-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, JZx1mHidBfDKfQDSZ6JYCV9r3JTix+0AF45hwIwU8QGdz7oCYHJYoXv0i9QPjdAM 14Y1huOGHNxC9ocUpSSznQ== 0000950110-99-001541.txt : 19991125 0000950110-99-001541.hdr.sgml : 19991125 ACCESSION NUMBER: 0000950110-99-001541 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19990930 FILED AS OF DATE: 19991124 FILER: COMPANY DATA: COMPANY CONFORMED NAME: WILSHIRE OIL CO OF TEXAS CENTRAL INDEX KEY: 0000107454 STANDARD INDUSTRIAL CLASSIFICATION: CRUDE PETROLEUM & NATURAL GAS [1311] IRS NUMBER: 840513668 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 001-04673 FILM NUMBER: 99764001 BUSINESS ADDRESS: STREET 1: 921 BERGEN AVE CITY: JERSEY CITY STATE: NJ ZIP: 07306-4204 BUSINESS PHONE: 2014202796 MAIL ADDRESS: STREET 1: 921 BERGEN AVENUE STREET 2: 921 BERGEN AVENUE CITY: JERSEY CITY STATE: NJ ZIP: 07306 10-Q 1 FORM 10-Q ================================================================================ SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 --------- FORM 10-Q QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For quarter ended September 30, 1999 Commission file number 1-467 ---------- WILSHIRE OIL COMPANY OF TEXAS ------------------------------------------------------- (Exact name of registrants as specified in its charter) DELAWARE 84-0513668 - ------------------------------- ------------------- (State or other jurisdiction of (IRS Employer incorporation or organization) Identification No.) 921 BERGEN AVENUE - JERSEY CITY, NEW JERSEY 07306-4204 - ------------------------------------------- ---------- (Address of principal executive offices) (Zip Code) Registrant's telephone number - including area code (201) 420-2796 NO CHANGE --------------------------------------------------- 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 [_] 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 -- 8,796,827 ================================================================================ WILSHIRE OIL COMPANY OF TEXAS INDEX Page No. -------- Part I Financial Information Financial Information: Condensed Consolidated Balance Sheets - 1 September 30, 1999 (Unaudited) and December 31, 1998 Consolidated Statements of Income - 2 (Unaudited) Nine months ended September 30, 1999 and 1998 Consolidated Statements of Income - 3 (Unaudited) Three months ended September 30, 1999 and 1998 Consolidated Statements of Cash Flows - 4 (Unaudited) Nine months ended September 30, 1999 and 1998 Notes to (Unaudited) Consolidated Financial Statements 5 & 6 Management's Discussion and Analysis 7, 8, 9 & 10 of Financial Condition and Results of Operations Part II Other Information 11 WILSHIRE OIL COMPANY OF TEXAS AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS (000's Omitted, Except Share Data)
September 30, December 31, 1999 1998 --------- --------- (Unaudited) ASSETS ------ CURRENT ASSETS Cash and cash equivalents $ 2,508 $ 4,444 Accounts receivable 1,127 3,261 Marketable securities, stated at market value 5,711 5,162 Prepaid expenses and other current assets 1,987 1,359 --------- --------- Total current assets 11,333 14,226 --------- --------- PROPERTY AND EQUIPMENT Oil and gas properties, using the full cost method of accounting 135,053 133,804 Real estate properties 59,816 58,773 Other property and equipment 404 446 --------- --------- 195,273 193,023 Less - Accumulated depreciation, depletion and amortization 115,095 112,648 --------- --------- 80,178 80,375 --------- --------- $ 91,511 $ 94,601 ========= ========= LIABILITIES AND SHAREHOLDERS' EQUITY - ------------------------------------ CURRENT LIABILITIES Current portion of long-term debt $ 4,538 $ 6,502 Accounts payable 2,034 1,782 Accrued and other liabilities 305 928 --------- --------- Total current liabilities 6,877 9,212 --------- --------- LONG - TERM DEBT, less current portion 47,846 47,764 --------- --------- DEFERRED INCOME TAXES AND OTHER NONCURRENT LIABILITIES 11,992 11,891 --------- --------- SHAREHOLDERS' EQUITY Common stock, $1 par value, 15,000,000 shares authorized; 10,013,544 shares issued 10,014 10,014 Capital in excess of par value 9,155 9,146 Retained earnings 15,384 15,274 --------- --------- 34,553 34,434 Less - Treasury stock, 1,216,717 and 782,038 shares in 1999 and 1998, at cost (6,474) (5,303) Accumulated other comprehensive loss (3,283) (3,397) --------- --------- 24,796 25,734 --------- --------- $ 91,511 $ 94,601 ========= =========
