<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 September 30, 2000
------------------
OR
[_] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
Commission File Number: 1-10982
-------
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 November 1, 2000
----------------------------------
6,000,000
================================================================================
<PAGE>
CROSS TIMBERS ROYALTY TRUST
FORM 10-Q FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 2000
-----------------------------------------------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
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 September 30, 2000 and December 31, 1999............................ 6
Condensed Statements of Distributable Income
for the Three and Nine Months Ended September 30, 2000 and 1999........ 7
Condensed Statements of Changes in Trust Corpus
for the Three and Nine Months Ended September 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
</TABLE>
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 from sale of production from the
underlying properties, less applicable costs
royalty income Net proceeds, multiplied by the applicable net
profits percentage of 75% or 90%, and 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 that are
royalty or overriding royalty interests in Texas,
Oklahoma and New Mexico
75% royalty trust interests - 75% of the net
proceeds from the underlying properties that 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 September 30, 2000, and the
distributable income and changes in trust corpus for the three- and nine-month
periods ended September 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 September 30, 2000 and the
related condensed statements of distributable income and changes in trust corpus
for the three- and nine-month periods ended September 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
October 21, 2000
5
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CROSS TIMBERS ROYALTY TRUST
--------------------------------------------------------------------------------
Condensed Statements of Assets, Liabilities and Trust Corpus
<TABLE>
<CAPTION>
September 30, December 31,
2000 1999
------------ ------------
(Unaudited)
<S> <C> <C>
ASSETS
Cash and short-term investments........................ $ 1,277,300 $ 912,164
Interest to be received................................ 3,622 1,840
Net profits interests in oil and gas properties - net.. 31,304,846 33,005,334
----------- ------------
$32,585,768 $ 33,919,338
=========== ============
LIABILITIES AND TRUST CORPUS
Distribution payable to unitholders.................... $ 1,280,922 $ 914,004
Trust corpus (6,000,000 units of beneficial interest
authorized and outstanding)........................... 31,304,846 33,005,334
----------- ------------
$32,585,768 $ 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 Nine Months Ended
September 30 September 30
---------------------------- -------------------------
2000 1999 2000 1999
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Royalty income................. $3,394,310 $1,696,721 $8,224,324 $4,390,115
Interest income................ 8,441 2,876 18,309 6,675
---------- ---------- ---------- ----------
Total income................... 3,402,751 1,699,597 8,242,633 4,396,790
Administration expense......... 56,419 41,545 170,875 126,975
---------- ---------- ---------- ----------
Distributable income........... $3,346,332 $1,658,052 $8,071,758 $4,269,815
========== ========== ========== ==========
Distributable income per unit
(6,000,000 units).. $ 0.557722 $ 0.276342 $ 1.345293 $ 0.711637
========== ========== ========== ==========
</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 Nine Months Ended
September 30 September 30
------------------------- -----------------------------
2000 1999 2000 1999
----------- ----------- ----------- ---------
<S> <C> <C> <C> <C>
Trust corpus, beginning of period...... $31,983,302 $35,183,110 $33,005,334 $36,024,941
Amortization of net profits interests.. (678,456) (760,135) (1,700,488) (1,601,966)
Distributable income................... 3,346,332 1,658,052 8,071,758 4,269,815
