<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 March 31, 1998
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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 (I.R.S. Employer
incorporation 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 [ ]
<PAGE> 2
Part I
FINANCIAL INFORMATION
TEXAS PACIFIC LAND TRUST
BALANCE SHEETS
MARCH 31, 1998 and DECEMBER 31, 1997
------------------------------------
(Unaudited)
<TABLE>
<CAPTION>
March 31, December 31,
ASSETS 1998 1997
------------ ------------
<S> <C> <C>
Cash $ 393,017 $ 112,591
Temporary cash investments at cost which approximates market 2,150,000 1,800,000
Accounts receivable 386,263 386,781
Accrued interest receivable 446,858 411,674
Prepaid expenses 31,850 45,500
Notes receivable for land sales 10,201,360 9,307,218
Real estate acquired through foreclosure:
(27,585.95 acres at March 31, 1998 and December 31, 1997) 4,466,895 4,466,895
Water wells, leasehold improvements, furniture and
equipment - at cost less accumulated depreciation 120,999 142,630
Property, no value assigned (note 2):
Land (surface rights) situated in twenty-one counties in
Texas - 1,041,792.77 acres in 1998 and 1,065,481.33 acres in 1997 -- --
Town lots in Iatan, Loraine and Morita - 628 lots in 1998 and 1997 -- --
1/16 nonparticipating perpetual royalty interest in 386,987.70 acres in 1998 and 1997 -- --
1/128 nonparticipating perpetual royalty interest in 85,413.60 acres in 1998 and 1997 -- --
------------ ------------
$ 18,197,242 $ 16,673,289
============ ============
LIABILITIES AND CAPITAL
Federal income taxes payable $ 695,189 $ 42,783
Other taxes payable 97,094 24,372
Other liabilities 186,487 93,072
Escrow deposits on land sales 2,000 --
Deferred taxes 4,571,360 4,291,856
------------ ------------
Total liabilities 5,552,130 4,452,083
Capital (note 3)
Certificates of Proprietary Interest, par value $100
each; outstanding one certificate in 1998 and 1997 -- --
Sub-share Certificates in Certificates of Proprietary Interest, par value
$.16 2/3 each; outstanding 2,739,505 sub-shares in 1998 and
2,753,205 sub-shares in 1997 -- --
Net proceeds from all sources 12,645,112 12,221,206
------------ ------------
Total capital 12,645,112 12,221,206
------------ ------------
$ 18,197,242 $ 16,673,289
============ ============
</TABLE>
See accompanying notes to financial statements.
(1)
<PAGE> 3
TEXAS PACIFIC LAND TRUST
STATEMENTS OF INCOME
------------------------
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended
March 31
-------------------------
1998 1997
---------- ----------
<S> <C> <C>
Income:
Rentals, royalties and sundry income $1,465,516 $1,285,946
Land sales 1,879,400 2,188,172
Interest 244,834 168,868
---------- ----------
3,589,750 3,642,986
---------- ----------
Expenses:
Taxes, other than Federal income taxes 124,418 152,435
General and administrative expenses 347,643 299,056
---------- ----------
472,061 451,491
---------- ----------
Income before provision for
Federal income taxes 3,117,689 3,191,495
Provision for Federal income taxes (note 4) 976,036 1,014,168
---------- ----------
Net income $2,141,653 $2,177,327
========== ==========
Average number of sub-share certificates
and equivalent sub-share certificates
outstanding 2,750,988 2,842,905
========== ==========
Earnings per sub-share certificate $ .78 $ .77
========== ==========
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>
Three Months Ended
March 31
----------------------------
1998 1997
----------- -----------
<S> <C> <C>
Cash flows from operating activities:
Net income $ 2,141,653 $ 2,177,327
Adjustments to reconcile net income to net cash provided by operating
activities:
Depreciation 28,500 10,050
Deferred taxes 279,504 347,798
(Increase) decrease in assets:
Accounts receivable 518 889
New notes from land sales (1,329,000) (1,311,203)
Payments received on notes receivable 434,858 296,507
Accrued interest receivable (35,184) (56,181)
Prepaid expenses 13,650 13,722
Increase in liabilities:
Federal income taxes 652,406 563,427
Other taxes 72,722 87,196
Escrow deposits on land sales 2,000 27,000
Other liabilities 93,415 23,617
----------- -----------
Total adjustments 213,389 2,822
----------- -----------
Net cash provided by operating activities 2,355,042 2,180,149
----------- -----------
Cash flows from investing activities:
Additions to water wells, leasehold improvements,
furniture and equipment (6,869) (20,569)
----------- -----------
Cash flows from financing activities:
Sub-shares purchased for retirement (614,945) (651,578)
Dividends paid (1,102,802) (1,134,882)
----------- -----------
Net cash used by financing activities (1,717,747) (1,786,460)
----------- -----------
Net increase in cash and cash equivalents 630,426 373,120
Cash and cash equivalents at beginning
of year 1,912,591 1,794,898
----------- -----------
Cash and cash equivalents at end
of period $ 2,543,017 $ 2,168,018
=========== ===========
</TABLE>
See accompanying notes to financial statements.
