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SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM 10-Q
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QUARTERLY REPORT UNDER SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For quarter ended March 31, 1997
Commission file number 1-467
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
- -------------------------------------------- ----------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number -- including area code (201) 420-2796
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 -- 9,265,871
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<PAGE>
WILSHIRE OIL COMPANY OF TEXAS
INDEX
Page No.
--------
PART I FINANCIAL INFORMATION
Financial Information:
Consolidated Balance Sheets --
March 31, 1997 and December 31, 1996 ..................... 1
Consolidated Statements of Income --
Three months ended March 31, 1997 and 1996 ............... 2
Consolidated Statements of Cash Flows --
Three months ended March 31, 1997 and 1996 ............... 3
Notes to Consolidated Financial Statements ................. 4
Management's Discussion and Analysis
of Financial Condition and Results of Operations ......... 5 & 6
PART II OTHER INFORMATION ........................................... 7
<PAGE>
WILSHIRE OIL COMPANY OF TEXAS AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(000's Omitted, Except Share Data)
(Unaudited)
March 31, December 31,
1997 1996
-------- -----------
ASSETS
CURRENT ASSETS:
Cash and cash equivalents .......................... $ 1,508 $ 1,192
Accounts receivable ................................ 1,980 1,855
Marketable securities, stated at market
value in 1996 and 1995 ........................... 22,300 24,106
Prepaid expenses and other current assets .......... 445 442
-------- --------
Total current assets ........................ 26,233 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 ................... 132,240 131,655
Real estate properties ............................. 41,204 40,534
Other property and equipment ....................... 430 430
-------- --------
173,874 172,619
Less -- Accumulated depreciation,
depletion and amortization .................. 105,679 104,836
-------- --------
68,195 67,783
-------- --------
$ 97,428 $ 98,378
======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Current portion of long-term debt .................. $ 3,200 $ 2,911
Accounts payable ................................... 2,220 2,197
Accrued liabilities ................................ 2,198 2,469
Dividends payable .................................. 463 463
-------- --------
Total current liabilities ................... 8,081 8,040
-------- --------
LONG-TERM DEBT, less current portion ................. 45,054 46,299
-------- --------
DEFERRED INCOME TAXES AND OTHER
NONCURRENT LIABILITIES ............................. 15,690 16,411
-------- --------
SHAREHOLDERS' EQUITY
Common stock, $1 par value,
15,000,000 shares authorized;
issued 10,013,544 and 10,013,544
shares in 1997 and 1996 .......................... 10,014 10,014
Capital in excess of par value ..................... 9,758 9,700
Unrealized gain on marketable
securities ($7,444 in 1997 and $9,047 in 1996),
net of deferred income taxes ..................... 4,094 4,976
Retained earnings .................................. 11,953 10,237
-------- --------
35,819 34,927
Less --
Treasury stock, 748,129 and 765,169
shares in 1997 and 1996, at cost ....... 4,743 4,851
Cumulative foreign currency
translation adjustment ................. 2,473 2,448
-------- --------
28,603 27,628
-------- --------
$ 97,428 $ 98,378
======== ========
1
<PAGE>
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,
1997 1996
--------- ---------
REVENUES
Oil & Gas ....................................... $ 1,420 $ 1,349
Real Estate ..................................... 2,341 2,191
--------- ---------
Total Revenues ......................... 3,761 3,540
COSTS AND EXPENSES
Oil and Gas Production Expenses ................. 583 611
Real Estate Operating Expenses .................. 1,324 1,238
Depreciation, depletion and amortization ........ 843 898
General and Administrative ...................... 369 232
--------- ---------
Total Costs and Expenses ............... 3,119 2,979
--------- ---------
Income from Operations ................. 642 561
OTHER INCOME (EXPENSE) .......................... 190 (63)
GAIN ON SALES OF MARKETABLE
SECURITIES (Note 3) .......................... 2,689 3,040
INTEREST EXPENSE ................................ (923) (997)
--------- ---------
Income before provision
for income taxes .......................... 2,598 2,541
PROVISION FOR INCOME TAXES ...................... 882 889
--------- ---------
Net income ............................. $ 1,716 $ 1,652
--------- ---------
AVERAGE NUMBER OF SHARES OF
COMMON STOCK OUTSTANDING: ................... 9,263,261 9,330,164
--------- ---------
INCOME PER COMMON SHARE ......................... $ .19 $ .18
--------- ---------
2
<PAGE>
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,
1997 1996
-------- --------
CASH FLOWS FROM OPERATING ACTIVITIES
Net Income ................................... $ 1,716 $ 1,652
Adjustments to reconcile net income to net
cash provided by operating activities--
Depreciation, depletion and amortization ..... 843 898
Deferred income tax provision ................ -- 488
Amortization (adjustment) of deferred and
unearned compensation in connection
with non-qualified stock option plan, net 58 (134)
Gain on sales of marketable securities ....... (2,689) (3,040)
Foreign currency transactions ................ -- --
Changes in operating assets and liabilities--
(Increase) decrease in receivables ........ (125) (922)
(Increase) in prepaid expenses and other
current assets ............................ (3) (30)
Increase (decrease) in accounts payable,
accrued and other liabilities ........... (247) 2,207
------- -------
Net cash provided by (used in)
operating activities ...................... $ (447) $ 1,119
------- -------
CASH FLOWS FROM INVESTING ACTIVITIES
Capital expenditures, net ..................... (1,255) (3,263)
Purchase of marketable securities ............. -0- -0-
Proceeds from sales of marketable securities .. 2,891 -0-
------- -------
Net cash provided by (used in)
investing activities ...................... $ 1,636 ($3,263)
------- -------
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from issuance of long term debt ..... 578 3,750
Principal payment of long term debt .......... (1,534) (1,300)
Purchase of treasury stock ................... -- (526)
Exercise of stock options .................... 108 --
Other ........................................ -- --
------- -------
Net cash provided by (used in)
financing activities ...................... $ (848) $ 1,924
------- -------
EFFECT OF EXCHANGE RATE CHANGES ON CASH ......... (25) 17
------- -------
Net increase (decrease) in cash and
cash equivalents .......................... 316 (203)
CASH AND CASH EQUIVALENTS AT
BEGINNING OF PERIOD ......................... 1,192 1,601
------- -------
CASH AND CASH EQUIVALENTS AT
END OF PERIOD ............................... $ 1,508 $ 1,398
------- -------
SUPPLEMENTAL DISCLOSURES TO THE
STATEMENTS OF CASH FLOWS:
Cash paid during the period for--
Interest, net of amounts capitalized ........ $ 939 $ 949
Income taxes, net ........................... 1,158 380
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3
<PAGE>
WILSHIRE OIL COMPANY OF TEXAS
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 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 securties.