Distributions declared................. (3,346,332) (1,658,052) (8,071,758) (4,269,815)
----------- ----------- ----------- -----------
Trust corpus, end of period............ $31,304,846 $34,422,975 $31,304,846 $34,422,975
=========== =========== =========== ===========
</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
$29,795,603 as of September 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
$0.032 per unit for the quarter ended September 30, 2000 and $0.095 per
unit for the nine months ended September 30, 2000. The actual coal seam tax
credit per unit was $0.040 for the quarter ended September 30, 1999 and
$0.122 for the nine months ended September 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 September 30,
2000. The following is a summary of changes in excess costs for the 75%
royalty trust interests by conveyance during the three and nine months
ended September 30, 1999 and the nine months ended September 30, 2000:
<TABLE>
<CAPTION>
Three Months Nine Months
Ended September 30 Ended September 30
----------------------- -----------------------------------
1999 2000 1999
----------------------- --------- -----------------------
Texas Oklahoma Texas Texas Oklahoma
-------- -------- --------- --------- --------
<S> <C> <C> <C> <C> <C>
Cumulative excess costs and accrued
interest - beginning of period..... $757,604 $ 14,215 $ 375,802 $ 519,817 $ -
Excess costs......................... 34,760 34,345 - 327,318 105,471
Recovery of excess costs and
accrued interest................... (82,610) (14,305) (383,836) (165,735) (72,312)
Accrued interest..................... 14,820 90 8,034 43,174 1,186
-------- -------- --------- --------- --------
Cumulative excess costs and
accrued interest - end of period... $724,574 $ 34,345 $ - $ 724,574 $ 34,345
======== ======== ========= ========= ========
Net to trust (75%)................... $543,431 $ 25,759 $ - $ 543,431 $ 25,759
======== ======== ========= ========= ========
</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 as of September 30, 1999 from the Oklahoma 75%
royalty trust interests were fully recovered in October 1999 and from the
Texas 75% royalty trust interest were fully recovered in May 2000. See Item
2, "Trustee's Discussion and Analysis - Costs."
4. Cross Timbers Oil Company
On October 6, 2000, the trust and Cross Timbers Oil filed an amended
registration statement with the Securities and Exchange Commission to sell
1,360,000 units (22.7% of outstanding units) held by Cross Timbers Oil. The
trust did not participate in Cross Timbers Oil's decisions to acquire or
sell units and will not receive any of the proceeds in the event of such
sale.
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
For the quarter ended September 30, 2000, royalty income was $3,394,310 compared
to $1,696,721 for the third quarter of 1999. This 100% increase in royalty
income is primarily the result of higher oil and gas prices. See "Royalty
Income" below.
Distributable income for the quarter ended September 30, 2000 was $3,346,332, or
$0.557722 per unit of beneficial interest. Distributions for the quarter were:
Distribution
Record Date Payment Date per Unit
------------------ ------------------ ------------
July 31, 2000 August 14, 2000 $ 0.146346
August 31, 2000 September 15, 2000 0.197889
September 29, 2000 October 16, 2000 0.213487
------------
$ 0.557722
============
The distributable income for the quarter includes approximately $0.04 per unit
related to revenues overpaid to the trust for the distribution declared in
September. Cross Timbers Oil expects the correction of this overpayment to
reduce distributable income in fourth quarter 2000.
For the nine months ended September 30, 2000, royalty income was $8,224,324
compared with $4,390,115 for the same 1999 period. This 87% increase in royalty
income is also primarily because of higher oil and gas prices. See "Royalty
Income" below.
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.
The 90% royalty trust interests generally bear no costs other than production
and property taxes, related legal costs, and marketing and transportation
charges. The 75% royalty trust interests bear these same costs and are also
subject to production and development costs.
