<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 September 30, 1997
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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
- --------------------------------------------------------------------------------
(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
SEPTEMBER 30, 1997 and DECEMBER 31, 1996
(Unaudited)
<TABLE>
<CAPTION>
September 30, December 31,
ASSETS 1997 1996
------------- ------------
<S> <C> <C>
Cash $ 537,233 $ 144,898
Temporary cash investments 1,750,000 1,650,000
Accounts receivable 438,855 436,142
Accrued interest receivable 352,144 203,107
Prepaid expenses 4,574 45,740
Notes receivable for land sales 9,299,987 5,067,778
Real estate acquired through foreclosure:
(27,585.95 acres at September 30, 1997 and 27,830.19 acres at
December 31, 1996) 4,466,895 6,034,969
Water wells, leasehold improvements, furniture and
equipment - at cost less accumulated depreciation 152,588 127,600
Property, no value assigned (note 2):
Land (surface rights) situated in twenty-one counties in
Texas - 1,066,287.00 acres in 1997 and 1,075,685.03 acres in 1996 -- --
Town lots in Iatan, Loraine and Morita - 628 lots in 1997 and 1996 -- --
1/16 nonparticipating perpetual royalty interest in 386,987.70 acres in 1997 and 1996 -- --
1/128 nonparticipating perpetual royalty interest in 85,413.60 acres in 1997 and 1996 -- --
----------- -----------
$17,002,276 $13,710,234
=========== ===========
LIABILITIES AND CAPITAL
Federal income taxes payable $ 151,307 $ 99,824
Other taxes payable 281,523 26,338
Other liabilities 91,348 15,034
Escrow deposits on land sales 5,000 55,000
Deferred taxes 4,286,774 3,388,382
----------- -----------
Total liabilities 4,815,952 3,584,578
Capital (note 3)
Certificates of Proprietary Interest, par value $100
each; outstanding one certificate in 1997 and 1996 -- --
Sub-share Certificates in Certificates of Proprietary Interest, par value
$.16 2/3 each; outstanding 2,774,805 sub-shares in 1997 and
2,848,105 sub-shares in 1996 -- --
Net proceeds from all sources 12,186,324 10,125,656
----------- -----------
Total capital 12,186,324 10,125,656
----------- -----------
$17,002,276 $13,710,234
=========== ===========
</TABLE>
See accompanying notes to financial statements.
(1)
<PAGE> 3
TEXAS PACIFIC LAND TRUST
STATEMENTS OF INCOME
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
September 30 September 30
------------------------ -------------------------
1997 1996 1997 1996
<S> <C> <C> <C> <C>
Income:
Rentals, royalties and sundry income $1,419,762 $1,276,800 $3,851,289 $3,586,225
Land sales 2,439,678 373,391 6,972,000 1,987,111
Interest 209,410 129,888 559,126 359,625
---------- ---------- ---------- ----------
4,068,850 1,780,079 11,382,415 5,932,961
---------- ---------- ---------- ----------
Expenses:
Taxes, other than Federal taxes
on income 133,822 152,589 424,157 453,004
General and administrative expenses 251,311 236,567 899,748 796,129
Basis in real estate sold -- 7,321 1,568,074 809,367
---------- ---------- ---------- ----------
385,133 396,477 2,891,979 2,058,500
---------- ---------- ---------- ----------
Income before provision for
Federal income taxes 3,683,717 1,383,602 8,490,436 3,874,461
Provision for Federal income taxes
(note 4) 1,201,241 414,113 2,717,818 1,165,508
---------- ---------- ---------- ----------
Net income $2,482,476 $ 969,489 $5,772,618 $2,708,953
========== ========== ========== ==========
Average number of sub-share certificates
and equivalent sub-share certificates
outstanding 2,792,472 2,900,638 2,818,650 2,929,160
========== ========== ========== ==========
Earnings per sub-share certificate $ .89 $ .33 $2.05 $ .92
========== ========== ========== ==========
Cash dividend per sub-share certificate -- -- $ .40 $ .40
========== ========== ========== ==========
</TABLE>
See accompanying notes to financial statements.
(2)
<PAGE> 4
TEXAS PACIFIC LAND TRUST
STATEMENTS OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
Nine Months Ended
September 30
----------------------------
1997 1996
----------- -----------
<S> <C> <C>
Cash flows from operating activities:
Net income $ 5,772,618 $ 2,708,953
Adjustments to reconcile net income to net cash provided by operating
activities:
Depreciation 30,150 8,460
Deferred taxes 898,392 (139,407)
(Increase) decrease in assets:
Notes and accounts receivable (4,234,922) (858,338)
Accrued interest receivable (149,037) (56,534)
Federal income taxes receivable -- (20,483)
Prepaid expenses 41,166 43,528
Real estate acquired through foreclosure 1,568,074 809,367
Increase (decrease) in liabilities:
Federal income taxes 51,483 (240,412)
Other taxes 255,185 295,308
Escrow deposits on land sales (50,000) 50,000
Other liabilities 76,314 7,737
----------- -----------
Total adjustments (1,513,195) (100,774)
----------- -----------
Net cash provided by operating activities 4,259,423 2,608,179
----------- -----------
Cash flows from investing activities -
additions to water wells, leasehold improvements,
furniture and equipment (55,138) (16,368)
----------- -----------
Cash flows from financing activities:
Sub-shares purchased for retirement (2,577,068) (2,469,708)
Dividends paid (1,134,882) (1,178,802)
----------- -----------
Net cash used by financing activities (3,711,950) (3,648,510)
----------- -----------
Net (decrease) increase in cash and cash equivalents 492,335 (1,056,699)
Cash and cash equivalents at beginning
of year 1,794,898 3,022,985
----------- -----------
Cash and cash equivalents at end
of period $ 2,287,233 $ 1,966,286
=========== ===========
</TABLE>
See accompanying notes to financial statements.
