<PAGE> 1
FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1996
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OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
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Commission file number 1-737
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TEXAS PACIFIC LAND TRUST
- --------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
NOT APPLICABLE 75-0279735
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(State or other jurisdiction of incorporation (I.R.S. Employer
or organization) Identification No.)
80 Broad Street, Suite 2700, New York, New York 10004
- --------------------------------------------------------------------------------
(Address of principal executive offices)
(Zip Code)
212/269-2266
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(Registrant's telephone number, including area code)
NOT APPLICABLE
- --------------------------------------------------------------------------------
(Former name, former address and former fiscal year,
if changed 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
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<PAGE> 2
Part I
FINANCIAL INFORMATION
TEXAS PACIFIC LAND TRUST
BALANCE SHEETS
MARCH 31, 1996 & DECEMBER 31, 1995
(Unaudited)
June 30, December 31,
ASSETS 1996 1995
------ ------------ ------------
Cash $ 245,520 $ 72,985
Temporary cash investments 1,800,000 2,950,000
Accounts receivable 297,434 294,582
Accrued interest receivable 142,552 128,482
Prepaid expenses 19,346 48,365
Notes receivable 4,201,182 3,509,008
Real estate acquired through foreclosure:
(28,015.75 acres at June 30, 1996 and 28,140.75
acres at December 31, 1995) 6,042,290 6,844,336
Water wells, leasehold improvements, furniture and
equipment - at cost less accumulated depreciation 64,774 54,046
Property, no value assigned (Note 2):
Land (surface rights) situated in twenty-one
counties in Texas -- 1,078,284.51 acres in 1996
and 1,078,934.61 acres in 1995. -- --
Town lots in Iatan, Loraine and Morita -- 628
lots in 1996 and 1995. -- --
1/16 nonparticipating perpetual royalty interest
in 386,987.70 acres in 1996 and 1995. -- --
1/128 nonparticipating perpetual royalty interest
in 85,413.60 acres in 1996 and 1995. -- --
----------- -----------
$12,813,098 $13,901,804
=========== ===========
LIABILITIES AND CAPITAL
-----------------------
Federal taxes on income $ 100,387 $ 240,412
Other taxes 211,314 17,401
Other liabilities 21,050 5,046
Escrow deposits on land sales 80,000 50,000
Deferred taxes 3,099,927 3,294,317
----------- -----------
Total liabilities 3,512,678 3,607,176
Capital (Note 3)
Certificates of Proprietary Interest, par value
$100 each; outstanding one certificate in 1996
and 1995 -- --
Sub-share Certificates in Certificates of
Proprietary Interest, par value $.16 2/3 each;
outstanding 2,908,705 sub-shares in 1996 and
2,962,405 sub-shares in 1995 -- --
Net proceeds from all sources 9,300,420 10,294,628
----------- -----------
Total capital 9,300,420 10,294,628
----------- -----------
$12,813,098 $13,901,804
=========== ===========
See accompanying notes to financial statements.
(1)
<PAGE> 3
TEXAS PACIFIC LAND TRUST
STATEMENTS OF INCOME
------------------------
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30 June 30
-------------------------- -------------------------
1996 1995 1996 1995
---- ---- ---- ----
<S> <C> <C> <C> <C>
Income:
Rentals, royalties and sundry income $ 1,371,296 $ 974,940 $ 2,309,425 $ 1,770,102
Land sales 1,262,194 1,053,258 1,613,720 1,777,118
Interest 110,609 153,464 229,737 310,230
---------- ---------- ----------- -----------
2,744,099 2,181,662 4,152,882 3,857,450
---------- ---------- ----------- -----------
Expenses:
Taxes, other than Federal taxes on income 153,301 139,290 300,415 274,360
General and administrative expenses 255,391 316,598 559,562 648,588
Basis in real estate sold 802,046 -- 802,046 --
---------- ---------- ----------- -----------
1,210,738 455,888 1,662,023 922,948
---------- ---------- ----------- -----------
Income before provision for
Federal taxes on income 1,533,361 1,725,774 2,490,859 2,934,502
Provision for Federal taxes on income (Note 4) 474,681 524,839 751,395 882,059
---------- ---------- ----------- -----------
Net income $1,058,680 $1,200,935 $1,739,464 $2,052,443
========== ========== ========== ==========
Average number of sub-share certificates
and equivalent sub-share certificates
outstanding 2,930,105 3,050,105 2,943,422 3,058,964
========== =========== ========== ==========
Earnings per sub-share certificate 36 cents 39 cents 59 cents 67 cents
========== =========== ========== ==========
Cash dividend per sub-share certificate -- -- 40 cents 40 cents
========== =========== ========= ==========
</TABLE>
See accompanying notes to financial statements.
