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SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
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FORM 10-Q
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QUARTERLY REPORT UNDER SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For quarter ended March 31, 2001
Commission file number 1-467
WILSHIRE OIL COMPANY OF TEXAS
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(Exact name of registrants as specified in its charter)
Delaware 84-0513668
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(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
921 Bergen Avenue -- Jersey City, New Jersey 07306-4204
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number -- including area code
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(201) 420-2796
NO CHANGE
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Former name, former address and former fiscal year,
if changed since last reports.
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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Indicate the number of shares outstanding of each of the issuer's classes
of common stock, as of the close of the period by this report.
Common Stock $1 Par Value -- 7,946,688
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WILSHIRE OIL COMPANY OF TEXAS
INDEX
Page No.
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Part I Financial Information
Financial Information:
Condensed Consolidated Balance Sheets --
March 31, 2001 (Unaudited) and December 31, 2000 ............. 1
Unaudited Condensed Consolidated Statements of Income --
(Unaudited) Three months ended March 31, 2001 and 2000 ....... 2
Unaudited Condensed Consolidated Statement of Cash Flows --
(Unaudited) Three months ended March 31, 2001 and 2000 ....... 3
Notes to Unaudited Condensed Consolidated Financial
Statements ................................................... 4, 5 & 6
Management's Discussion and Analysis
of Financial Condition and Results of Operations ............. 7, 8 & 9
Part II Other Information ............................................ 10
WILSHIRE OIL COMPANY OF TEXAS AND SUBSIDIARIES
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
(000's Omitted, Except Share Data)
March 31, December 31,
2001 2000
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(Unaudited)
ASSETS
CURRENT ASSETS
Cash and cash equivalents .......................... $ 1,941 $ 2,925
Marketable securities, available-for-sale, at
fair value ....................................... 8,388 7,166
Accounts receivable ................................ 2,441 2,243
Income taxes receivable ............................ 468 332
Prepaid expenses and other current assets .......... 2,161 2,535
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Total current assets ........................ 15,399 15,201
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MORTGAGE NOTES RECEIVABLE ............................ 3,500 3,500
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PROPERTY AND EQUIPMENT
Oil and gas properties, using full cost
method of accounting ............................. 136,802 137,458
Real estate properties ............................. 67,041 61,402
Other property and equipment ....................... 290 312
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204,133 199,172
Less -- Accumulated depreciation, depletion
and amortization ................................. 119,977 119,332
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84,156 79,840
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$103,055 98,541
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LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Current portion of long-term debt .................. $ 12,269 $ 14,842
Loan payable to shareholder ........................ 400 400
Accounts payable ................................... 3,944 1,986
Accrued liabilities ................................ 1,174 1,159
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Total current liabilities ................... 17,787 18,387
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LONG -- TERM DEBT, less current portion .............. 51,704 46,701
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DEFERRED INCOME TAXES ................................ 11,597 11,994
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OTHER LONG-TERM LIABILITIES .......................... 31 31
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COMMITMENTS AND CONTINGENCIES
SHAREHOLDERS' EQUITY
Preferred stock, $1 par value, 1,000,000 shares
authorized; None issued and outstanding in
2001 and 2000
Common stock, $1 par value, 15,000,000 shares
authorized; Issued 10,013,544 shares in
2001 and 2000 .................................... 10,014 10,014
Capital in excess of par value ..................... 9,029 9,029
Treasury stock, 2,057,556 and 1,742,021 shares
at March 31, 2001 and December 31, 2000,
respectively, at cost ............................ (10,048) (9,850)
Retained earnings .................................. 18,149 17,112
Accumulated other comprehensive loss ............... (5,208) (4,877)
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21,936 21,428
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$103,055 $ 98,541
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1
WILSHIRE OIL COMPANY OF TEXAS AND SUBSIDIARIES
UNAUDITED CONDENSED CONDOLIDATED STATEMENTS OF INCOME
(000's Omitted, Except Per Share Data)
For The Three Months Ended
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March 31, March 31,
2001 2000
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REVENUES
Oil & Gas .......................................... $ 3,418 $ 1,345
Real Estate ........................................ 3,289 3,225
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Total Revenues ............................ 6,707 4,570
COSTS AND EXPENSES
Oil and Gas Production Expenses .................... 601 536
Real Estate Operating Expenses ..................... 2,041 1,765
Depreciation, depletion and amortization ........... 1,000 910
General and Administrative ......................... 344 336
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Total Costs and Expenses .................. 3,986 3,547
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Income from Operations .................... 2,721 1,023
OTHER INCOME ....................................... 95 146
INTEREST EXPENSE ................................... (1,169) (1,024)
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Income before provision for income taxes ........ 1,647 145
PROVISION FOR INCOME TAXES ......................... 610 13
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Net income ................................ $ 1,037 $ 132
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BASIC AND DILUTED EARNINGS PER SHARE .............. $ 0.13 $ 0.02
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The accompanying notes are an integral part of these unaudited condensed
consolidated financial statements.
