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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 September 30, 2000 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 -- 8,024,098
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<PAGE>
WILSHIRE OIL COMPANY OF TEXAS
INDEX
Page No.
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Part I Financial Information
Financial Information: 1
Condensed Consolidated Balance Sheets -
September 30, 2000 (Unaudited) and December 31, 1999
Unaudited Condensed Consolidated Statements of Income - 2
Nine months ended September 30, 2000 and 1999
Unaudited Condensed Consolidated Statements of Income - 3
Three months ended September 30, 2000 and 1999
Unaudited Condensed Consolidated Statements of Cash Flows - 4
Nine months ended September 30, 2000 and 1999
Notes to Unaudited Condensed Consolidated Financial Statements 5
Management's Discussion and Analysis of 9
Financial Condition and Results of Operations
Part II Other Information 12
<PAGE>
WILSHIRE OIL COMPANY OF TEXAS AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(000's Omitted, Except Share Data)
<TABLE>
<CAPTION>
September 30,
2000 December 31,
ASSETS (Unaudited) 1999
-------------- ------------- ------------
<S> <C> <C>
CURRENT ASSETS
Cash and cash equivalents $ 1,872 $ 1,887
Accounts receivable 2,804 1,698
Marketable securities, stated at market value 8,799 5,211
Prepaid expenses and other current assets 1,278 1,550
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Total current assets 14,753 10,346
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MORTGAGE NOTES RECEIVABLE 3,500 --
--------- ---------
PROPERTY AND EQUIPMENT
Oil and gas properties, using the full cost
method of accounting 136,583 136,540
Real estate properties 61,297 59,602
Other property and equipment 269 392
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198,149 196,534
Less- Accumulated depreciation,
depletion and amortization 118,778 116,353
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79,371 80,181
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$ 97,624 $ 90,527
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LIABILITIES AND SHAREHOLDERS' EQUITY
------------------------------------
CURRENT LIABILITIES
Current portion of long-term debt $ 3,974 $ 4,682
Short-term debt 4,700 --
Loan payable to Shareholder 2,622 --
Accounts payable 3,061 2,023
Accrued and other liabilities 915 985
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Total current liabilities 15,272 7,690
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LONG - TERM MORTGAGE DEBT, less current portion 48,728 46,935
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DEFERRED INCOME TAXES AND OTHER
NONCURRENT LIABILITIES 11,360 11,934
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SHAREHOLDERS' EQUITY
Common stock, $1 par value,
15,000,000 shares authorized;
10,013,544 shares issued 10,014 10,014
Capital in excess of par value 8,538 9,029
Retained earnings 16,638 15,888
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35,190 34,931
Less -
Treasury stock, 1,989,446 and 1,486,923
shares at September 30, 2000 and December 1999,
Respectively, at cost (9,619) (7,748)
Accumulated other comprehensive loss (3,307) (3,215)
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22,264 23,968
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$ 97,624 $ 90,527
========= =========
</TABLE>
1
<PAGE>
WILSHIRE OIL COMPANY OF TEXAS AND SUBSIDIARIES
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(000's Omitted Except Per Share Data)
FOR THE NINE MONTHS ENDED
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September 30, September 30,
2000 1999
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REVENUES
Oil & Gas $ 5,467 $ 3,818
Real Estate 9,551 9,285
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Total Revenues 15,018 13,103
COSTS AND EXPENSES
Oil and Gas Production Expenses 1,769 1,438
Real Estate Operating Expenses 5,605 5,199
Depreciation, depletion and amortization 2,735 2,330
General and Administrative 1,300 1,190
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Total Costs and Expenses 11,409 10,157
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Income from Operations 3,609 2,946
OTHER INCOME 579 460
GAIN ON SALES OF MARKETABLE
SECURITIES -- 34
INTEREST EXPENSE (3,051) (2,862)
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Income before provision for income taxes 1,137 578
PROVISION FOR INCOME TAXES 387 138
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Net income $ 750 $ 440
======== ========
BASIC AND DILUTED EARNINGS PER SHARE $ 0.09 $ 0.05
======== ========
The accompanying notes are an integral part of these unaudited condensed
consolidated financial statements.