(2)
<PAGE> 4
TEXAS PACIFIC LAND TRUST
STATEMENTS OF CASH FLOWS
------------------------
(Unaudited)
Six Months Ended
June 30
--------------------------
1996 1995
---- ----
Cash flows from operating activities:
Net income $ 1,739,464 $ 2,052,443
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation 5,640 5,460
Deferred taxes (194,390) (20,427)
(Increase) decrease in assets:
Notes and accounts receivable (695,026) 31,011
Accrued interest receivable (14,070) (46,843)
Prepaid expenses 29,019 29,019
Real estate acquired through foreclosure 802,046 --
Increase (decrease) in liabilities:
Federal taxes on income (140,025) (107,514)
Other taxes 193,913 181,855
Escrow deposits on land sales 30,000 1,000
Other liabilities 16,004 (97,566)
----------- -----------
Total adjustments 33,111 (24,005)
----------- -----------
Net cash provided by operating activities 1,772,575 2,028,438
----------- -----------
Cash flows from investing activities:
Water wells, leasehold improvements, furniture and
equipment - at cost (16,368) (14,664)
----------- -----------
Cash flows from financing activities:
Sub-shares purchased for retirement (1,554,870) (538,543)
Dividends paid (1,178,802) (1,222,802)
----------- -----------
Net cash used by financing activities (2,733,672) (1,761,345)
----------- -----------
Net (decrease) increase in cash and cash equivalents (977,465) 252,429
Cash and cash equivalents at beginning of year 3,022,985 2,232,843
----------- -----------
Cash and cash equivalents at end of period $ 2,045,520 $ 2,485,272
=========== ===========
See accompanying notes to financial statements.
(3)
<PAGE> 5
TEXAS PACIFIC LAND TRUST
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 1996
(1) In the opinion of management the accompanying unaudited financial
statements contain all adjustments (consisting of only normal recurring
accruals) necessary to present fairly the financial position of the
Trust as of June 30, 1996 and the results of its operations and its cash
flows for the three and six months ended June 30, 1996 and June 30,
1995, respectively.
(2) No value is assigned to the land; consequently, no allowance for
depletion is computed, and no charge to income is made therefor, and no
cost is deducted from the proceeds of the land sales in computing gain
or loss thereon.
(3) The Sub-shares and the Certificates of Proprietary Interest are freely
interchangeable in the ratio of one Certificate of Proprietary
Interest for 600 Sub-shares or 600 Sub-shares for one Certificate of
Proprietary Interest.
(4) The Trust's effective Federal income tax rate is less than the 34%
statutory rate because taxable income is reduced by statutory percentage
depletion allowed on mineral royalty income.
(5) The results of operations for the six months ended June 30, 1996 are
not necessarily indicative of the results to be expected for the full
year.
(6) Cash in excess of daily requirements is invested in money market
instruments with maturities of ninety days or less. Such investments
are deemed to be cash equivalents for purposes of the statements of
cash flows.
Supplemental cash flow information for the six months ended June 30,
1996 and 1995 is summarized as follows:
1996 1995
---- ----
Federal income taxes paid $1,085,810 $1,010,000
========== ==========
There were no non-cash investing and financing activities during the
six months ended June 30, 1996 and 1995.
(4)
<PAGE> 6
Management's Discussion and
Analysis of Financial Condition and
Results of Operations
-----------------------------------
Earnings per sub-share were $.36 for the second quarter of 1996 compared with
$.39 in the second quarter of 1995.