2
WILSHIRE OIL COMPANY OF TEXAS AND SUBSIDIARIES
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(000's Omitted)
For The Three Months Ended
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March 31, March 31,
2001 2000
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CASH FLOWS FROM OPERATING ACTIVITIES
Net Income ......................................... $ 1,037 $ 132
Adjustments to reconcile net income to net
cash used in operating activities --
Depreciation, depletion and amortization ........... 1,000 910
Deferred income tax (benefit) provision ............ (397) 159
Gain on sales of marketable securities ............. -- --
Changes in operating assets and liabilities --
(Increase) decrease in receivables ............... (334) (191)
(Increase) decrease in prepaid expenses and
Other current assets ........................... (175) 410
(Increase) Decrease in accounts payable,
Accrued and other liabilities .................. 1,973 (793)
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Net cash provided by operating activities .......... 3,104 627
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CASH FLOWS FROM INVESTING ACTIVITIES
Capital expenditures, net .......................... (4,961) (494)
Purchases of marketable securities ................. -- (146)
Proceeds from sales and redemptions of securities .. -- --
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Net cash used in investing activities .............. (4,961) $ (640)
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CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from issuance of long term debt ........... 4,270 750
Principal payment of short term debt ............... (2,000) (271)
Purchase of treasury stock ......................... (198) (733)
Other .............................................. (195) 7
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Net cash provided by (used) in
financing activities ............................. 1,877 (247)
EFFECT OF EXCHANGE RATE CHANGES ON CASH .............. (1,004) 50
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Net decrease in cash and cash equivalents .......... (984) (210)
CASH AND CASH EQUIVALENTS AT
BEGINNING OF PERIOD ............................... 2,925 1,887
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CASH AND CASH EQUIVALENTS AT
END OF PERIOD .................................... $ 1,941 $ 1,677
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SUPPLEMENTAL DISCLOSURES TO THE
STATEMENTS OF CASH FLOWS:
Cash paid during the period for --
Interest ....................................... $ 1,175 $ 1,116
Income taxes ................................... $ 59 $ 131
3
WILSHIRE OIL COMPANY OF TEXAS
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2001
1. FINANCIAL STATEMENTS
The unaudited condensed consolidated financial statements included herein
have been prepared by the Registrant, without audit, pursuant to the rules
and regulations of the Securities and Exchange Commission. Certain
information and footnote disclosures normally included in financial
statements prepared in accordance with accounting principles generally
accepted in the United States have been condensed or omitted pursuant to
such rules and regulations, although the Registrant believes that the
disclosures are adequate to make the information presented not misleading.
It is suggested that these unaudited condensed consolidated financial
statements be read in conjunction with the financial statements and the
notes thereto included in the Company's latest annual report on Form 10-K.
This condensed financial information reflects, in the opinion of
management, all adjustments necessary to present fairly the results for the
interim periods. The results of operations for such interim periods are not
necessarily indicative of the results for the full year.
2. DESCRIPTION OF BUSINESS
Wilshire Oil Company of Texas (the Company) is a diversified corporation
engaged in oil and gas exploration and production and real estate
operations. The Company's oil and gas operations are conducted both in its
own name and through several wholly-owned subsidiaries in the United States
and Canada. Crude oil and natural gas productions are sold to oil
refineries and natural gas pipeline companies. The Company's real estate
holdings are located in the states of Arizona, Florida, New Jersey, Texas
and Georgia. The Company also maintains investments in marketable
securities.
3. SEGMENT INFORMATION
The Company is engaged in the exploration and development of oil and gas,
both in its own name and through several wholly-owned subsidiaries, on the
North American continent. The Company also conducts real estate operations
throughout the United States.
Oil and Gas
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The Company conducts its oil and gas operations in the United States and
Canada. Oil and gas operations in the United States are located in
Arkansas, California, Kansas, Nebraska, New Mexico, Ohio, Oklahoma,
Pennsylvania, Texas and Wyoming. In Canada, the Company conducts oil and
gas operations in the Provinces of Alberta, British Columbia and
Saskatchewan.
