<PAGE>
================================================================================
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 2000
-------------
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
Commission File Number: 1-10982
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Cross Timbers Royalty Trust
(Exact name of registrant as specified in its charter)
Texas 75-6415930
----------- --------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
Bank of America, N.A., P.O. Box 830650, Dallas, Texas 75283-0650
------------------------------------------------------- ------------
(Address of principal executive offices) (Zip Code)
(877) 228-5084
----------------
(Registrant's telephone number, including area code)
NONE
------
(Former name, former address and former fiscal year, if change since last
report)
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 units of beneficial interest outstanding, as of the
latest practicable date:
Outstanding as of July 3, 2000
----------------------------------
6,000,000
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<PAGE>
CROSS TIMBERS ROYALTY TRUST
FORM 10-Q FOR THE QUARTERLY PERIOD ENDED JUNE 30, 2000
------------------------------------------------------
TABLE OF CONTENTS
Page
----
Glossary of Terms............................................... 3
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements............................................ 4
Report of Independent Public Accountants........................ 5
Condensed Statements of Assets, Liabilities and Trust Corpus
at June 30, 2000 and December 31, 1999........................ 6
Condensed Statements of Distributable Income
for the Three and Six Months Ended June 30, 2000 and 1999..... 7
Condensed Statements of Changes in Trust Corpus
for the Three and Six Months Ended June 30, 2000 and 1999.... 8
Notes to Condensed Financial Statements......................... 9
Item 2. Trustee's Discussion and Analysis............................... 12
Item 3. Quantitative and Qualitative Disclosures about Market Risk...... 15
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K................................ 16
Signatures...................................................... 17
2
<PAGE>
CROSS TIMBERS ROYALTY TRUST
GLOSSARY OF TERMS
-----------------
The following are definitions of significant terms used in this Form 10-Q:
Bbl Barrel (of oil)
Bcf Billion cubic feet (of natural gas)
Mcf Thousand cubic feet (of natural gas)
MMBtu One million British Thermal Units, a common energy
measurement
net profits interest An interest in an oil and gas property measured by net
profits from the sale of production, rather than a
specific portion of production
net proceeds Gross proceeds received by Cross Timbers Oil Company
from sale of production from the underlying
properties, less applicable costs
royalty income Net proceeds, multiplied by the net profits percentage
of 75% or 90%, that is paid to the trust
royalty interest A nonoperating interest in an oil and gas property
(and overriding that provides the owner a specified share of
royalty interest) production without any production or development costs
royalty trust interests Defined net profits interests that were conveyed from
the underlying properties and entitle the trust to
receive for each of the following:
90% royalty trust interests - 90% of the net proceeds
from the underlying properties, which are royalty and
overriding royalty interests in Texas, Oklahoma and
New Mexico
75% royalty trust interests - 75% of the net proceeds
from the underlying properties, which are working
interests in Texas and Oklahoma
underlying properties Cross Timbers Oil's interest in certain oil and gas
properties from which the royalty trust interests were
conveyed. The underlying properties include royalty
and overriding royalty interests in producing and non-
producing properties in Texas, Oklahoma and New
Mexico, and working interests in producing properties
located in Texas and Oklahoma.
working interest An operating interest in an oil and gas property that
provides the owner a specified share of production
that is subject to all production and development
costs
3
<PAGE>
CROSS TIMBERS ROYALTY TRUST
PART I - FINANCIAL INFORMATION
------------------------------
Item 1. Financial Statements.
The condensed financial statements included herein are presented, without audit,
pursuant to the rules and regulations of the Securities and Exchange Commission.