Total revenues for the second quarter of 1996 were $2,744,099 compared with
$2,181,662 in the second quarter of 1995, an increase of 25.8%. The reason for
decreased earnings at a time of increased revenues was a land cost basis (from
repossession) of $802,046 on land which sold at $1,000,000 during the quarter.
As indicated in note 2 to the financial statements, land sold by the Trust
typically has no related costs.
The Trust had three land sales in El Paso County in the second quarter,
totaling 395.32 acres, and one sale of 320 acres in Hudspeth County for total
consideration of $1,262,194, an average of $1,765 per acre. This compares to
14,711 acres for $1,053,258, an average of $72 per acre in the second quarter
of 1995.
Land sales may vary widely from year to year and quarter to quarter. The total
dollar amount, the average price per acre, and the number of acres sold in any
one year or quarter should not be assumed to be indicative of land sales in the
future. The Trust is a passive seller of land; it does not actively solicit
sales of land. The demand for and the sales price of any particular tract of
the Trust's land is influenced by many factors including the national and local
economies, the rate of residential and commercial development in nearby areas,
livestock carrying capacity, and the conditions of the local agricultural
industry which itself is influenced by range conditions and prices for
livestock and other agricultural products. Approximately 99% of the Trust's
land is classified as ranch land and intermingled with other ownerships to form
ranching units. Ranch land sales are, therefore, largely dependent on the
actions of the adjoining landowners.
Rentals, royalties and sundry income amounted to $1,371,296 for the second
quarter compared to $974,940 for the second quarter of 1995, up 40.7%.
Oil and gas royalty revenue was $817,898 up 29.4% for the period. Oil royalty
revenue was $582,321, up 27.2% compared with 1995. Crude oil production
subject to the Trust's royalty interest was up 11.4% in the second quarter,
and the average price per barrel was up 14.2% compared to 1995. Gas royalty
revenue was $235,577 in the second quarter, up 35.0% on a volume decrease of
21.5% and a price increase of 71.5%.
(5)
<PAGE> 7
Management's Discussion (cont'd)
Interest revenue was down 27.9% in the second quarter, compared with 1995.
Interest from notes receivable amounted to $87,306 in the second quarter, and
$169,889 in the first six months, down 30.9% and 31.9% respectively for the
second quarter and first six months. Notes receivable have decreased from
$5,318,751 to $4,201,182 or 21.0% in the period since June 30, 1995. Sundry
interest for the second quarter was $23,303, down 13.9% and for the first six
months was $59,848 down 1.7% compared to 1995.
Taxes, other than Federal taxes on income, were up 10.0% in the second quarter
and 9.5% in the first six months of 1996.
The Trust's oil and gas royalty revenues, lease rentals and receipts of interest
and principal on notes receivable has generated more than adequate amounts of
cash to meet the Trust's needs and should continue to do so in the predictable
future.
(6)
<PAGE> 8
PART II
OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits. Interim report furnished to shareholders upon
request per sub-part Item 601 (19) Regulation S-K.
Exhibit 27 - Financial Data Schedule.
(b) Reports on Form 8-K. The registrant has filed no reports on
Form 8-K during the quarter for which this report is filed.
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.
TEXAS PACIFIC LAND TRUST
----------------------------------
(Registrant)
Date August 13, 1996 By /s/ ROY THOMAS
-----------------------------------
Roy Thomas, General Agent,
Authorized Signatory and Principal
Financial Officer
(7)
<PAGE> 9
Exhibit Index
Exhibit No. Description
- ----------- -----------
27 Financial Data Schedule
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> JUN-30-1996
<CASH> 2,045,520
<SECURITIES> 0
<RECEIVABLES> 4,641,168
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 2,504,852
<PP&E> 6,107,064
<DEPRECIATION> 5,640
<TOTAL-ASSETS> 12,813,098
<CURRENT-LIABILITIES> 412,751
<BONDS> 0
<COMMON> 0
0
0
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 12,813,098
<SALES> 0
<TOTAL-REVENUES> 4,152,882
<CGS> 0
<TOTAL-COSTS> 1,662,023
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 2,490,859
<INCOME-TAX> 751,395
<INCOME-CONTINUING> 1,739,464
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,739,464
<EPS-PRIMARY> .59
<EPS-DILUTED> 0
</TABLE>