3. GAIN ON SALES OF MARKETABLE SECURITIES
--------------------------------------
The Company realized gains from the sales of marketable securities of
$2,689,000 for the three months ended March 31, 1997 and $3,040,000 for
the three months ended March 31, 1996.
4
<PAGE>
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 $1,652,000 in 1996
to $1,716,000 in 1997.
Consolidated revenues for the quarter ended March 31 increased from
$3,540,000 in 1996 to $3,761,000 in 1997. Oil and gas revenues increased from
$1,349,000 to $1,420,000 and real estate revenues increased from $2,191,000 to
$2,341,000.
Total costs and expenses were comparable from quarter to quarter, amounting
to $3,119,000 in 1997 and $2,979,000 in 1996. Oil and gas production expense
decreased by $28,000, real estate operating expenses increased by $86,000,
depreciation, depletion and amortization decreased by $55,000, and general and
administrative expenses increased by $137,000.
Gain on sales of marketable securities was $2,689,000 in 1997 as compared
with $3,040,000 in 1996.
Interest expense decreased from $997,000 in the first quarter of 1996 to
$923,000 in 1997. This decrease is attributable to a reduction in long-term debt
and lower interest rates in 1997.
The provision for income taxes includes Federal, state 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, 1997, the
gross unrealized gain on marketable securities was $7,444,000. This amount, net
of related deferred income taxes of $3,350,000, is included as a credit to
shareholders' equity in the Company's March 31, 1997 consolidated balance sheet.
5
<PAGE>
Liquidity and Capital Resources
- -------------------------------
At March 31, 1997 the Company had approximately $14.9 million in marketable
securities at cost, with a market value of approximately $22.3 million. The
current ratio at March 31, 1997 was 3.25 to 1 on a market basis, which
management considers adequate for the Company's current business. The Company's
working capital was approximately $18 million at March 31, 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 first quarter of 1997, the Company acquired a real estate
property from The Trust Company of New Jersey at a purchase price of
approximately $680,000. 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. The Company is currently planning
further acquisitions of investment properties during the next several months.
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 $(447,000) in 1997
and $1,119,000 in 1996. The decrease in 1997 was primarily due to changes in
operating assets and liabilities.
Net cash provided by (used in) investing activities was $1,636,000 in 1997
and $(3,263,000) in 1996. The increase in 1997 was principally attributable a
reduced level of cash expenditures in 1997 and greater proceeds from the sales
of securities.
Net cash provided by (used in) financing activities was $(848,000) in 1997
and $1,924,000 in 1996. The variation principally relates to the issuance of
long-term debt in connection with the purchases of real estate properties during
the respective quarters.
The Company believes it has adequate capital resources to fund operations
for the foreseeable future.
6
<PAGE>
PART II -- OTHER INFORMATION
Item 1, 2, 3, 4, 5 -- Not applicable
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Item 6 -- Exhibits and Reports on Form 8-K
- --------- --------------------------------
No Form 8-K was filed during the quarter ended March 31, 1997.
7
<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
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(Registrant)
Date: May 14, 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> 3-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> MAR-31-1997
<CASH> 1,508,000
<SECURITIES> 22,300,000
<RECEIVABLES> 1,980,000
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 26,233,000
<PP&E> 173,874,000
<DEPRECIATION> 105,679,000
<TOTAL-ASSETS> 97,428,000
<CURRENT-LIABILITIES> 8,081,000
<BONDS> 0
0
0
<COMMON> 10,014,000
<OTHER-SE> 18,589,000
<TOTAL-LIABILITY-AND-EQUITY> 97,428,000
<SALES> 1,420,000
<TOTAL-REVENUES> 3,761,000
<CGS> 583,000
<TOTAL-COSTS> 3,119,000
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 923,000
<INCOME-PRETAX> 2,598,000
<INCOME-TAX> 882,000
<INCOME-CONTINUING> 1,716,000
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,716,000
<EPS-PRIMARY> .19
<EPS-DILUTED> .19
</TABLE>