1 WILSHIRE OIL COMPANY OF TEXAS AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF INCOME (000's Omitted, Except Share Data) (Unaudited)
FOR THE NINE MONTHS ENDED ---------------------------- September 30, September 30, 1999 1998 -------- -------- REVENUES Oil & Gas $ 3,818 $ 3,808 Real Estate 9,285 8,625 -------- -------- Total Revenues 13,103 12,433 COSTS AND EXPENSES Oil and Gas Production Expenses 1,438 1,751 Real Estate Operating Expenses 5,199 5,077 Depreciation, depletion and amortization 2,330 3,203 General and Administrative 1,190 1,258 -------- -------- Total Costs and Expenses 10,157 11,289 -------- -------- Income from Operations 2,946 1,144 OTHER INCOME 460 638 GAIN ON SALES OF MARKETABLE SECURITIES (Note 3) 34 4.219 INTEREST EXPENSE (2,862) (2,974) -------- -------- Income before provision for income taxes 578 3,027 PROVISION FOR INCOME TAXES 138 1,020 -------- -------- Net income $ 440 $ 2,007 ======== ======== BASIC EARNINGS PER SHARE $ .05 $ .21 ======== ======== DILUTED EARNINGS PER SHARE $ .05 $ .21 ======== ========
2 WILSHIRE OIL COMPANY OF TEXAS AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF INCOME (000's Omitted, Except Share Data) (Unaudited)
FOR THE THREE MONTHS ENDED ---------------------------- September 30, September 30, 1999 1998 -------- -------- REVENUES Oil & Gas $ 1,415 $ 1,275 Real Estate 3,056 3,003 ------- ------- Total Revenues 4,471 4,278 COSTS AND EXPENSES Oil and Gas Production Expenses 316 541 Real Estate Operating Expenses 1,720 1,715 Depreciation, depletion and amortization 699 1,217 General and Administrative 483 504 ------- ------- Total Costs and Expenses 3,218 3,977 ------- ------- Income from Operations 1,253 301 OTHER INCOME 53 259 GAIN ON SALES OF MARKETABLE SECURITIES (Note 3) -- 676 INTEREST EXPENSE (944) (985) ------- ------- Income before provision for income taxes 362 251 PROVISION FOR INCOME TAXES 62 88 ------- ------- Net income $ 300 $ 163 ======= ======= BASIC EARNINGS PER SHARE $ .03 $ .02 ======= ======= DILUTED EARNINGS PER SHARE $ .03 $ .02 ======= =======
3 WILSHIRE OIL COMPANY OF TEXAS AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (000's Omitted) (Unaudited)
FOR THE NINE MONTHS ENDED -------------------------------- September 30, September 30, 1999 1998 -------- -------- CASH FLOWS FROM OPERATING ACTIVITIES Net Income $ 440 $ 2,007 Adjustments to reconcile net income to net cash used in operating activities - Depreciation, depletion and amortization 2,447 3,203 Deferred income tax provision (benefit) 101 (93) Amortization (adjustment) of deferred and unearned compensation in connection with non-qualified stock option plan, net 9 (112) Gain on sales of marketable securities (34) (4,219) Foreign currency transactions -- -- Changes in operating assets and liabilities - (Increase) decrease in receivables 2,134 274 (Increase) in prepaid expenses and other current assets (628) (581) Increase (decrease) in accounts payable, accrued and other liabilities (437) (1,706) -------- -------- Net cash provided by (used in) operating activities $ 4,032 $ (1,227) -------- -------- CASH FLOWS FROM INVESTING ACTIVITIES Capital expenditures, net (2,502) (8,024) Purchases of marketable securities (638) (2,907) Proceeds from sales and redemptions of securities 375 13,642 -------- -------- Net cash provided by (used in) investing activities $ (2,765) $ 2,711 -------- -------- CASH FLOWS FROM FINANCING ACTIVITIES Proceeds from issuance of long term debt 1,000 9,151 Principal payment of long term debt (3,146) (11,800) Purchase of treasury stock (1,171) (974) Exercise of stock options -- -- Other -- (566) -------- -------- Net cash provided by (used in) financing activities $ (3,317) ($ 4,189) -------- -------- EFFECT OF EXCHANGE RATE CHANGES ON CASH 114 (131) -------- -------- Net increase (decrease) in cash and cash equivalents (1,936) (2,836) CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 4,444 5,534 -------- -------- CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 2,508 $ 2,698 ======== ======== SUPPLEMENTAL DISCLOSURES TO THE STATEMENTS OF CASH FLOWS: Cash paid during the period for - Interest $ 2,975 $ 2,951 Income taxes $ 106 $ 1,906
