(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, 2010

[   ]

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE  ACT OF 1934. For the transition period from ______ to ______

 

NOT APPLICABLE (State or Other Jurisdiction of Incorporation or Organization)

75-0279735 (I.R.S. Employer Identification No.)

1700 Pacific Avenue, Suite 2770, Dallas, Texas (Address of Principal Executive Offices)

75201 (Zip Code)

 

 

 

 

 

Large Accelerated Filer	¨	Accelerated Filer	T
Non-Accelerated Filer	¨	Smaller reporting company	¨

 

 

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See accompanying notes to financial statements.

		Three Months Ended September 30,								Nine Months Ended September 30,
		2010				2009				2010				2009
Income:
Rentals, royalties and sundry income		$	3,616,747			$	3,055,608			$	11,849,194			$	8,003,287
Land sales			--				--				1,935,070				523,010
Interest income from notes receivable			269,074				302,656				821,255				923,769
			3,885,821				3,358,264				14,605,519				9,450,066
Expenses:
Taxes, other than income taxes			185,191				157,203				578,226				428,876
General and administrative expenses			497,505				406,512				1,749,271				1,538,522
			682,696				563,715				2,327,497				1,967,398
Operating income			3,203,125				2,794,549				12,278,022				7,482,668
Interest income earned from investments			8,554				11,855				20,845				46,017
Income before income taxes			3,211,679				2,806,404				12,298,867				7,528,685
Income taxes			983,502				852,704				3,822,689				2,383,984
Net income		$	2,228,177			$	1,953,700			$	8,476,178			$	5,144,701
Average number of sub-share certificates
and equivalent sub-share certificates
outstanding			9,681,431				10,019,767				9,739,570				10,070,246
Basic and dilutive earnings per sub-share certificate		$	.23			$	.19			$	.87			$	.51
Cash dividends per sub-share certificate		$	–			$	–			$	.20			$	.19

		Nine Months Ended September 30,
		2010				2009
Cash flows from operating activities:
Net income		$	8,476,178			$	5,144,701
Adjustments to reconcile net income to net
cash provided by operating activities:
Deferred taxes			(296,519	)			(178,136	)
Depreciation and amortization			9,462				18,000
Loss on disposal of fixed assets			2,884				–
Changes in operating assets and liabilities:
Accrued receivables and other assets			(158,894	)			(345,603	)
Notes receivable for land sales			933,471				978,082
Accounts payable, accrued expenses
and other liabilities			39,087				(239,576	)
Prepaid income taxes			(407,075	)			929,077
Net cash provided by operating activities			8,598,594				6,306,545
Cash flows from investing activities:
Proceeds from sale of fixed assets			12,500				–
Purchase of fixed assets			(27,670	)			(20,485	)
Net cash used in investing activities			(15,170	)			(20,485	)
Cash flows from financing activities:
Purchase of Sub-share Certificates in Certificates of
Proprietary Interest			(7,496,512	)			(6,478,500	)
Dividends paid			(1,968,061	)			(1,930,444	)
Net cash used in financing activities			(9,464,573	)			( 8,408,944	)
Net decrease in cash and cash
equivalents			(881,149	)			(2,122,884	)
Cash and cash equivalents, beginning of period			8,151,209				9,654,379
Cash and cash equivalents, end of period		$	7,270,060			$	7,531,495

 

 

 

(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 (the “Trust”) as of September 30, 2010 and the results of its operations for the three month and nine month periods ended September 30, 2010 and 2009, respectively, and its cash flows for the nine month periods ended September 30, 2010 and 2009, respectively.  The financial statements and footnotes included herein should be read in conjunction with the Trust’s annual financial statements as of December 31, 2009 and 2008 and for each of the years in the three year period ended December 31, 2009 included in the Trust’s Annual Report on Form 10-K and Form 10-K/A for the year ended December 31, 2009.

 

(2)

In June 2009, the FASB issued a standard which stipulated the FASB Accounting Standards Codification is the source of authoritative U.S. GAAP recognized by the FASB to be applied by nongovernmental  entities.  This standard is effective for financial statements issued for interim and annual periods ending after September 15, 2009.  The implementation of this standard did not have a material impact on the Trust’s financial position, results of operations and cash flows.

