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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 March 31, 1996 Commission file number 1-467
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WILSHIRE OIL COMPANY OF TEXAS
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(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
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number - including area code (201) 420-2796
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NO CHANGE
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Former name, former address and former fiscal year,
if changed since last reports.
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
Yes x No
----- -----
Indicate the number of shares outstanding of each of the issuer's classes
of common stock, as of the close of the period by this report.
Common Stock $1 Par Value -----9,303,595
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WILSHIRE OIL COMPANY OF TEXAS
INDEX
Page No.
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Part I Financial Information
Financial Information: 1
Consolidated Balance Sheets -
March 31, 1996 and December 31, 1995
Consolidated Statements of Income - 2
Three months ended March 31, 1996 and 1995
Consolidated Statements of Cash Flows - 3
Three months ended March 31, 1996 and 1995
Notes to Consolidated Financial Statements 4
Management's Discussion and Analysis 5, 6, & 7
of Financial Condition and Results of Operations
Part II Other Information 8
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WILSHIRE OIL COMPANY OF TEXAS AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(000's Omitted, Except Share Data)
(Unaudited)
ASSETS March 31, December 31,
1996 1995
---- ----
CURRENT ASSETS:
Cash and cash equivalents $ 1,398 $ 1,601
Accounts receivable (Note 1) 4,975 1,013
Marketable securities, stated at market
value in 1996 and 1995 30,086 30,521
Prepaid expenses and other current assets 371 341
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Total current assets 36,830 33,476
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INVESTMENT IN PREFERRED STOCK OF
THE TRUST COMPANY OF NEW JERSEY 6,000 6,000
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PROPERTY AND EQUIPMENT
Oil and gas properties, using the
full cost method of accounting 131,022 130,280
Real estate properties 39,635 36,535
Other property and equipment 418 410
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171,075 167,225
Less - Accumulated depreciation,
depletion and amortization 103,440 102,515
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67,635 64,710
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$110,465 $104,186
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LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Current portion of long-term debt $ 2,925 $ 3,514
Accounts payable 2,959 2,042
Accrued liabilities 5,004 4,170
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Total current liabilities 10,888 9,726
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LONG - TERM DEBT, less current portion 50,337 47,298
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DEFERRED INCOME TAXES AND OTHER
NONCURRENT LIABILITIES 18,421 17,688
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SHAREHOLDERS' EQUITY
Common stock, $1 par value,
15,000,000 shares authorized;
issued 10,013,544 and 10,013,544
shares in 1996 and 1995 10,014 10,014
Capital in excess of par value 9,791 9,925
Unrealized gain on marketable
securities ($17,783 in 1996 and $17,174 in
1995), net of deferred income taxes 9,782 9,446
Retained earnings 8,105 6,459
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37,692 35,844
Less -
Treasury stock, 709,947 and 621,313
shares in 1996 and 1995, at cost 4,536 4,010
Cumulative foreign currency
translation adjustment 2,337 2,360
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30,819 29,474
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$110,465 $104,186
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1
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WILSHIRE OIL COMPANY OF TEXAS AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(000's Omitted, Except Share Data)
(Unaudited)
FOR THE THREE MONTHS ENDED
--------------------------
March 31, March 31,
1996 1995
---- ----
REVENUES
Oil & Gas $ 1,349 $ 1,635
Real Estate 2,191 2,084
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Total Revenues 3,540 3,719
COSTS AND EXPENSES
Oil and Gas Production Expenses 611 686
Real Estate Operating Expenses 1,238 1,216
Depreciation, depletion and amortization 898 947
General and Administrative 232 256
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Total Costs and Expenses 2,979 3,105
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Income from Operations 561 614
OTHER INCOME (EXPENSE) (63) 160
GAIN ON SALES OF MARKETABLE
SECURITIES (Note 3) 3,040 2,202
INTEREST EXPENSE (997) (1,060)
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Income before provision
for income taxes 2,541 1,916
PROVISION FOR INCOME TAXES 889 586
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Net income $ 1,652 $ 1,330
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AVERAGE NUMBER OF SHARES OF
COMMON STOCK OUTSTANDING: 9,330,164 9,671,663
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INCOME PER COMMON SHARE $.18 $.14
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2
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WILSHIRE OIL COMPANY OF TEXAS AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(000's Omitted)
(Unaudited)
For The Three Months Ended
--------------------------
March 31, March 31,
1996 1995
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CASH FLOWS FROM OPERATING ACTIVITIES
Net Income $ 1,652 $ 1,330
Adjustments to reconcile net income to net
cash provided by operating activities -
Depreciation, depletion and amortization 898 947
Deferred income tax provision 488 74
Amortization (adjustment) of deferred and
unearned compensation in connection
with non-qualified stock option plan, net (134) (297)
Gain on sales of marketable securities (3,040) (2,202)
Foreign currency transactions -
Changes in operating assets and liabilities -
(Increase) decrease in receivables (922) (270)
(Increase) in prepaid expenses and other
current assets (30) 588
Increase (decrease) in accounts payable,
accrued and other liabilities 2,207 (471)
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Net cash provided by (used in)
operating activities $ 1,119 $ (301)
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CASH FLOWS FROM INVESTING ACTIVITIES
Capital expenditures, net (3,263) (446)
Purchase of marketable securities -0- (1,392)
Proceeds from sales of marketable securities -0- 2,074
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Net cash provided by (used in)
investing activities ($3,263) $ 236
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CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from issuance of long term debt 3,750 -
Principal payment of long term debt (1,300) (558)
Purchase of treasury stock (526) ( 1)
Exercise of stock options - -
Other - 116
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Net cash provided by (used in)
financing activities $ 1,924 $ (443)
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EFFECT OF EXCHANGE RATE CHANGES ON CASH 17 49
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Net increase (decrease) in cash and
cash equivalents (203) (459)
CASH AND CASH EQUIVALENTS AT
BEGINNING OF PERIOD 1,601 907
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CASH AND CASH EQUIVALENTS AT
END OF PERIOD $ 1,398 $ 448
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SUPPLEMENTAL DISCLOSURES TO THE
STATEMENTS OF CASH FLOWS:
Cash paid during the period for -
Interest, net of amounts capitalized $ 949 $ 1,022
Income taxes, net 380 43
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3
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WILSHIRE OIL COMPANY OF TEXAS
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 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 gaspipeline 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 securties.