Certain information and footnote disclosures normally included in annual
financial statements have been condensed or omitted pursuant to such rules and
regulations, although the trustee believes that the disclosures are adequate to
make the information presented not misleading. These condensed financial
statements should be read in conjunction with the financial statements and the
notes thereto included in the trust's latest annual report on Form 10-K. In the
opinion of the trustee, all adjustments, consisting only of normal recurring
adjustments, necessary to present fairly the assets, liabilities and trust
corpus of the Cross Timbers Royalty Trust at June 30, 2000, and the
distributable income and changes in trust corpus for the three- and six-month
periods ended June 30, 2000 and 1999, have been included. Distributable income
for such interim periods is not necessarily indicative of the distributable
income for the full year.
4
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
Bank of America, N.A., as Trustee
for the Cross Timbers Royalty Trust:
We have reviewed the accompanying condensed statement of assets, liabilities and
trust corpus of the Cross Timbers Royalty Trust as of June 30, 2000 and the
related condensed statements of distributable income and changes in trust corpus
for the three- and six-month periods ended June 30, 2000 and 1999. These
financial statements are the responsibility of the trustee.
We conducted our review in accordance with standards established by the American
Institute of Certified Public Accountants. A review of interim financial
information consists principally of applying analytical procedures to financial
data and making inquiries of persons responsible for financial and accounting
matters. It is substantially less in scope than an audit in accordance with
auditing standards generally accepted in the United States, the objective of
which is the expression of an opinion regarding the financial statements taken
as a whole. Accordingly, we do not express such an opinion.
The accompanying condensed financial statements are prepared on a modified cash
basis as described in Note 1 which is a comprehensive basis of accounting other
than accounting principles generally accepted in the United States.
Based on our review, we are not aware of any material modifications that should
be made to the financial statements referred to above for them to be in
conformity with the basis of accounting described in Note 1.
We have previously audited, in accordance with auditing standards generally
accepted in the United States, the statement of assets, liabilities and trust
corpus of the Cross Timbers Royalty Trust as of December 31, 1999 included in
the trust's 1999 annual report on Form 10-K, and in our report dated March 8,
2000, we expressed an unqualified opinion on that statement. In our opinion,
the information set forth in the accompanying condensed statement of assets,
liabilities and trust corpus as of December 31, 1999 is fairly stated in all
material respects in relation to the statement of assets, liabilities and trust
corpus included in the trust's 1999 annual report on Form 10-K from which it has
been derived.
ARTHUR ANDERSEN LLP
Fort Worth, Texas
July 5, 2000
5
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CROSS TIMBERS ROYALTY TRUST
-------------------------------------------------------------------------------
Condensed Statements of Assets, Liabilities and Trust Corpus
<TABLE>
<CAPTION>
June 30, December 31,
2000 1999
----------- ------------
(Unaudited)
<S> <C> <C>
ASSETS
Cash and short-term investments........................ $ 839,395 $ 912,164
Interest to be received................................ 2,537 1,840
Net profits interests in oil and gas properties - net.. 31,983,302 33,005,334
----------- ------------
$32,825,234 $33,919,338
=========== ============
LIABILITIES AND TRUST CORPUS
Distribution payable to unitholders.................... $ 841,932 $ 914,004
Trust corpus (6,000,000 units of beneficial interest
authorized and outstanding).......................... 31,983,302 33,005,334
----------- ------------
$32,825,234 $33,919,338
=========== ============
</TABLE>
The accompanying notes to condensed financial statements are an integral part of
these statements.
6
<PAGE>
CROSS TIMBERS ROYALTY TRUST
--------------------------------------------------------------------------------
Condensed Statements of Distributable Income (Unaudited)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30 June 30
---------------------- ----------------------
2000 1999 2000 1999
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Royalty income................................... $2,477,134 $1,213,539 $4,830,014 $2,693,394
Interest income.................................. 5,919 1,771 9,868 3,799
---------- ---------- ---------- ----------
Total income..................................... 2,483,053 1,215,310 4,839,882 2,697,193
Administration expense........................... 58,423 43,935 114,456 85,430
---------- ---------- ---------- ----------
Distributable income............................. $2,424,630 $1,171,375 $4,725,426 $2,611,763
========== ========== ========== ==========
Distributable income per unit (6,000,000 units).. $ 0.404105 $ 0.195230 $ 0.787571 $ 0.435295
========== ========== ========== ==========
</TABLE>
The accompanying notes to condensed financial statements are an integral part of
these statements.
