CASH AND CASH EQUIVALENTS AT
BEGINNING OF PERIOD 1,601 907
------- -------
CASH AND CASH EQUIVALENTS AT
END OF PERIOD $ 1,011 $ 1,033
------- -------
SUPPLEMENTAL DISCLOSURES TO THE
STATEMENTS OF CASH FLOWS:
Cash paid during the period for -
Interest, net of amounts capitalized $ 1,881 $ 1,982
Income taxes, net 2,837 221
------- -------
4
<PAGE>
WILSHIRE OIL COMPANY OF TEXAS
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 1996 (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. DESCRIPTION OF BUSINESS:
Wilshire Oil Company of Texas is a diversified corporation engaged in oil
and gas exploration and production and real estate operations. The
Company's oil and gas operations are conducted both in its own name and
through several wholly-owned subsidiaries in the United States and Canada.
Crude oil and natural gas productions are sold to oil refineries and
natural gas pipeline companies. The company's real estate holdings are
located in the states of Arizona, Florida, New Jersey, Texas and Georgia.
The Company also maintains investments in marketable securities.
3. GAIN ON SALES OF MARKETABLE SECURITIES
The company realized gains from the sales of marketable securities of
$5,673,000 and $4,900,000 for the six months ended June 30, 1996 and 1995,
respectively, and $2,633,000 and $2,698,000 for the three months ended June
30, 1996 and 1995, respectively .
5
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Results of Operations
Net income for the six months ended June 30 increased from $2,634,000 in
1995 to $3,055,000 in 1996. Net income for the quarter ended June 30 increased
from $1,304,000 in 1995 to $1,403,000 in 1996.
Oil and gas revenues were $2,730,000 in the first half of 1996 as compared
with $3,013,000 in 1995. This decrease was due to production declines from
period to period. Much of this decrease in production is typical of the natural
decline experienced in a "horizontal well" drilling program. Real estate
revenues increased from $4,239,000 in the first half of 1995 to $4,586,000 in
1996. This increase was principally attributable to the operations of investment
real estate properties acquired in 1996 as well as generally higher rents and
occupancy.
Total costs and expenses were comparable from half to half, amounting to
$6,613,000 in 1996 and $6,500,000 in 1995. Oil and gas production expense
decreased by $137,000 and depreciation, depletion, and amortization decreased by
$176,000. General and administrative expense increased by $164,000, and real
estate operating expense increased by $262,000, principally due to the newly
acquired properties in 1996.
Interest expense decreased from $2,111,000 in the first half of 1995 to
$1,984,000 in 1996. This decrease is attributable to a reduced level of
long-term debt and lower interest rates in general in 1996. Gain on sales of
marketable securities was $5,673,000 in 1996 as compared with $4,900,000 in
1995. 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 Certain Investments in Debt and Equity Securities
The Company has adopted Statement of Financial Accounting Standards No. 115
"Accounting for Certain Investments in Debt and Equity Securities" (SFAS 115).
The investments of the Company are principally equity securities, held for
indefinite periods of time. These securities are carried at fair value and the
difference between cost and fair value is charged/credited directly to
shareholders' equity net of income taxes. As of June 30, 1996, the gross
unrealized gain on marketable securities was $13.5 million. This amount, net of
related deferred income taxes of $6.1 million, is included as a credit to
shareholders' equity in the Company's June 30, 1996 consolidated balance sheet.
6
<PAGE>
Liquidity and Capital Resources
At June 30, 1996 the Company had approximately $12.2 million in
marketable securities at cost, with a market value of approximately $25.7
million. The current ratio at June 30, 1996 was 2.9 to 1 on a market basis,
which management considers adequate for the Company's current business. The
Company's working capital was approximately $18.3 million at June 30, 1996.
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.
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.
During the first quarter of 1996, the Company acquired real estate
properties from The Trust Company of New Jersey at an aggregate purchase price
of approximately $3 million. 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 $496,000 and
$(4,000) in the first six months of 1996 and 1995, respectively. The changes
principally relate to changes in operating assets and liabilities.
Net cash provided by (used in) investing activities was $1,935,000 and
$1,711,000 in the first six months of 1996 and 1995, respectively. Variations in
purchases of marketable securities, proceeds from sales of marketable
securities, and capital expenditures, including the 1996 first quarter
acquisition of $3 million of real estate properties, contributed to these
changes.
Net cash provided by (used in) financing activities was $(3,066,000)
and $(1,584,000) in the first half of 1996 and 1995, respectively. The variation
relates to both the issuance of long-term debt in connection with purchases of
real estate properties during 1996 and principal payments of long-term debt.
The Company believes it has adequate capital resources to fund
operations for the foreseeable future.
7
<PAGE>
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 JUNE 30, 1996.
8
<PAGE>
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)
Date: August 13, 1996 /s/S. Wilzig Izak
--------------- -----------------
By: S. Wilzig Izak
Chairman of the Board and Chief Executive Officer
(Duly Authorized Officer and Chief Financial Officer)
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> JUN-30-1996
<CASH> 1,011,000
<SECURITIES> 25,707,000
<RECEIVABLES> 752,000
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 27,808,000
<PP&E> 172,004,000
<DEPRECIATION> 104,422,000
<TOTAL-ASSETS> 101,390,000
<CURRENT-LIABILITIES> 9,519,000
<BONDS> 0
0
0
<COMMON> 10,014,000
<OTHER-SE> 20,125,000
<TOTAL-LIABILITY-AND-EQUITY> 30,139,000
<SALES> 2,730,000
<TOTAL-REVENUES> 7,316,000
<CGS> 1,225,000
<TOTAL-COSTS> 6,613,000
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1,984,000
<INCOME-PRETAX> 4,493,000
<INCOME-TAX> 1,438,000
<INCOME-CONTINUING> 3,055,000
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 3,055,000
<EPS-PRIMARY> 0.33
<EPS-DILUTED> 0.33
</TABLE>