2
<PAGE>
WILSHIRE OIL COMPANY OF TEXAS AND SUBSIDIARIES
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(000's Omitted, Except Per Share Data)
FOR THE THREE MONTHS ENDED
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September 30, September 30,
2000 1999
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REVENUES
Oil & Gas $ 2,107 $ 1,415
Real Estate 3,167 3,056
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Total Revenues 5,274 4,471
COSTS AND EXPENSES
Oil and Gas Production Expenses 563 316
Real Estate Operating Expenses 1,851 1,720
Depreciation, depletion and amortization 840 699
General and Administrative 436 483
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Total Costs and Expenses 3,690 3,218
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Income from Operations 1,584 1,253
OTHER INCOME 347 53
INTEREST EXPENSE (1,045) (944)
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Income before provision for income taxes 886 362
PROVISION FOR INCOME TAXES 343 62
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Net income $ 543 $ 300
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BASIC AND DILUTED EARNINGS PER SHARE $ 0.06 $ 0.03
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The accompanying notes are an integral part of these unaudited condensed
consolidated financial statements.
3
<PAGE>
WILSHIRE OIL COMPANY OF TEXAS AND SUBSIDIARIES
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(000's Omitted)
<TABLE>
<CAPTION>
For The Nine Months Ended
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September 30, September 30,
2000 1999
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<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net Income $ 750 $ 440
Adjustments to reconcile net income to net
cash provided by operating activities -
Depreciation, depletion and amortization 2,735 2,330
Deferred income tax (benefit) provision (172) 101
Amortization (adjustment) of deferred and
unearned compensation in connection
with non-qualified stock option plan, net -- 9
Gain on sales of marketable securities -- (34)
Changes in operating assets and liabilities -
(Increase) decrease in receivables (1,106) 2,134
(Increase) decrease in prepaid expenses and
Other current assets 272 (628)
Increase (decrease) in accounts payable,
accrued and other liabilities 968 (437)
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Net cash provided by operating activities 3,447 3,915
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CASH FLOWS USED IN INVESTING ACTIVITIES
Capital expenditures, net (1,615) (2,502)
Purchases of marketable securities (4,481) (638)
Purchase Mortgage Notes (3,500) --
Proceeds from sales and redemptions of securities -- 375
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Net cash used in investing activities (9,596) (2,765)
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CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from issuance of short term debt 4,700 --
Proceeds from issuance of long term debt 1,793 1,000
Proceeds from issuance of loan payable to shareholder 2,622 --
Principal payment of long term debt (708) (3,146)
Purchase of treasury stock (1,871) (1,171)
Other (125) 117
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Net cash provided by (used in) financing activities 6,411 (3,200)
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EFFECT OF EXCHANGE RATE CHANGES ON CASH (277) 114
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Net decrease in cash and cash equivalents (15) (1,936)
CASH AND CASH EQUIVALENTS AT
BEGINNING OF PERIOD 1,887 4,444
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CASH AND CASH EQUIVALENTS AT
END OF PERIOD $ 1,872 $ 2,508
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SUPPLEMENTAL DISCLOSURES TO THE
STATEMENTS OF CASH FLOWS:
Cash paid during the period for -
Interest $ 3,051 $ 2,975
Income taxes $ 183 $ 106
</TABLE>
The accompanying notes are an integral part of these unaudited condensed
consolidated financial statements.
4
<PAGE>
WILSHIRE OIL COMPANY OF TEXAS
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2000
1. FINANCIAL STATEMENTS
The unaudited condensed consolidated 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 accounting principles generally
accepted in the United States 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 unaudited condensed consolidated 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 (the Company) 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. SEGMENT INFORMATION
The Company is engaged in the exploration and development of oil and
gas, both in its own name and through several wholly-owned
subsidiaries, on the North American continent. The Company also
conducts real estate operations throughout the United States.
Oil and Gas
The Company conducts its oil and gas operations in the United States
and Canada. Oil and gas operations in the United States are located in
Arkansas, California, Kansas, Nebraska, New Mexico, Ohio, Oklahoma,
Pennsylvania, Texas and Wyoming. In Canada, the Company conducts oil
and gas operations in the Provinces of Alberta, British Columbia and
Saskatchewan.
Real Estate
The Company's real estate operations are conducted in the states of
Arizona, Texas, Florida, Georgia and New Jersey. The Company's
properties consists of apartment complexes as well as commercial and
retail properties.