7
<PAGE>
CROSS TIMBERS ROYALTY TRUST
--------------------------------------------------------------------------------
Condensed Statements of Changes in Trust Corpus (Unaudited)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30 June 30
-------------------------- -------------------------
2000 1999 2000 1999
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Trust corpus, beginning of period...... $32,507,596 $35,570,963 $33,005,334 $36,024,941
Amortization of net profits interests.. (524,294) (387,853) (1,022,032) (841,831)
Distributable income................... 2,424,630 1,171,375 4,725,426 2,611,763
Distributions declared................. (2,424,630) (1,171,375) (4,725,426) (2,611,763)
----------- ----------- ----------- -----------
Trust corpus, end of period............ $31,983,302 $35,183,110 $31,983,302 $35,183,110
=========== =========== =========== ===========
</TABLE>
The accompanying notes to condensed financial statements are an integral part of
these statements.
8
<PAGE>
CROSS TIMBERS ROYALTY TRUST
--------------------------------------------------------------------------------
Notes to Condensed Financial Statements (Unaudited)
1. Basis of Accounting
The financial statements of the Cross Timbers Royalty Trust are prepared on
the following basis:
- Royalty income recorded for a month is the amount computed and paid by
the interest owner, Cross Timbers Oil Company, to Bank of America, N.A.,
as trustee for the trust. Royalty income consists of net proceeds
received by Cross Timbers Oil from the underlying properties in the prior
month, multiplied by net profit percentages of 90% for the 90% royalty
trust interests, and 75% for the 75% royalty trust interests.
Costs deducted in the calculation of net proceeds for the 90% royalty
trust interests generally include applicable taxes, transportation,
marketing and legal costs, and do not include other production and
development costs. For the 75% royalty trust interests, costs deducted in
the calculation of net proceeds include production expenses, development
costs, applicable taxes, operating charges and other costs.
- Royalty income is computed separately for each of five conveyances under
which the royalty trust interests were conveyed to the trust. If monthly
costs exceed revenues for any conveyance, such excess costs cannot reduce
royalty income from other conveyances, but are carried forward with
accrued interest to be recovered from future net proceeds of that
conveyance. See Note 3.
- Interest income, interest to be received and distribution payable to
unitholders include interest to be earned from the monthly record date
(last business day of the month) through the date of the next
distribution to unitholders.
- Trust expenses are recorded based on liabilities paid and cash reserves
established by the trustee for liabilities and contingencies.
- Distributions to unitholders are recorded when declared by the trustee.
The financial statements of the trust differ from financial statements
prepared in accordance with generally accepted accounting principles
("GAAP") because revenues are not accrued in the month of production,
expenses are recognized when paid rather than when incurred, and certain
cash reserves may be established for contingencies which would not be
accrued under GAAP. The initial carrying value of the royalty trust
interests ($61,100,449) represents Cross Timbers Oil's historical net book
value on February 12, 1991, the creation date of the trust. Amortization of
the royalty trust interests is calculated on a unit-of-production basis and
is charged directly to trust corpus. Accumulated amortization was
$29,117,147 as of June 30, 2000 and $28,095,115 as of December 31, 1999.
9
<PAGE>
2. Federal Income Taxes
Tax counsel has advised the trust that, under current tax laws, the trust
will be classified as a grantor trust for federal income tax purposes and
therefore is not subject to taxation at the trust level. However, the
opinion of tax counsel is not binding on the Internal Revenue Service.
The unitholders are considered, for federal income tax purposes, to own the
trust's income and principal as though no trust were in existence. The
income of the trust is deemed to have been received or accrued by the
unitholders at the time such income is received or accrued by the trust,
rather than when distributed by the trust.
