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, 1997 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
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(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 ----- 9,265,310
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WILSHIRE OIL COMPANY OF TEXAS
INDEX
Page No.
--------
Part I Financial Information
Financial Information: 1
Consolidated Balance Sheets -
June 30, 1997 and December 31, 1996
Consolidated Statements of Operations - 2
Six months ended June 30, 1997 and 1996
Consolidated Statements of Operations - 3
Three months ended June 30, 1997 and 1996
Consolidated Statements of Cash Flows - 4
Six months ended June 30, 1997 and 1996
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,
1997 1996
--------- ------------
CURRENT ASSETS:
Cash and cash equivalents $ 959 $ 1,192
Accounts receivable 1,212 1,855
Marketable securities, stated at market
value in 1997 and 1996 19,427 24,106
Prepaid expenses and other current assets 675 442
-------- --------
Total current assets 22,273 27,595
-------- --------
INVESTMENT IN PREFERRED STOCK OF
THE TRUST COMPANY OF NEW JERSEY 3,000 3,000
-------- --------
PROPERTY AND EQUIPMENT
Oil and gas properties, using the
full cost method of accounting 132,419 131,655
Real estate properties 42,520 40,534
Other property and equipment 410 430
-------- --------
175,349 172,619
Less - Accumulated depreciation,
depletion and amortization 106,951 104,836
-------- --------
68,398 67,783
-------- --------
$ 93,671 $ 98,378
======== --------
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Current portion of long-term debt $ 1,725 $ 2,911
Accounts payable 1,983 2,197
Accrued liabilities 2,392 2,932
-------- --------
Total current liabilities 6,100 8,040
-------- --------
LONG - TERM DEBT, less current portion 41,952 46,299
-------- --------
DEFERRED INCOME TAXES AND OTHER
NONCURRENT LIABILITIES 16,320 16,411
-------- --------
SHAREHOLDERS' EQUITY
Common stock, $1 par value,
15,000,000 shares authorized;
issued 10,013,544
shares in 1997 and 1996 10,014 10,014
Capital in excess of par value 9,680 9,700
Unrealized gain on marketable
securities ($6,000 in 1997 and $9,047 in 1996),
net of deferred income taxes 3,275 4,976
Retained earnings 13,719 10,237
-------- --------
36,688 34,927
Less -
Treasury stock, 748,234 and 765,169
shares in 1997 and 1996, at cost 4,743 4,851
Cumulative foreign currency
translation adjustment 2,646 2,448
-------- --------
29,299 27,628
-------- --------
$ 93,671 $ 98,378
======== ========
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,
1997 1996
----------- -----------
REVENUES
Oil & Gas $ 2,842 $ 2,730
Real Estate 4,791 4,586
----------- -----------
Total Revenues 7,633 7,316
COSTS AND EXPENSES
Oil and Gas Production Expenses 1,184 1,225
Real Estate Operating Expenses 2,725 2,634
Depreciation, depletion and amortization 2,115 1,901
General and Administrative 806 853
----------- -----------
Total Costs and Expenses 6,830 6,613
----------- -----------
Income from Operations 803 703
OTHER INCOME 370 101
GAIN ON SALES OF MARKETABLE
SECURITIES (Note 3) 6,001 5,673
INTEREST EXPENSE (1,819) (1,984)
----------- -----------
Income before provision
for income taxes 5,355 4,493
----------- -----------
PROVISION FOR INCOME TAXES 1,873 1,438
----------- -----------
Net income $ 3,482 $ 3,055
----------- -----------
AVERAGE NUMBER OF SHARES OF
COMMON STOCK OUTSTANDING: 9,264,338 9,314,238
----------- -----------
INCOME PER COMMON SHARE $ .38 $ .33
----------- -----------
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,
1997 1996
----------- -----------
REVENUES
Oil & Gas $ 1,422 $ 1,381
Real Estate 2,450 2,395
----------- -----------
Total Revenues 3,872 3,776
COSTS AND EXPENSES
Oil and Gas Production Expenses 601 614
Real Estate Operating Expenses 1,401 1,396
Depreciation, depletion and amortization 1,272 1,003
General and Administrative 437 621
----------- -----------
Total Costs and Expenses 3,711 3,634
----------- -----------
Income from Operations 161 142
OTHER INCOME 180 164
GAIN ON SALES OF MARKETABLE
SECURITIES (Note 3) 3,312 2,633
INTEREST EXPENSE (896) (987)
----------- -----------
Income before provision
for income taxes 2,757 1,952
----------- -----------
PROVISION FOR INCOME TAXES 991 549
----------- -----------
Net income 1,766 $ 1,403
----------- -----------
AVERAGE NUMBER OF SHARES OF
COMMON STOCK OUTSTANDING: 9,265,403 9,298,313
----------- -----------
INCOME PER COMMON SHARE $ .19 $ .15
----------- -----------
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,
1997 1996
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CASH FLOWS FROM OPERATING ACTIVITIES
Net Income $ 3,482 $ 3,055
Adjustments to reconcile net income to net
cash provided by operating activities -
Depreciation, depletion and amortization 2,115 1,901
Deferred income tax provision 244 549
Amortization (adjustment) of deferred and
unearned compensation in connection
with non-qualified stock option plan, net (20) 236
Gain on sales of marketable securities (6,001) (5,673)
Foreign currency transactions -- --
Changes in operating assets and liabilities -
(Increase) decrease in receivables 643 261
(Increase) decrease in prepaid expenses and other
current assets (233) 3
Increase (decrease) in accounts payable,
accrued and other liabilities 182 164
------- -------
Net cash provided by (used in)
operating activities $ 412 $ 496
------- -------
CASH FLOWS FROM INVESTING ACTIVITIES
Capital expenditures, net (2,730) (4,779)
Purchase of marketable securities (344) (167)
Proceeds from sales and redemptions of securities 8,053 6,881
------- -------
Net cash provided by (used in)
investing activities $ 4,979 $ 1,935
------- -------