Corporate
The Company holds investments in certain marketable securities. From
time to time, the Company buys and sells securities in the open
market. Over the years, the Company has decreased its holding in
marketable securities and focused its resources in the oil and gas and
real estate divisions.
5
<PAGE>
The following segment data is presented based on the Company's internal
management reporting system-
<TABLE>
<CAPTION>
For the Nine months
ended September 30
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2000 1999
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<S> <C> <C>
Revenues
Oil and gas - United States $ 3,074,000 $ 2,319,000
Oil and gas - Canada 2,393,000 1,499,000
Real estate 9,551,000 9,285,000
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$ 15,018,000 $ 13,103,000
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Income from operations and reconciliation
to Income before provision for income taxes
Oil and gas - United States (a) $ (716,000) $ (173,000)
Oil and gas - Canada (a) 1,504,000 715,000
Real estate (a) 2,483,000 2,575,000
Corporate (a) 338,000 (171,000)
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Income from Operations 3,609,000 2,946,000
Other Income 579,000 460,000
Gain on Sale of marketable securities -- 34,000
Interest expense (3,051,000) (2,862,000)
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Income before provision for income taxes $ 1,137,000 $ 578,000
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Identifiable assets
Oil and gas - United States $ 17,520.000 $ 16,085,000
Oil and gas - Canada 14,012,000 12,222,000
Real estate 48,176,000 46,749,000
Corporate 17,916,000 16,455,000
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$ 97,624,000 $ 91,511,000
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</TABLE>
(a) Represents revenues less all operating costs, including depreciation,
depletion and amortization.
6
<PAGE>
The following segment data is presented based on the Company's internal
management reporting system-
<TABLE>
<CAPTION>
For the three months
ended September 30
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2000 1999
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<S> <C> <C>
Revenues
Oil and gas - United States $ 1,213,000 $ 780,000
Oil and gas - Canada 894,000 621,000
Real estate 3,167,000 3,070,000
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$ 5,274,000 $ 4,471,000
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Income from operations and reconciliation
to Income before provision for income taxes
Oil and gas - United States (a) $ (272,000) $ 454,000
Oil and gas - Canada (a) 876,000 177,000
Real estate (a) 795,000 690,000
Corporate (a) 185,000 (68,000)
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Income from Operations 1,584,000 1,253,000
Other Income 347,000 53,000
Interest expense (1,045,000) (944,000)
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Income before provision for income taxes $ 886,000 $ 362,000
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</TABLE>
(a) Represents revenues less all operating costs, including depreciation,
depletion and amortization.
4. COMPREHENSIVE INCOME
Comprehensive income, representing all changes in shareholders' equity
during the period, other than changes resulting from the Company's common
stock, for the nine months ended September 30, 2000 and 1999 is as follows:
<TABLE>
<CAPTION>
2000 1999
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<S> <C> <C>
Net income $ 750,000 $ 440,000
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Other comprehensive income (loss), net of taxes
Foreign currency translation adjustments 488,000 114,000
Change in unrealized (loss) gain on marketable securities (396,000) --
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Other comprehensive income (92,000) 114,000
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Comprehensive income $ 658,000 $ 554,000
========= =========
</TABLE>
7
<PAGE>
5. EARNINGS PER SHARE
In 1997, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 128, "Earnings per Share" (SFAS No.
128), which requires presentation in the Consolidated Statement of Income
of both basic and diluted earnings per share. Earnings per share amounts
have been presented, and where appropriate, restated to conform to the SFAS
No. 128 requirements.
The following table sets forth the computation of basic and diluted
earnings per share-
<TABLE>
<CAPTION>
Nine Months Ended September 30, Three Months Ended September 30,
------------------------------- --------------------------------
2000 1999 2000 1999
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Numerator-
Net income $ 750,000 $ 440,000 $ 543,000 $ 300,000
========== ========== ========== ==========
Denominator-
Weighted average common shares
outstanding - Basic 8,212,190 8,903,464 8,079,858 8,848,076
Incremental shares from assumed
conversions of stock options -- -- -- --
---------- ---------- ---------- ----------
Weighted average common shares
outstanding - Diluted 8,212,190 8,903,464 8,079,858 8,848,076
========== ========== ========== ==========
Basic earnings per share $ 0.09 $ 0.05 $ 0.07 $ 0.03
Diluted earnings per share $ 0.09 $ 0.05 $ 0.07 $ 0.03
</TABLE>
6. MORTGAGE NOTES RECEIVABLE
During June, 2000 the Company acquired mortgage notes receivable from the
Trust Company of New Jersey for a fair value price of $3,500,000. As part
of this transaction, the Company borrowed $2,100,000 from the Trust Company
of New Jersey as well as $1,400,000 from another lending institution both
of which are reflected in short-term debt on the accompanying balance
sheet.