Cross Timbers Oil has advised the trustee that the trust receives royalty
income from coal seam gas wells. Production from coal seam gas wells drilled
after December 31, 1979, and prior to January 1, 1993, qualifies for the
federal income tax credit for producing nonconventional fuels under Section
29 of the Internal Revenue Code. This tax credit, which was approximately
$1.02 per MMBtu for 1999, is recalculated annually based on each year's
qualified production through the year 2002. Such credit, based on the
unitholder's pro rata share of qualifying production, may not reduce the
unitholder's regular tax liability (after the foreign tax credit and certain
other nonrefundable credits) below his tentative minimum tax. Any part of
the Section 29 credit not allowed for the tax year solely because of this
limitation is subject to certain carryover provisions. Unitholders should
consult their tax advisors regarding use of this credit and other trust tax
compliance matters.
Based on 2000 qualifying sales volumes and the factors used in the
calculation of the 1999 coal seam tax credit, the credit is estimated to be
$0.031 per unit for the quarter ended June 30, 2000 and $0.063 per unit for
the six months ended June 30, 2000. The actual coal seam tax credit per unit
was $0.040 for the quarter ended June 30, 1999 and $0.082 for the six months
ended June 30, 1999. Final 2000 coal seam tax credit data will be provided
to unitholders with year-end tax information.
3. Excess Costs
There are no excess costs remaining to be recovered as of June 30, 2000. The
following is a summary of changes in excess costs for the 75% royalty trust
interests by conveyance during the three and six months ended June 30, 2000
and 1999:
<TABLE>
<CAPTION>
Three Months Ended June 30 Six Months Ended June 30
------------------------------- -------------------------------
2000 1999 2000 1999
--------- ------------------- --------- -------------------
Texas Texas Oklahoma Texas Texas Oklahoma
--------- -------- -------- --------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Cumulative excess costs and accrued
interest - beginning of period..... $ 145,871 $808,361 $ 19,301 $ 375,802 $519,817 $ -
Excess costs......................... - 16,424 46,777 - 292,558 71,126
Recovery of excess costs and
accrued interest.................... (147,203) (83,125) (52,814) (383,836) (83,125) (58,007)
Accrued interest..................... 1,332 15,944 951 8,034 28,354 1,096
--------- -------- -------- --------- -------- --------
Cumulative excess costs and
accrued interest - end of period... $ - $757,604 $ 14,215 $ - $757,604 $ 14,215
========= ======== ======== ========= ======== ========
Net to trust (75%)................... $ - $568,203 $ 10,661 $ - $568,203 $ 10,661
========= ======== ======== ========= ======== ========
</TABLE>
10
<PAGE>
Any excess costs and accrued interest for each conveyance must be fully
recovered from the respective future net proceeds of the 75% royalty trust
interests before they can again contribute to trust royalty income. Excess
costs and accrued interest from the Oklahoma 75% royalty trust interests as of
June 30, 1999 were fully recovered in October 1999 and from the Texas 75%
royalty trust interest as of June 30, 1999 were fully recovered in May 2000.
See Item 2, "Trustee's Discussion and Analysis - Costs."
11
<PAGE>
Item 2. Trustee's Discussion and Analysis.
The following discussion should be read in conjunction with the trustee's
discussion and analysis contained in the trust's 1999 annual report, as well as
the condensed financial statements and notes thereto included in this quarterly
report on Form 10-Q.
Distributable Income
Quarter
For the quarter ended June 30, 2000, royalty income was $2,477,134 compared to
$1,213,539 for the second quarter of 1999. This 104% increase in royalty income
is the result of higher oil and gas prices. Because of higher oil prices, the
remaining excess cost balance for the trust was fully recovered in May 2000 and
the Texas 75% royalty trust interests began to contribute to royalty income for
the first time since March 1998. See "Royalty Income" below.
After considering interest income of $5,919 and administration expense of
$58,423, distributable income for the quarter ended June 30, 2000 was
$2,424,630, or $0.404105 per unit of beneficial interest. For the quarter ended
June 30, 1999, distributable income was $1,171,375, or $0.195230 per unit.