Real Estate
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The Company's real estate operations are conducted in the states of
Arizona, Texas, Florida, Georgia and New Jersey. The Company's properties
consists of apartment complexes as well as commercial and retail
properties.
Corporate
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The Company holds investments in certain marketable securities. From time
to time, the Company buys and sells securities in the open market. Over the
years, the Company has decreased its holding in marketable securities and
focused its resources in the oil and gas and real estate divisions.
4
The following segment data is presented based on the Company's internal
management reporting system-
For the three months
ended March 31
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2001 2000
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Revenues
Oil and gas -- United States ................. $ 1,636,000 $ 763,000
Oil and gas -- Canada ........................ 1,782,000 582,000
Real estate .................................. 3,289,000 3,225,000
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$ 6,707,000 $ 4,570,000
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Income from operations and reconciliation
to Income before provision for income taxes
Oil and gas -- United States (a) ............. $ 521,000 $ (208,000)
Oil and gas - Canada (a) ..................... 1,479,000 268,000
Real estate (a) .............................. 711,000 985,000
Corporate (a) ................................ 10,000 (22,000)
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Income from Operations .................... 2,721,000 1,023,000
Other Income ..................................... 95,000 146,000
Interest expenses .............................. (1,169,000) (1,024,000
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Income before provision for income taxes... $ 1,647,000 $ 145,000
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Identifiable assets
Oil and gas - United States .................. $ 16,459.000 $15,274,000
Oil and gas - Canada ......................... 14,748,000 13,960,000
Real estate .................................. 36,467,000 40,685,000
Corporate .................................... 35,381,000 19,401,000
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$103,055,000 $89,320,000
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(a) Represents revenues less all operating costs, including depreciation,
depletion and amortization.
4. COMPREHENSIVE INCOME
Comprehensive income for the three months ended March 31, 2001 and 2000 is
as follows:
2001 2000
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Net income $1,037,000 $ 132,000
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Other comprehensive income (loss), net of taxes
Foreign currency translation adjustments ...... (1,243,000) (260,000)
Change in unrealized (loss) gain on
marketable securities ....................... 912,000 (163,000)
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Other comprehensive income (loss) ............... (331,000) (423,000)
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Comprehensive income (loss) ..................... $ 706,000 $(291,000)
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5
Changes in the components of Accumulated Other Comprehensive Income (Loss)
for the year 2000 and for the three months ended March 31, 2001 are as
follows-
Unrealized Gains Cumulative Accumulated
(Losses) on Foreign Currency Other
Available-for Sale Translation Comprehensive
Securities Adjustment Income (Loss)
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BALANCE, December 31, 1999 ..... $ (274,000) $(2,941,000) $(3,215,000)
Change for the year 2000 ..... (1,311,000) (351,000) (1,662,000)
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BALANCE, December 31, 2000 ..... (1,585,000) (3,292,000) (4,877,000)
Change for the quarter ....... 912,000 (1,243,000) (331,000)
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$ (673,000) $(4,535,000) $(5,208,000)
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5. EARNINGS PER SHARE
The following table sets forth the computation of basic and diluted
earnings per share-
Three Months Ended March 31,
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2001 2000
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Numerator --
Net income ................................ $1,037,000 $ 132,000
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Denominator --
Weighted average common shares
outstanding -- Basic .................... 7,969,820 8,371,041
Incremental shares from assumed
conversions of stock options ............ -- --
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Weighted average common shares
outstanding -- Diluted .............. 7,969,820 8,371,041
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Basic earnings per share .................... $ 0.13 $ 0.02
Diluted earnings per share .................. $ 0.13 $ 0.02
6
FINANCIAL CONDITION AND RESULTS OF MANAGEMENT'S DISCUSSION AND
ANALYSIS OF OPERATIONS
Results of Operations
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Net income for the quarter ended March 31 increased from $132,000 in 2000
to $1,037,000 in 2001.
Consolidated revenues for the quarter ended March 31 increased from
$4,570,000 in 2000 to $6,707,000 in 2001. Oil and gas revenues increased by
$2,073,000 primarily due to increases in the price of crude oil and gas. Real
estate revenues increased from $3,225,000 in 2000 to $3,289,000 in 2001. This
increase is due to higher rents.
Total costs and expenses for the quarter ended March 31 increased slightly,
amounting to $3,986,000 in 2001 compared with $3,547,000 in 2000. Oil and gas
production expenses increased $65,000 real estate operating expenses increased
by $276,000, depreciation, depletion and amortization increased by $90,000, and
general and administrative expenses increased by $8,000.