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from issuance of long term debt 1,615 3,950
Principal payment of long term debt (7,149) (6,445)
Purchase of treasury stock -- (593)
Exercise of stock options 108 22
------- -------
Net cash provided by (used in)
financing activities ($5,426) ($3,066)
------- -------
EFFECT OF EXCHANGE RATE CHANGES ON CASH (198) 45
------- -------
Net increase (decrease) in cash and
cash equivalents (233) (590)
CASH AND CASH EQUIVALENTS AT
BEGINNING OF PERIOD 1,192 1,601
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CASH AND CASH EQUIVALENTS AT
END OF PERIOD $ 959 $ 1,011
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SUPPLEMENTAL DISCLOSURES TO THE
STATEMENTS OF CASH FLOWS:
Cash paid during the period for -
Interest, net of amounts capitalized $ 1,790 $ 1,881
Income taxes, net 1,231 2,837
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4
<PAGE>
WILSHIRE OIL COMPANY OF TEXAS
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
June 30, 1997 (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
$6,001,000 and $5,673,000 for the six months ended June 30, 1997 and
1996, respectively, and $3,312,000 and $2,633,000 for the three months
ended June 30, 1997 and 1996, 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 $3,055,000
in 1996 to $3,482,000 in 1997. Net income for the quarter ended June 30
increased from $1,403,000 in 1996 to $1,766,000 in 1997.
Consolidated revenues for the six months ended June 30 increased from
$7,316,000 in 1996 to $7,633,000 in 1997. Oil and gas revenues increased from
$2,730,000 to $2,842,000 and real estate revenues increased from $4,586,000 to
$4,791,000.
Total costs and expenses were comparable from half to half, amounting
to $6,830,000 in 1997 and $6,613,000 in 1996. Oil and gas production expense
decreased by $41,000 and general and administrative expenses decreased by
$47,000. Real estate operating expense increased by $91,000 and depreciation,
depletion and amortization increased by $214,000.
Interest expense decreased from $1,984,000 in the first half of 1996 to
$1,819,000 in 1997. This decrease is attributable to a reduced level of
long-term debt and lower interest rates in general in 1997. Gain on sales of
marketable securities was $6,001,000 in 1997 as compared with $5,673,000 in
1996. The provision for income taxes includes Federal, state, 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, 1997, the gross
unrealized gain on marketable securities was $6 million. This amount, net of
related deferred income taxes of $2.7 million, is included as a credit to
shareholders' equity in the Company's June 30, 1997 consolidated balance sheet.
6
<PAGE>
Liquidity and Capital Resources
At June 30, 1997 the Company had approximately $13.4 million in
marketable securities at cost, with a market value of approximately $19.4
million. The current ratio at June 30, 1997 was 3.7 to 1 on a market basis,
which management considers adequate for the Company's current business. The
Company's working capital was approximately $16.2 million at June 30, 1997.
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 six months ended June 30, 1997, the Company acquired real
estate properties from The Trust Company of New Jersey ("TCNJ") at an aggregate
purchase price of approximately $1.9 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. The Company is currently
planning further acquisitions of investment properties during the second half of
1997. Accordingly, while the Company anticipates that it will actively explore
these and other real estate acquisition opportunities, no assurance can be given
that any such acquisition will occur.
Net cash provided by (used in) operating activities was $412,000 and
$496,000 in the first six months of 1997 and 1996, respectively. The changes
principally relate to changes in operating assets and liabilities.
Net cash provided by (used in) investing activities was $4,979,000 and
$1,935,000 in the first six months of 1997 and 1996, respectively. Variations in
purchases of marketable securities, proceeds from sales of marketable
securities, and capital expenditures, including the 1997 first half
acquisitions of $1.9 million of real estate properties, contributed to these
changes. Included in proceeds from sales and redemptions of securities of
$8,053,000 for the six months ended June 30, 1997 is a redemption of 7,500
shares, at par, aggregating $750,000, of preferred stock of TCNJ.
Net cash provided by (used in) financing activities was $(5,426,000)
and $(3,066,000) in the first half of 1997 and 1996, respectively. The variation
relates to both the issuance of long-term debt in connection with purchases of
real estate properties during 1997 and 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
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No Form 8-K was filed during the quarter ended June 30, 1997.
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, 1997 /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
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> JUN-30-1997
<CASH> 959,000
<SECURITIES> 19,427,000
<RECEIVABLES> 1,212,000
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 22,273,000
<PP&E> 175,349,000
<DEPRECIATION> 106,951,000
<TOTAL-ASSETS> 93,671,000
<CURRENT-LIABILITIES> 6,100,000
<BONDS> 0
0
0
<COMMON> 10,014,000
<OTHER-SE> 19,285,000
<TOTAL-LIABILITY-AND-EQUITY> 93,671,000
<SALES> 2,842,000
<TOTAL-REVENUES> 7,633,000
<CGS> 1,184,000
<TOTAL-COSTS> 6,830,000
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1,819,000
<INCOME-PRETAX> 5,355,000
<INCOME-TAX> 1,873,000
<INCOME-CONTINUING> 3,482,000
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 3,482,000
<EPS-PRIMARY> 0.38
<EPS-DILUTED> 0.38
</TABLE>