Distributions to unitholders for the quarter ended June 30, 2000 were:
<TABLE>
<CAPTION>
Distribution
Record Date Payment Date per Unit
-------------- ------------- ------------
<S> <C> <C>
April 28, 2000 May 12, 2000 $ 0.122125
May 31, 2000 June 14, 2000 0.141658
June 30, 2000 July 17, 2000 0.140322
----------
$ 0.404105
==========
</TABLE>
Six Months
For the six months ended June 30, 2000, royalty income was $4,830,014 compared
with $2,693,394 for the same 1999 period. This 79% increase in royalty income
is because of higher oil and gas prices. See "Royalty Income" below.
After considering interest income of $9,868 and administration expense of
$114,456, distributable income for the six months ended June 30, 2000 was
$4,725,426, or $0.787571 per unit of beneficial interest. For the six months
ended June 30, 1999, distributable income was $2,611,763, or $0.435295 per unit.
Royalty Income
Royalty income is recorded when received by the trust, which is the month
following receipt by Cross Timbers Oil, and generally two months after oil
production and three months after gas production. Royalty income is generally
affected by three major factors:
- oil and gas sales volumes,
- oil and gas sales prices, and
- costs deducted in the calculation of royalty income.
12
<PAGE>
Because properties underlying the 90% royalty trust interests are royalty and
overriding royalty interests, they generally bear no costs other than production
and property taxes, related legal costs, and marketing and transportation
charges. In addition to these costs, the 75% royalty trust interests are
subject to production and development costs since the properties underlying the
75% royalty trust interests are working interests.
The following is a summary of the calculation of royalty income received by the
trust:
<TABLE>
<CAPTION>
Three Months Six Months
Ended June 30 (a) Ended June 30 (a)
----------------------- Increase ---------------------- Increase
2000 1999 (Decrease) 2000 1999 (Decrease)
---------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Sales Volumes
Oil (Bbls) (b)
Underlying properties........ 81,033 86,866 (7%) 169,492 174,866 (3%)
Average per day............. 900 976 (8%) 931 966 (4%)
Royalty trust interests..... 36,737 19,827 85% 72,185 39,258 84%
Gas (Mcf) (b)
Underlying properties........ 771,057 815,789 (5%) 1,567,071 1,734,614 (10%)
Average per day............. 8,473 9,064 (7%) 8,563 9,531 (10%)
Royalty trust interests..... 672,761 708,220 (5%) 1,359,326 1,501,917 (9%)
Average Sales Prices
Oil (per Bbl)................. $26.86 $12.28 119% $25.48 $11.36 124%
Gas (per Mcf)................. $ 2.88 $ 1.79 61% $ 2.80 $ 1.76 59%
Revenues
Oil sales..................... $2,176,883 $1,066,701 104% $4,317,880 $1,985,861 117%
Gas sales..................... 2,220,757 1,458,981 52% 4,388,499 3,051,002 44%
---------- ---------- ---------- ----------
Total Revenues............. 4,397,640 2,525,682 74% 8,706,379 5,036,863 73%
---------- ---------- ---------- ----------
Costs
Taxes, transportation
and other................... 611,211 397,432 54% 1,189,516 629,101 89%
Production expense (c)........ 648,264 625,349 4% 1,241,754 1,195,955 4%
Development costs............. 134,297 81,786 64% 348,193 441,025 (21%)
Excess costs.................. - (63,201) - - (363,684) -
Recovery of excess costs
and accrued interest........ 147,203 135,939 8% 383,836 141,132 172%
---------- ---------- ---------- ----------
Total Costs................ 1,540,975 1,177,305 31% 3,163,299 2,043,529 55%
---------- ---------- ---------- ----------
Net Proceeds................... $2,856,665 $1,348,377 112% $5,543,080 $2,993,334 85%
========== ========== ========== ==========
Royalty Income................. $2,477,134 $1,213,539 104% $4,830,014 $2,693,394 79%
========== ========== ========== ==========
</TABLE>
--------------------
(a) Because of the interval between time of production and receipt of royalty
income by the trust, (1) oil and gas sales for the quarter ended June 30
generally represent oil production for the period February through April and
gas production for the period January through March and (2) oil and gas
sales for the six months ended June 30 generally represent oil production
for the period November through April and gas production for the period
October through March.