12
<PAGE>
The following is a summary of the calculation of royalty income received by the
trust:
<TABLE>
<CAPTION>
Three Months Nine Months
Ended September 30 (a) Increase Ended September 30 (a) Increase
---------------------- ----------------------- ----------
2000 1999 (Decrease) 2000 1999 (Decrease)
---------- ---------- ---------- ----------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Sales Volumes
Oil (Bbls) (b)
Underlying properties......... 92,766 79,435 17% 262,258 254,301 3%
Average per day.......... 1,008 863 17% 957 932 3%
Royalty trust interests....... 49,770 24,040 107% 121,955 63,298 93%
Gas (Mcf) (b)
Underlying properties......... 829,633 935,338 (11%) 2,396,704 2,669,952 (10%)
Average per day.......... 9,117 10,278 (11%) 8,747 9,780 (11%)
Royalty trust interests....... 731,476 822,978 (11%) 2,090,802 2,324,895 (10%)
Average Sales Prices
Oil (per Bbl).................... $27.91 $16.34 71% $26.34 $12.91 104%
Gas (per Mcf).................... $3.47 $2.02 72% $3.03 $1.85 64%
Revenues
Oil sales........................ $2,589,444 $1,297,628 100% $ 6,907,324 $3,283,489 110%
Gas sales........................ 2,882,885 1,885,097 53% 7,271,384 4,936,099 47%
---------- ---------- ----------- ----------
Total Revenues............... 5,472,329 3,182,725 72% 14,178,708 8,219,588 72%
---------- ---------- ----------- ----------
Costs
Taxes, transportation
and other..................... 736,444 478,595 54% 1,925,960 1,107,696 74%
Production expense (c)........... 620,850 599,642 4% 1,862,604 1,795,597 4%
Development costs................ 159,647 175,132 (9%) 507,840 616,157 (18%)
Excess costs..................... - (69,105) - - (432,789) -
Recovery of excess costs
and accrued interest.......... - 96,915 - 383,836 238,047 61%
---------- ---------- ----------- ----------
Total Costs.................. 1,516,941 1,281,179 18% 4,680,240 3,324,708 41%
---------- ---------- ----------- ----------
Net Proceeds....................... $3,955,388 $1,901,546 108% $ 9,498,468 $4,894,880 94%
========== ========== =========== ==========
Royalty Income..................... $3,394,310 $1,696,721 100% $ 8,224,324 $4,390,115 87%
========== ========== =========== ==========
</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 September
30 generally represent oil production for the period May through July and
gas production for the period April through June and (2) oil and gas sales
for the nine months ended September 30 generally represent oil production
for the period November through July and gas production for the period
October through June.
(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 third quarter 1999
to 2000 and from the first nine months of 1999 to the comparable period in 2000:
Sales Volumes
Oil
Increased 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 are primarily because of the timing of cash receipts
and higher natural production decline in coal seam gas production. These
decreases were partially offset by purchaser volume adjustments. Sales volumes
for the quarter and nine-month 2000 periods include approximately 70,000 Mcf
related to a purchaser's overpayment. Sales volumes will be reduced when
this overpayment is corrected, which is expected during fourth quarter
2000.
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. Despite OPEC production increases, increased demand has sustained
higher prices. In September 2000, when crude oil prices rose to their highest
level in 10 years, the average West Texas Intermediate ("WTI") posted price was
$30.86 per Bbl. The average WTI posted price for October 2000 was $29.96. Recent
trust oil prices have averaged approximately $1.10 higher than the WTI posted
price.
Gas
The average gas price increased 72% for the third quarter and 64% for the nine-
month period. Part of the increase for the nine-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 (see "Costs - Taxes" below). Excluding the effect of
this change, gas prices increased 57% for the nine-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. Higher gas prices have been
supported by both lower gas storage levels and increased demand for power
generation. Prices are expected to remain high as the winter heating season
approaches. On November 3, 2000, the average NYMEX price for the following
twelve months was $4.50 per MMBtu. The trust's recent gas prices have averaged
approximately $0.20 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
14
<PAGE>
price. As a result, taxes, transportation and other includes an increase of
$286,000 in purchaser deductions for the nine-month period.
Development
Lower development costs primarily reflect completion of the carbon dioxide
injection project on one of the underlying Texas working interest properties in
third quarter 1999.
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 remaining excess costs to be recovered as of
September 30, 2000. Excess costs occurred in the 1999 periods because of low
oil prices and higher 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.
(a) Exhibits.
Exhibit Number
and Description Page
--------------- ----
(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.
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 RON E. HOOPER
--------------------------------
Ron E. Hooper
Vice President
CROSS TIMBERS OIL COMPANY
Date: November 13, 2000 By LOUIS G. BALDWIN
--------------------------------
Louis G. Baldwin
Executive Vice President and
Chief Financial Officer
17