Interest expense increased from $1,024,000 in 2000 to $1,169,000 in 2001.
This increase is primarily attributable to additional real estate financings.
The provision for income taxes includes Federal, state and Canadian taxes.
Differences between the effective tax rate and the statutory income tax rates
are principally due to foreign resource tax credits in Canada and the dividend
exclusion in the United States.
7
Liquidity and Capital Resources
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At March 31, 2001 the Company had approximately $8.4 million in marketable
securities at market value. The current ratio at March 31, 2001 was .87 to 1,
which management considers adequate at this time.
During the first quarter of 2001, the Company chose to postpone the
refinancing of its short-term debt into long-term mortgages to take advantage of
anticipated interest rate reductions by the Federal Reserve.
While the Company's working capital was ($2,388,000) at March 31, 2001, the
Company intends to refinance $5.7 million of its current portion of long-term
debt into long-term mortgages at lower, more favorable interest rates during the
second and third quarters of 2001.
The Company anticipates that cash provided by operating activities and
investing activities will be sufficient to meet its capital requirements to
acquire oil and gas properties and to drill and evaluate these and other oil and
gas properties presently held by the Company. The level of oil and gas capital
expenditures will vary in future periods depending on market conditions,
including the price of oil and the demand for natural gas, and other related
factors. As the Company has no material long-term commitments with respect to
its oil and gas capital expenditure plans, the Company has a significant degree
of flexibility to adjust the level of its expenditures as circumstances warrant.
The Company plans to actively continue its exploration and production
activities as well as search for the acquisition of oil and gas producing
properties and of companies with desirable oil and gas producing properties.
There can be no assurance that the Company will in fact locate any such
acquisitions.
The Company also will explore real estate acquisitions as they arise. The
timing of any such acquisition will depend on, among other things, economic
conditions and the favorable evaluation of specific opportunities presented to
the Company. The Company is planning further acquisitions of investment
properties during the year. Accordingly, while the Company anticipates that it
will actively explore these and other real estate acquisition opportunities, no
assurance can be given that any such acquisition will occur.
Net cash provided by operating activities was $3,104,000 in 2001 and
$627,000 in 2000. The increase in 2001 was primarily due to changes in operating
assets and liabilities and higher income.
Net cash used in investing activities was $(4,961,000) in 2001 and
$(640,000) in 2000. The variations principally relate to property, equipment
additions and the purchase of an apartment complex in San Antonio, Texas for
$5,250,000 offset by decreases in oil and gas properties held in Canada due to
exchange rate fluctuations.
Net cash provided by (used in) financing activities was $1,877,000 in 2001
and $(247,000) in 2000. The variation principally relates to the issuance of
long-term debt in connection with real estate properties during the respective
quarters as well as principal payments of long-term debt. In addition, the
Company acquired approximately $198,000 of treasury stock in 2001.
The Company believes it has adequate capital resources to fund operations
for the foreseeable future.
8
Foward-Looking Statements
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This Report on Form 10-Q for the quarter ended March 31, 2001 contains
forward-looking statements within the meaning of the Private Securities
Litigation Reform Act of 1995. All statements included herein other than
statements of historical fact are forward-looking statements. Although the
Company believes that the underlying assumptions and expectations reflected in
such forward-looking statements are reasonable, it can give no assurance that
such expectations will prove to be correct. The Company's business and prospects
are subject to a number of risks which could cause actual results to differ
materially from those reflected in such forward-looking statements, including
volatility of oil & gas prices, the need to develop and replace reserves, risks
involved in exploration and drilling, uncertainties about estimates of reserves,
environmental risks relating to the Company's oil & gas and real estate
properties, competition, the substantial capital expenditures required to fund
the Company's oil & gas and real estate operations, market and economic changes
in areas where the Company holds real estate properties, interest rate
fluctuations, government regulation, and the ability of the Company to implement
its business strategy.
9
PART II -- OTHER INFORMATION
Item 1, 2, 3, 4, 5 -- Not applicable
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Item 6 -- Exhibits and Reports on Form 8-K
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No Form 8-K was filed during the quarter ended March 31, 2001.
10
S I G N A T U R E S
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.
WILSHIRE OIL COMPANY OF TEXAS
(Registrant)
Date: May 12, 2001 By: /s/ S. WILZIG IZAK
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S. Wilzig Izak
Chairman of the Board and Chief
Executive Officer
(Duly Authorized Officer and Chief
Financial Officer)