4 WILSHIRE OIL COMPANY OF TEXAS NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS September 30, 1999 (Unaudited) 1. FINANCIAL STATEMENTS The 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 generally accepted accounting principles 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 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. All such adjustments are of a normal recurring nature. 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 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. GAIN ON SALES OF MARKETABLE SECURITIES The Company realized gains from the sales of marketable securities of $34,000 and $4,219,000 for the nine months ended September 30, 1999 and 1998, respectively, and $676,000 for the three months ended September 30, 1998. There were no such gains during the quarter ended September 30, 1999 4. COMPREHENSIVE INCOME Effective January 1, 1998, the Company adopted the provisions of Statement of Financial Accounting Standards No. 130, "Reporting Comprehensive Income," which modifies the financial statement presentation of comprehensive income and its components. Reclassification of financial statements for earlier periods is required. 5 Comprehensive income, representing all changes in shareholders' equity during the period, other than changes resulting from the Company's common stock, for the nine months ended September 30, 1999 and 1998 is as follows:
Nine Months Ended September 30, ------------------------------- 1999 1998 ----------- ----------- Net income $ 440,000 $ 2,007,000 Other comprehensive income (loss), net of taxes Foreign currency translation adjustments 114,000 (697,000) Unrealized gain on available-for-sale securities -- 1,250,000 Less: Reclassification adjustment for gains included in net income, net of income tax effect of - and $1,434,000 in 1999 and 1998, respectively -- (2,785,000) ----------- ----------- Other comprehensive income (loss) 114,000 (2,232,000) ----------- ----------- Comprehensive income (loss) $ 554,000 $ (225,000) ----------- -----------
5. EARNINGS PER SHARE In 1997, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards No. 128, "Earnings per Share" (SFAS No. 128), which requires presentation in the Consolidated Statement of Income of both basic and diluted earnings per share. Earnings per share amounts have been presented, and where appropriate, restated to conform to the SFAS No. 128 requirements. The following table sets forth the computation of basic and diluted earnings per share-
Nine Months Ended Sept. 30, Three Months Ended Sept. 30, --------------------------- ----------------------------- 1999 1998 1999 1998 ---------- ---------- ---------- ---------- Numerator- Net income $ 440,000 $2,007,000 $ 300,000 $ 163,000 ========== ========== ========== ========== Denominator- Weighted average common shares outstanding - Basic 8,903,464 9,331,850 8,848,076 9,264,493 Incremental shares from assumed conversions of stock options -- 82,283 -- 83,427 ---------- ---------- ---------- ---------- Weighted average common shares outstanding - Diluted 8,903,464 9,714,133 8,848,076 9,347,920 ========== ========== ========== ========== Basic earnings per share $ 0.05 $ 0.21 $ 0.03 $ 0.02 Diluted earnings per share $ 0.05 $ 0.21 $ 0.03 $ 0.02
6 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Results of Operations Net income for the nine months ended September 30 was $440,000 in 1999 as compared to $2,007,000 in 1998. The 1998 net income included $4,219,000 gain on the sale of marketable securities. Without the $4,219,000 gains on the sale of marketable securities, the net income would have been a loss of over $2,000,000 in 1998, compared to a gain of $440,000 in 1999. Consolidated revenues for the nine months ended September 30 increased from $12,433,000 in 1998 to $13,103,000 in 1999. Oil and gas revenues in 1999 and 1998 were substantially the same but oil and gas revenues in the third quarter of 1999 increased by 11%. Real estate revenues increased from $8,625,000 in 1998 to $9,285,000 in 1999. This increase is due to higher rents and the operations of the properties acquired in 1998. Net cash flow generated from real estate operations went from $1,095,000 in 1998 to $1,640,000 in 