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 -------------------------------------------------- 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 ----------------------------------------------------------- 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 ----- ----- 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) TEXAS PACIFIC LAND TRUST STATEMENTS OF INCOME ------------------------ (Unaudited)
Three Months Ended Six Months Ended June 30 June 30 -------------------------- ------------------------- 1996 1995 1996 1995 ---- ---- ---- ---- 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 ========== =========== ========= ==========
See accompanying notes to financial statements. (2) 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) 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) 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) 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) 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) Exhibit Index Exhibit No. Description - ----------- ----------- 27 Financial Data Schedule