3. GAIN ON SALES OF MARKETABLE SECURITIES
The Company realized gains from the sales of marketable securities of
$3,040,000 for the three months ended March 31, 1996 and $2,202,000 for the
three months March 31, 1995. Included in accounts receivable on the March
31, 1996 consolidated balance sheet are proceeds due on first quarter 1996
sales of securities.
4
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MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
Net income for the quarter ended March 31 increased from $1,330,000 in 1995
to $1,652,000 in 1996.
Oil and gas revenues were $1,349,000 in the first quarter of 1996 as
compared with $1,635,000 in 1995. This decrease was due to production declines
from quarter to quarter. Much of this decrease in production is typical of the
natural decline experienced in a "horizontal well" drilling program. Real
estate revenues increased from $2,084,000 in 1995 to $2,191,000 in 1996. This
increase was attributable to generally higher rents and occupancy.
Overall, costs and expenses were comparable from quarter to quarter,
amounting to $2,979,000 in 1996 and $3,105,000 in 1995. Oil and gas production
expense decreased by $75,000, real estate operating expenses increased by
$22,000, depreciation, depletion and amortization decreased by $49,000, and
general and administrative expenses decreased by $24,000.
Gain on sales of marketable securities was $3,040,000 in 1996 as compared
with $2,202,000 in 1995.
Interest expense decreased from $1,060,000 in the first quarter of 1995 to
$997,000 in 1996. This decrease is attributable to lower interest rates in
1996.
The provision for income taxes includes Federal and Canadian taxes.
Differences between the effective tax rate and the statutory income tax rates
are principally 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
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 March 31, 1996, the
gross unrealized gain on marketable securities was $17,783,000. This amount,
net of related deferred income taxes of $8,001,000, is included as a credit to
shareholders' equity in the Company's March 31, 1996 consolidated balance sheet.
5
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LIQUIDITY AND CAPITAL RESOURCES
At March 31, 1996 the Company had approximately $12.3 million in marketable
securities at cost, with a market value of approximately $30.1 million. The
current ratio at March 31, 1996 was 3.38 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 March 31, 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 $1,119,000 in 1996
and $(301,000) in 1995. The increase in 1996 was primarily due to changes in
operating assets and liabilities.
Net cash provided by (used in) investing activities was $(3,263,000) in
1996 and $236,000 in 1995. The decrease in 1996 was principally attributable to
the first quarter acquisition of real estate properties discussed above.
Net cash provided by (used in) financing activities was $1,924,000 in 1996
and $(443,000) in 1995. The variation principally relates to the issuance of
long-term debt in connection with the aforementioned purchases of real estate
properties during the first quarter of 1996.
The Company believes it has adequate capital resources to fund operations
for the foreseeable future.
6
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PART II - OTHER INFORMATION
ITEM 1, 2, 3, 4, 5 - NOT APPLICABLE
ITEM 6 - EXHIBITS AND REPORTS ON FORM 8-K
A Form 8-K was filed on February 16, 1996 relating to an amendment to the
Registrant's By- Laws.
7
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S I G N A T U R E S
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
WILSHIRE OIL COMPANY OF TEXAS
(Registrant)
Date: May 15, 1996 /s/ S. Wilzig Izak
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By: S. Wilzig Izak
Chairman of the Board and Chief Executive
Officer (Duly Authorized Officer and Chief
Financial Officer)
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<CIK> 0000107454
<NAME> WILSHIRE OIL COMPANY OF TEXAS
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> MAR-31-1996
<CASH> 1,398,000
<SECURITIES> 30,086,000
<RECEIVABLES> 4,975,000
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 36,830,000
<PP&E> 171,075,000
<DEPRECIATION> 103,440,000
<TOTAL-ASSETS> 110,465,000
<CURRENT-LIABILITIES> 10,888,000
<BONDS> 0
0
0
<COMMON> 10,014,000
<OTHER-SE> 20,805,000
<TOTAL-LIABILITY-AND-EQUITY> 110,465,000
<SALES> 1,349,000
<TOTAL-REVENUES> 3,540,000
<CGS> 611,000
<TOTAL-COSTS> 2,979,000
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 997,000
<INCOME-PRETAX> 2,541,000
<INCOME-TAX> 889,000
<INCOME-CONTINUING> 1,652,000
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,652,000
<EPS-PRIMARY> .18
<EPS-DILUTED> .18
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