1999, an increase of 50%. Total costs and expenses for the nine months ended September 30 were reduced from $11,289,000 in 1998 to $10,157,000 in 1999. Oil and gas production expense decreased by $313,000, real estate operating expenses increased by $122,000 due to the addition of more properties, depreciation, depletion and amortization decreased by $873,000, and general and administrative expenses decreased by $68,000. Gain on sales of marketable securities was $43,000 in 1999 as compared with $4,219,000 in 1998. The Company realized $4 million less in gains in 1999 than in 1998. Interest expense was $2,862,000 in the first nine months of 1999 as compared with $2,974,000 in 1998. This decrease in interest expense is attributable to refinancing first-mortgage indebtness at lower interest rates. 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. Liquidity and Capital Resources At September 30, 1999 the Company had approximately $5.4 million in marketable securities at cost, with a market value of approximately $4.5 million. The current ratio at September 30, 1999 was 1.6 to 1, which management considers adequate for the Company's current business. The Company's working capital was approximately $4.5 million at September 30, 1999. 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 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. 7 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. During the nine months ended September 30, 1998, the Company acquired two real estate properties from The Trust Company of New Jersey ("TCNJ") at an aggregate purchase price of approximately $4.4 million. These transactions were financed by first-mortgage loans from TCNJ. The Company did not acquire any new real estate properties in 1999. The Company will explore other 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 currently planning further acquisitions of investment properties during the next 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 (used in) operating activities was $4,032,000 in 1999 and $(1,227,000) in 1998. The increase in 1999 was primarily due to less gain on sale of marketable securities. Net cash provided by (used in) investing activities was $(2,765,000) in 1999 and $2,711,000 in 1998. The variations principally relate to purchases of real estate properties and transactions in securities. Purchases of real estate properties amounted to $-0- in 1999 and $4,400,000 in 1998. Proceeds from sales and redemptions of securities and other assets amounted to $375,000 in 1999 and $13,642,000 in 1998. Included in these amounts are redemptions, at par, of preferred stock of TCNJ, aggregating $2,250,000 in 1998. Net cash provided by (used in) financing activities was ($3,317,000) in 1999 and ($4,189,000) in 1998. The variation principally relates to refinancings of first-mortgages, the issuance of long-term debt in connection with the purchases of real estate properties during the respective quarters, and principal payments of long-term debt. The Company believes it has adequate capital resources to fund operations for the foreseeable future. 8 Year 2000 Compliance Many businesses and government organizations use computers and other electronic equipment that read and process dates. This equipment falls into two categories-information technology ("IT"), such as ordinary computers and "non-IT" equipment, such as process controllers and devices with embedded microprocessors. Some IT and non-IT equipment currently in use cannot accurately read and process certain dates, including several dates in the year 1999 and/or all dates in the Year 2000 and afterwards (collectively, "Year 2000 Problem"). The Company has implemented a formal Year 2000 program (the "Year 2000 Program") to address its Year 2000 Problem and to investigate the Year 2000 Problem of third parties significant to the Company's business. The Company's Year 2000 Program has three general components: (i) addressing Year 2000 Problems in the Company's IT and non-IT equipment; (ii) investigating the Year 2000 Problems of such significant third parties; and (iii) contingency planning. The Company has evaluated its current systems with respect to oil and gas operations and management feels that it is Year 2000 compliant. With respect to real