<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, 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
------------------------ ------------------------
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
- --------------------------------------------------------------------------------
(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
--- ---
<PAGE> 2
Part I
FINANCIAL INFORMATION
TEXAS PACIFIC LAND TRUST
BALANCE SHEETS
JUNE 30, 1997 and DECEMBER 31, 1996
(Unaudited)
<TABLE>
<CAPTION>
June 30, December 31,
ASSETS 1997 1996
----------- -----------
<S> <C> <C>
Cash $ 238,645 $ 144,898
Temporary cash investments 1,900,000 1,650,000
Accounts receivable 440,474 436,142
Accrued interest receivable 248,111 203,107
Prepaid expenses 18,296 45,740
Federal income taxes receivable 18,696 --
Notes receivable for land sales 7,714,871 5,067,778
Real estate acquired through foreclosure:
(27,585.95 acres at June 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 153,162 127,600
Property, no value assigned (Note 2):
Land (surface rights) situated in twenty-one counties in
Texas - 1,069,205.64 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 -- --
----------- -----------
$15,199,150 $13,710,234
=========== ===========
LIABILITIES AND CAPITAL
Federal income taxes $ -- $ 99,824
Other taxes 196,894 26,338
Other liabilities 94,036 15,034
Escrow deposits on land sales 55,000 55,000
Deferred taxes 3,745,536 3,388,382
----------- -----------
Total liabilities 4,091,466 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
2,808,405 sub-shares in 1997 and 2,848,105 sub-
shares in 1996 -- --
Net proceeds from all sources 11,107,684 10,125,656
----------- -----------
Total capital 11,107,684 10,125,656
----------- -----------
$15,199,150 $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 Six Months Ended
June 30 June 30
------------------------ -----------------------
1997 1996 1997 1996
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Income:
Rentals, royalties and sundry income $1,145,581 $1,371,296 $2,431,527 $2,309,425
Land sales 2,344,150 1,262,194 4,532,322 1,613,720
Interest 180,848 110,609 349,716 229,737
---------- ---------- ---------- ----------
3,670,579 2,744,099 7,313,565 4,152,882
---------- ---------- ---------- ----------
Expenses:
Taxes, other than Federal taxes
on income 137,900 153,301 290,335 300,415
General and administrative expenses 349,381 255,391 648,437 559,562
Basis in real estate sold 1,568,074 802,046 1,568,074 802,046
---------- ---------- ---------- ----------
2,055,355 1,210,738 2,506,846 1,662,023
---------- ---------- ---------- ----------
Income before provision for
Federal income taxes 1,615,224 1,533,361 4,806,719 2,490,859
Provision for Federal income taxes
(Note 4) 502,409 474,681 1,516,577 751,395
---------- ---------- ---------- ----------
Net income $1,112,815 $1,058,680 $3,290,142 $1,739,464
========== ========== ========== ==========
Average number of sub-share certificates
and equivalent sub-share certificates
outstanding 2,820,572 2,930,105 2,831,739 2,943,422
========== ========== ========== ==========
Earnings per sub-share certificate $ .39 $ .36 $ 1.16 $ .59
========== ========== ========== ==========
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>
Six Months Ended
June 30
----------------------------
1997 1996
------------ ------------
<S> <C> <C>
Cash flows from operating activities:
Net income $ 3,290,142 $ 1,739,464
Adjustments to reconcile net income to net cash provided by operating
activities:
Depreciation 20,100 5,640
Deferred taxes 357,154 (194,390)
(Increase) decrease in assets:
Notes and accounts receivable (2,651,425) (695,026)
Accrued interest receivable (45,004) (14,070)
Federal income taxes receivable (18,696) --
Prepaid expenses 27,444 29,019
Real estate acquired through foreclosure 1,568,074 802,046
Increase (decrease) in liabilities:
Federal income taxes (99,824) (140,025)
Other taxes 170,556 193,913
Escrow deposits on land sales -- 30,000
Other liabilities 79,002 16,004
------------ ------------
Total adjustments (592,619) 33,111
------------ ------------
Net cash provided by operating activities 2,697,523 1,772,575
------------ ------------
Cash flows from investing activities:
Additions to water wells, leasehold improvements,
furniture and equipment (45,662) (16,368)
------------ ------------
Cash flows from financing activities:
Sub-shares purchased for retirement (1,173,232) (1,554,870)
Dividends paid (1,134,882) (1,178,802)
------------ ------------
Net cash used by financing activities (2,308,114) (2,733,672)
------------ ------------
Net (decrease) increase in cash and cash equivalents 343,747 (977,465)
Cash and cash equivalents at beginning
of year 1,794,898 3,022,985
------------ ------------
Cash and cash equivalents at end
of period $ 2,138,645 $ 2,045,520
============ ============
</TABLE>
See accompanying notes to financial statements.