(3)
<PAGE> 5
TEXAS PACIFIC LAND TRUST
NOTES TO FINANCIAL STATEMENTS
MARCH 31, 1998
-----------------------------
(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 March 31, 1998 and December 31, 1997
and the results of its operations and its cash flows for the three
months ended March 31, 1998 and March 31, 1997, respectively. These
financial statements and footnotes included herein should be read in
conjunction with the Trust's annual financial statements as of December
31, 1997 and 1996 and for each of the years in the three year period
ended December 31, 1997 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 three months ended March 31, 1998 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 three months ended March
31, 1998 and 1997 is summarized as follows:
<TABLE>
<CAPTION>
1998 1997
----------- -----------
<S> <C> <C>
Federal income taxes paid $ 44,126 $ 102,943
=========== ===========
</TABLE>
There were no non-cash investing and financing activities during the
three months ended March 31, 1998 and 1997.
(4)
<PAGE> 6
Management's Discussion and
Analysis of Financial Condition and
Results of Operations for the
Three Months Ended
March 31, 1998 and 1997
-----------------------------------
Earnings per sub-share were $.78 for the first quarter of 1998 compared with
$.77 in the first quarter of 1997.
Total revenues for the first quarter of 1998 were $3,589,750 compared with
$3,642,986 in the first quarter of 1997, a decrease of 1.5%.
The Trust sold 23,688 acres of land for a total of $1,879,400, an average of $79
per acre, in the first quarter of 1998. In the comparable period of 1997 a total
of 5,839.39 acres were sold for $2,188,172, an average of $375 per acre.
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 $1,465,516 in the first quarter
of 1998, an increase of 14.0% compared with the first quarter of 1997.
Oil and gas royalty revenue was $754,987, down 28.5% compared with the first
quarter of 1997. Oil royalty revenue was $509,248, down 28.0% compared with
1997. Crude oil production subject to the Trust's royalty interest was up 3.9%
in the first quarter, and the average price per barrel was down 30.7% compared
with 1997. Gas royalty revenue was $245,739 in the first quarter, down 29.5% on
a volume decrease of 1.1% and a price decrease of 28.5%.
Easement and Sundry income was $623,010 up 348.2% over the first quarter of
1997. This was mainly due to increases in pipeline easement and seismic permit
income neither of which are recurring or can be predicted.
Interest revenue increased 45.0% in the first quarter of 1998, compared with
1997. Interest from notes receivable amounted to $210,695, an increase of 51.4%.
Notes receivable were $10,201,360 as of March 31, 1998, an increase of 67.7% for
the comparable period due to substantial land sales made in 1997, of which a
portion was financed by the Trust. Sundry interest was $34,139, up 14.8%
compared with 1997.
Taxes, other than Federal taxes on income, were down 18.4% due to a decrease in
land inventory and a decrease in royalty income in the first quarter of 1998
compared with last year.
General and administrative expenses increased due to an increase in depreciation
expense related to the purchase of computer hardware and software.
(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 5/14/98 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> 3-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> MAR-31-1998
<CASH> 2,543,017
<SECURITIES> 0
<RECEIVABLES> 11,034,481
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 3,407,988
<PP&E> 4,587,894
<DEPRECIATION> 28,500
<TOTAL-ASSETS> 18,197,242
<CURRENT-LIABILITIES> 978,770
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 18,197,242
<SALES> 0
<TOTAL-REVENUES> 3,589,750
<CGS> 0
<TOTAL-COSTS> 472,061
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 3,117,689
<INCOME-TAX> 976,036
<INCOME-CONTINUING> 2,141,653
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 2,141,653
<EPS-PRIMARY> 0.78
<EPS-DILUTED> 0.78
</TABLE>