(3)
<PAGE> 5
TEXAS PACIFIC LAND TRUST
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 1997
(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 Texas
Pacific Land Trust (Trust) as of September 30, 1997 and December 31,
1996 and the results of its operations and its cash flows for the three
and nine months ended September 30, 1997 and September 30, 1996,
respectively. These financial statements and footnotes included herein
should be read in conjunction with the Trust's annual financial
statements as of December 31, 1996 and 1995 and for each of the years
in the three year period ended December 31, 1996 included in the
Trust's Form 10-K.
(2) No value is assigned to the land, unless acquired through foreclosure;
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 nine months ended September 30, 1997
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 nine months ended September
30, 1997 and 1996 is summarized as follows:
<TABLE>
<CAPTION>
1997 1996
---- ----
<S> <C> <C>
Federal income taxes paid $1,767,943 $1,565,810
========== ==========
</TABLE>
There were no non-cash investing and financing activities during the
nine months ended September 30, 1997 and 1996.
(4)
<PAGE> 6
Management's Discussion and
Analysis of Financial Condition and
Results of Operations for the
Nine Months Ended
September 30, 1997 and 1996
Earnings per sub-share certificate for the third quarter of 1997 were $.89
compared with $.33 in the third quarter of 1996. Earnings per sub-share
certificate for nine months ended September 30, 1997 were $2.05 compared with
$.92 for 1996.
In the third quarter of 1997, land sales totalled $2,439,678 which was 2,940.93
acres at an average price of $830 per acre. In the comparable period of 1996,
1,827.73 acres were sold for $373,391, a price of $204 per acre. The first nine
months of 1997 had total land sales of 9,662 acres for $6,972,000, an average of
$722 per acre, compared to 2,593.27 acres for $1,987,111, an average of $766 per
acre in 1996.
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 were $3,851,289 for the first nine months
of 1997, which is an increase of 7.4% over the first nine months of 1996.
Oil and gas royalty was $764,948 for the third quarter of 1997 compared to
$844,266 for the third quarter of 1996, down 9.4%. Crude oil production subject
to the Trust's royalty interest was down 3.2% for the third quarter of 1997, and
the average price per barrel decreased 7.5%. Oil royalty revenue was $552,146
for the third quarter of 1997 compared to $617,038 for 1996 down 10.5%. Gas
royalty revenue for the third quarter of 1997 was $212,802 compared to $227,228
for 1996 down 6.3% on a volume decrease of 3.9%. Oil and gas royalty revenue for
the first nine months of 1997 was $2,633,054, up 10.6%. Oil royalty revenue for
the first nine months of 1997 was $1,866,055, up 9.2% over 1996. Crude oil
production was up 2.7% for 1997 and the average price for crude oil increased
6.4% over the first nine months of 1996. Gas royalty revenue for the first nine
months was $766,999 compared to $673,261 in 1996, an increase of 13.9%. Gas
volume decreased 4.2% and the average price was increased by 18.7% when
comparing the first nine months of 1997 to 1996.
Interest revenue increased 61.2% in the third quarter, and 55.5% for the first
nine months of 1997. Interest on notes receivable was $182,444 for the third
quarter of 1997 compared to $104,638 in 1996. Interest on notes receivable for
the first nine months of 1996 was $477,081 compared to $274,527 in the 1996
period. At the end of September 1997 notes receivable were $9,299,987 compared
to $4,368,674 at September 30, 1996. Prepaid principal on notes amounted to
$86,534 at September 30, 1997 compared to $106,392 at September 30, 1996.
Taxes, other than Federal taxes on income, were down 12.3% for the third quarter
of 1997, and down 6.4% for the first nine months of 1997 compared to 1996.
(5)
<PAGE> 7
Management's Discussion (cont'd)
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 November 10, 1997 By /s/ ROY THOMAS
--------------------------- -------------------------------------
Roy Thomas, General Agent
Authorized Signatory and Principal
Financial Officer
(7)
<PAGE> 9
INDEX TO EXHIBITS
EXHIBIT
NUMBER EXHIBIT
- ------- -------
27 Financial Data Schedule
(8)
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> SEP-30-1997
<CASH> 2,287,233
<SECURITIES> 0
<RECEIVABLES> 9,738,842
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 3,082,806
<PP&E> 4,619,483
<DEPRECIATION> 30,150
<TOTAL-ASSETS> 17,002,276
<CURRENT-LIABILITIES> 529,178
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 17,002,276
<SALES> 0
<TOTAL-REVENUES> 11,382,415
<CGS> 0
<TOTAL-COSTS> 2,891,979
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 5,772,618
<INCOME-TAX> 2,717,818
<INCOME-CONTINUING> 5,772,618
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 5,772,618
<EPS-PRIMARY> 2.05
<EPS-DILUTED> 0
</TABLE>