8
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Results of Operations
Net income for the nine months ended September 30 was $750,000 in 2000 as
compared to $440,000 in 1999.
Consolidated revenues for the nine months ended September 30 increased from
$13,103,000 in 1999 to $15,018,000 in 2000. Oil and gas revenues increased from
$3,818,000 for the nine months ended September 30, 1999 to $5,467,000 for the
same period in 2000, due to increases in the price of crude oil and gas from
period to period. Real estate revenues increased from $9,285,000 for the nine
months ended September 30, 1999 to $9,551,000 the same period in 2000. This
increase is due to higher rents and occupancy.
Total costs and expenses for the nine months ended September 30 were
$11,409,000 in 2000 compared with $10,157,000 in 1999. Oil and gas production
expense increased by $331,000, real estate operating expenses increased by
$406,000, depreciation, depletion and amortization increased by $405,000, and
general and administrative expenses increased by $110,000.
The Company realized gains on sales of marketable securities of $34,000 for
the nine months ended September 30, 1999; there were no gains in 2000.
Interest expense increased from $2,862,000 for the nine months ended
September 30, 1999 to $3,051,000 for the same period in 2000. This increase is
attributable to an increase in new mortgage financing and short term debt.
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.
9
<PAGE>
Liquidity and Capital Resources
At September 30, 2000 the Company had approximately $8.8 million in
marketable securities at market value plus $3.5 million in long-term mortgage
notes receivable. The current ratio at September 30, 2000 was approximately 1 to
1, which management considers adequate for the Company's current business.
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.
The Company will also explore 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 year. 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 operating activities was $3,915,000 for the nine
months ended September 30, 1999 and $3,447,000 for the same period in 2000. The
decrease was primarily due to changes in operating assets and liabilities.
Net cash used in investing activities was ($2,765,000) for the nine months
ended September 30, 1999 and ($9,596,000) for the same period in 2000. The
variations principally relate to transactions in securities and the purchase of
mortgage notes. Proceeds from sales and redemptions of securities amounted to
$375,000 for the nine months ended September 30, 1999 and none for the same
period in 2000.
Net cash provided by (used in) financing activities was ($3,200,000) for
the nine months ended September 30,1999 and $6,411,000 for the same period in
2000. The variation principally relates to the issuance of debt and a loan
issued to shareholder during the respective periods offset by principal payments
of long-term debt.
The Company believes it has adequate capital resources to fund operations
for the foreseeable future.
10
<PAGE>
Forward-Looking Statements
This Report on Form 10-Q for the quarter ended September 30, 2000 contains
forward-looking statements within the meaning of the Private Securities
Litigation Reform Act of 1995. All statements included herein other than
statements of historical fact are forward-looking statements. Although the
Company believes that the underlying assumptions and expectations reflected in
such forward-looking statements are reasonable, it can give no assurance that
such expectations will prove to be correct. The Company's business and prospects
are subject to a number of risks which could cause actual results to differ
materially from those reflected in such forward-looking statements, including
volatility of oil & gas prices, the need to develop and replace reserves, risks
involved in exploration and drilling, uncertainties about estimates of reserves,
environmental risks relating to the Company's oil & gas and real estate
properties, competition, the substantial capital expenditures required to fund
the Company's oil & gas and real estate operations, market and economic changes
in areas where the Company holds real estate properties, interest rate
fluctuations, government regulation, and the ability of the Company to implement
its business strategy.
11
<PAGE>
PART II - OTHER INFORMATION
Item 6 - Exhibits and Reports on Form 8-K
No Form 8-K was filed during the quarter ended September 30, 2000.
12
<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: November 14, 2000 /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)