(3)
<PAGE> 5
TEXAS PACIFIC LAND TRUST
NOTES TO FINANCIAL STATEMENTS
JUNE 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 June 30, 1997 and December
31, 1996 and the results of its operations and its cash flows for the
three and six months ended June 30, 1997 and June 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 six months ended June 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 six months ended June 30,
1997 and 1996 is summarized as follows:
<TABLE>
<CAPTION>
1997 1996
---- ----
<S> <C> <C>
Federal income taxes paid $1,277,943 $1,085,810
========== ==========
</TABLE>
There were no non-cash investing and financing activities during the
six months ended June 30, 1997 and 1996.
(4)
<PAGE> 6
Management's Discussion and
Analysis of Financial Condition and
Results of Operations for the
Six Months Ended
June 30, 1997 and 1996
Earnings per sub-share were $.39 for the second quarter of 1997 compared with
$.36 in the second quarter of 1996.
Total revenues for the second quarter of 1997 were $3,670,579 compared with
$2,744,099 in the second quarter of 1996, an increase of 33.8%. One second
quarter land sale of $2,296,150 had a land cost basis (from repossession) of
$1,568,074. As indicated in note 2 to the financial statements, land sold by
the Trust typically has no related costs, unless acquired through foreclosure.
The Trust had one land sale in El Paso County in the second quarter, totaling
241.7 acres, and one sale of 640 acres in Ector County for total consideration
of $2,344,150, an average of $2,659 per acre. This compares to 715 acres for
$1,262,194, an average of $1,765 per acre, in the second quarter of 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 amounted to $1,145,581 for the second
quarter compared to $1,371,296 for the second quarter of 1996, down 16.5%. This
16.5% decrease is primarily due to a decrease in pipeline easement income due
to unusually large income in this category in the comparison second quarter of
1996.
Oil and gas royalty revenue was $812,514, down just fractionally for the
period. Oil royalty revenue was $606,690, up 4.2% compared with 1996. Crude oil
production subject to the Trust's royalty interest was up 7.8% in the second
quarter, and the average price per barrel was down 3.4% compared to 1996. Gas
royalty revenue was $205,824 in the second quarter, down 12.6% on a fractional
volume decrease and a price decrease of 12.1%.
Interest revenue was up 63.5% in the second quarter, compared with 1996.
Interest from notes receivable amounted to $155,512 in the second quarter, and
$294,637 in the first six months, up 78.1% and 73.4% respectively for the
second quarter and first six months of 1997. Notes receivable have increased
from $4,201,182 to $7,714,871 or 83.6% in the period since June 30, 1996.
Sundry interest for the second quarter was $25,336, up 8.7% and for the first
six months was $55,079, down 8.0% compared to 1996.
Taxes, other than Federal income taxes, were down 10.1% in the second quarter
and 3.4% in the first six months of 1997.
General and administrative expenses increased $93,990 (36.8%) in the second
quarter and $88,875 (15.9%) in the first six months primarily due to a $90,000
expense for an environmental cleanup of a tract of land sold during the second
quarter.
(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 August 12, 1997 By /s/ ROY THOMAS
---------------------------------- --------------------------------------
Roy Thomas, General Agent,
Authorized Signatory and Principal
Financial Officer
(7)
<PAGE> 9
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT
NUMBER EXHIBIT
- ------- -------
<S> <C>
27 Financial Data Schedule
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> JUN-30-1997
<CASH> 2,138,645
<SECURITIES> 0
<RECEIVABLES> 8,403,456
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 2,864,222
<PP&E> 4,620,057
<DEPRECIATION> 20,100
<TOTAL-ASSETS> 15,199,150
<CURRENT-LIABILITIES> 345,930
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 15,199,150
<SALES> 0
<TOTAL-REVENUES> 7,313,565
<CGS> 0
<TOTAL-COSTS> 2,506,846
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 4,806,719
<INCOME-TAX> 1,516,577
<INCOME-CONTINUING> 3,290,142
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 3,290,142
<EPS-PRIMARY> 1.16
<EPS-DILUTED> 0
</TABLE>