(b) Oil and gas sales volumes are allocated to the royalty trust interests based
upon a formula that considers oil and gas prices and the total amount of
production expenses and development costs. Changes in any of these factors
may result in disproportionate fluctuations in volumes allocated to the
royalty trust interests. Therefore, comparative discussion of oil and gas
sales volumes is based on the underlying properties.
(c) Includes an overhead fee which is deducted and retained by Cross Timbers
Oil. This fee is currently $22,570 per month and is subject to adjustment
each May based on an oil and gas industry index.
13
<PAGE>
The following are explanations of significant variances from second quarter 1999
to 2000 and from the first six months of 1999 to the comparable period in 2000:
Sales Volumes
Oil
Decreased oil sales volumes are primarily because of the timing of cash
receipts. Natural production decline was largely offset by increased production
on one of the Texas working interest properties as a result of carbon dioxide
injections.
Gas
Decreased gas sales volumes for the quarter are primarily because of natural
production decline. Decreased gas volumes for the six-month period are
primarily because of higher natural decline in coal seam gas production and the
timing of cash receipts, partially offset by purchaser volume adjustments.
Sales Prices
Oil
Lower average 1999 prices reflect abnormally low prices resulting from global
excess supply. After OPEC members and other oil producers agreed to production
cuts in March 1999, oil prices climbed through the remainder of 1999 and first
quarter 2000. Increased demand in 2000 has more than offset OPEC production
increases in March and June, sustaining higher prices through June 2000. The
average West Texas Intermediate posted price for June 2000 was $28.79 per Bbl.
Recently, Saudi Arabia proposed additional production increases to reduce prices
closer to its target price of $25.00 per barrel.
Gas
The average gas price increased 61% for the second quarter and 59% for the six-
month period. Part of the increase for the six-month period is related to
purchaser deductions which were netted in the gas price prior to second quarter
1999. Since then, these purchaser deductions are included in taxes,
transportation and other costs (see "Costs" below). Excluding the effect of
this change, gas prices increased 48% for the six-month period. Gas prices were
lower in 1999 primarily because of the abnormally warm winter of 1998-1999
experienced across the United States that resulted in higher levels of gas in
storage. Gas prices began to increase in May 1999 and, after declining briefly
at year end, have continued to strengthen in 2000, as gas storage remains lower
than prior year levels. At July 5, 2000, the average NYMEX price for the
following twelve months was $3.82 per MMBtu. The trust's recent gas prices have
averaged $0.40 per MMBtu higher than the NYMEX price, primarily because of the
effect of higher natural gas liquids prices.
Costs
Taxes
Taxes, transportation and other increased primarily as a result of increased
taxes on higher oil and gas revenues. Also, beginning in second quarter 1999,
this cost category has included purchaser deductions for gathering and
compression charges. Prior to second quarter 1999, these charges were netted in
the gas sales price. As a result, taxes, transportation and other includes an
increase of $286,000 in purchaser deductions for the six-month period.
14
<PAGE>
Development
Lower development costs for the first six months of 2000 reflect completion of
the carbon dioxide injection project on one of the underlying Texas working
interest properties in third quarter 1999. Carbon dioxide injectant costs for
this property caused second quarter development costs to increase 64%.
Excess costs
Primarily because of higher oil prices, all excess costs and accrued interest
for the Texas 75% royalty trust interests were fully recovered in second quarter
2000. After almost two years of excess costs and recovery of these costs, the
Texas 75% royalty trust interests again began contributing to trust royalty
income in May 2000. There are no excess costs remaining to be recovered as of
June 30, 2000. Excess costs occurred in the 1999 periods because of low oil
prices and costs related to the carbon dioxide injection project. See Note 3 to
condensed financial statements.