 

(3)

We evaluate events that occur after the balance sheet date but before financial statements are, or are available to be, issued to determine if a material event requires our amending the financial statements or disclosing the event.  We evaluated subsequent events through November 4, 2010, the date we issued these financial statements.

 

(4)

No value has been assigned to the land held by the Trust other than parcels which have been acquired through foreclosure and a limited number of parcels which have been acquired because they were offered for sale and were contiguous to parcels already owned by the Trust.  Consequently, no allowance for depletion is computed, and no charge to income is made, with respect thereto, and no cost is deducted from the proceeds of the land sales in computing gain or loss thereon.

 

(5)	The Sub-shares and the Certificates of Proprietary Interest are freely interchangeable in the ratio of one Certificate of Proprietary Interest for 3,000 Sub-shares or 3,000 Sub-shares for one Certificate of Proprietary Interest.

 

(6)	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.

 

(7)	The results of operations for the three month and nine month periods ended September 30, 2010 are not necessarily indicative of the results to be expected for the full year.

 

(8)

The Trust invests cash in excess of daily requirements primarily in U.S. Treasury Bills, certificates of deposit, bank deposits and savings accounts with maturities of ninety days or less.  Such investments are deemed to be highly liquid debt instruments and classified as cash equivalents for purposes of the statements of cash flows.

 

 

 

 

 

		2010				2009
Income taxes paid		$	4,547,250			$	1,804,441

(9)

ASC 280, “Segment Reporting,” establishes standards for the way public business enterprises are to report information about operating segments.  In accordance with ASC 280, the Trust utilizes the management approach as a basis for identifying reportable segments.  The management approach is based on the way that management organizes the segments within the enterprise for making operating decisions and assessing performance.  The Trust’s management views its operations as one segment and believes the only significant activity is managing the land which was conveyed to the Trust in 1888.  The Trust’s management makes decisions about resource allocation and performance assessment based on the same financial information presented in these financial statements.  Managing the land includes sales and leases of such land, and the retention of oil and gas royalties.

 

 

Item 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

 

 

 

 

 

 

 

 

income and sundry income.  This category of income is unpredictable and may vary significantly from quarter to quarter.

 

 

 

 

 

 

 

 

 

 

 

 

increase in sundry income, as a result of a sale of pipe from an abandoned pipeline easement on Trust acreage for total proceeds of $999,558 and, to a lesser extent, an increase in sundry lease rental income and sundry income.  This category of income is unpredictable and may vary significantly from period to period.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(c)	During the third quarter of 2010, the Trust repurchased Sub-share certificates as follows:

 

Period

Total Number of Sub-shares Purchased

Average Price Paid per Sub- share

Total Number of Sub-shares Purchased as Part of Publicly Announced Plans or Programs

Maximum Number (or Approximate Dollar Value) of Sub-shares that May Yet Be Purchased Under the Plans or Programs

July 1, through July 31, 2010

31,760

$26.74

–

–

August 1, through August 31, 2010

24,840

$28.19

–

–

September 1, through September 30, 2010

31,306

$34.33

–

–

Total

87,906

*

$29.85

–

–

 

 

 

31.1

Rule 13a-14(a) Certification of Chief Executive Officer.

 

31.2

Rule 13a-14(a) Certification of Chief Financial Officer.

 

32.1

Certification of Chief Executive Officer furnished pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

 

32.2

Certification of Chief Financial Officer furnished pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

 

 

		TEXAS PACIFIC LAND TRUST
		(Registrant)
Date:  November 4 , 2010		By:	/s/ Roy Thomas
			Roy Thomas, General Agent, Authorized Signatory and Chief Executive Officer

Date:  November 4, 2010		By:	/s/ David M. Peterson
			David M. Peterson, Assistant General Agent, and Chief Financial Officer

 

 

EXHIBIT NUMBER	DESCRIPTION
31.1	Rule 13a-14(a) Certification of Chief Executive Officer.
31.2	Rule 13a-14(a) Certification of Chief Financial Officer.
32.1	Certification of Chief Executive Officer furnished pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2	Certification of Chief Financial Officer furnished pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.