Forward Looking Statements
This report on Form 10-Q includes "forward-looking statements" within the
meaning of Section 27A of the Securities Act of 1933, as amended, and Section
21E of the Securities Exchange Act of 1934, as amended. All statements other
than statements of historical fact included in this Form 10-Q, including,
without limitation, statements contained in this "Trustee's Discussion and
Analysis" regarding the royalty trust interests and industry conditions, are
forward-looking statements. Although Cross Timbers Oil believes that the
expectations reflected in these forward-looking statements are reasonable,
neither Cross Timbers Oil nor the trustee can give any assurance that such
expectations will prove to be correct.
Item. 3 Quantitative and Qualitative Disclosures about Market Risk
There have been no material changes in the trust's market risks, as disclosed in
the trust's Form 10-K for the year ended December 31, 1999.
15
<PAGE>
PART II - OTHER INFORMATION
---------------------------
Items 1 through 5. Not Applicable.
Item 6. Exhibits and Reports on Form 8-K.
<TABLE>
<CAPTION>
(a) Exhibits.
Exhibit Number
and Description Page
--------------- ----
<S> <C> <C>
(4)(a) Cross Timbers Royalty Trust Indenture Amended and Restated on
January 13, 1992 by NCNB Texas National Bank (now Bank of
America, N.A.) as trustee, heretofore filed as Exhibit 3.1 to the
trust's Registration Statement No. 33-44385 filed with the
Securities and Exchange Commission on February 19, 1992, is
incorporated herein by reference.
(b) Net Overriding Royalty Conveyance (Cross Timbers Royalty Trust,
90% - Texas) from South Timbers Limited Partnership, West Timbers
Limited Partnership, North Timbers Limited Partnership, East
Timbers Limited Partnership, Hickory Timbers Limited Partnership,
and Cross Timbers Partners, L.P. (predecessors of Cross Timbers
Oil Company, L.P. which subsequently merged into Cross Timbers
Oil Company) to NCNB Texas National Bank (now Bank of America,
N.A.), as trustee, dated February 12, 1991 (without Schedules A
and B), heretofore filed as Exhibit 10.1 to the trust's
Registration Statement No. 33-44385 filed with the Securities and
Exchange Commission on February 19, 1992, is incorporated herein
by reference.
(c) Net Overriding Royalty Conveyance (Cross Timbers Royalty Trust,
75% - Texas) from South Timbers Limited Partnership, West Timbers
Limited Partnership, North Timbers Limited Partnership, East
Timbers Limited Partnership, Hickory Timbers Limited Partnership,
and Cross Timbers Partners, L.P. (predecessors of Cross Timbers
Oil Company, L.P. which subsequently merged into Cross Timbers
Oil Company) to NCNB Texas National Bank (now Bank of America,
N.A.), as trustee, dated February 12, 1991 (without Schedules A
and B), heretofore filed as Exhibit 10.5 to the trust's
Registration Statement No. 33-44385 filed with the Securities and
Exchange Commission on February 19, 1992, is incorporated herein
by reference.
(15) Awareness letter of Arthur Andersen LLP 18
(b) Reports on Form 8-K.
No reports on Form 8-K have been filed during the quarter for which
this report is filed.
</TABLE>
16
<PAGE>
SIGNATURES
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.
CROSS TIMBERS ROYALTY TRUST
By BANK OF AMERICA, N.A., TRUSTEE
By /s/ RON E. HOOPER
------------------------------------
Ron E. Hooper
Vice President
CROSS TIMBERS OIL COMPANY
Date: July 10, 2000 By /s/ LOUIS G. BALDWIN
------------------------------------
Louis G. Baldwin
Executive Vice President and
Chief Financial Officer
17