estate, management is in the process of evaluating its systems and also believes the current systems are Year 2000 compliant. With respect to its non-IT equipment, the Company and its consultants are presently inventorying, evaluating, remediating and testing this equipment. The Company expects to complete its Year 2000 Program for IT and non-IT equipment by the 3rd quarter of 1999. The Company is also requesting information on the Year 2000 Problems of third parties significant to the Company's business, including banks, major suppliers and customers. The Company has received and is evaluating the responses from many of these entities and is in the process of requesting more information as appropriate. Based on these responses, the Company's obligations to its customers, and the information gathered from its Year 2000 Program, the Company is developing contingency plans to minimize the impact of Year 2000 Problems on its business should any such problems occur. The Company expects to substantially complete its investigation of the Year 2000 Problems of its major suppliers, third party service providers and customers and form contingency plans by the 3rd quarter of 1999, but also expects that these activities will continue through 1999 as more information becomes available to the Company. The Company has incurred costs of approximately $30,000 in connection with evaluating Year 2000 compliance of its IT Systems. The Company does not believe that the costs of its Year 2000 Program will be material to its financial condition or results of operations. Costs incurred in connection with evaluating Year 2000 compliance of its non-IT systems have not been material to date. The Company does not believe that future costs, if any, of addressing the Year 2000 Problems of its non-IT systems will have a material effect on its financial condition or results of operations. The Company also intends to continue to use its personnel in evaluating the Year 2000 Problems of those third parties who the Company believes are significant to the Company's business, including its suppliers, third party service providers and customers, and to formulate contingency plans. The Company expects that the source of any funds that may be necessary to pay the costs of addressing its Year 2000 Problems will be provided from cash balances or cash generated from operations. The Company intends to charge such costs against earnings as the costs are incurred. 9 Management believes that it has taken reasonable steps to address its Year 2000 Problems and to evaluate the Year 2000 compliance status of key third parties with whom the Company does business. Notwithstanding these actions, however, the Company cannot ensure that all of its Year 2000 Problems or those of its key suppliers, service providers or customers will be resolved or addressed satisfactorily before the Year 2000 commences. Management believes that the "most reasonably likely worst case scenario" could involve the failure of such third parties to address their Year 2000 Problems. If the Company's key suppliers, service providers, customers and other third parties fail to address their Year 2000 Problems, and there are no alternates available to the Company, then the Company's usual channels of supply and distribution would be disrupted, in which event the Company could experience a material adverse impact on its business, results of operations or financial condition. Forward-Looking Statements This Report on Form 10-Q for the nine months and quarter ended September 30, 1999 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. 10 PART II - OTHER INFORMATION Item 6 - Exhibits and Reports on Form 8-K - -------- -------------------------------- No Form 8-K was filed during the quarter ended September 30, 1999. 11 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: November 13, 1999 /s/ S. Wilzig Izak ------------------ ------------------------------ By: S. Wilzig Izak Chairman of the Board and Chief Executive Officer (Duly Authorized Officer and Chief Financial Officer) EX-27 2 FDS
5 1,000 9-MOS DEC-31-1999 SEP-30-1999 2,508,000 5,711,000 1,127,000 0 0 11,333,000 195,273,000 115,095,000 91,511,000 6,877,000 0 10,014,000 0 0 14,782,000 91,511,000 3,818,000 13,103,000 1,438,000 10,157,000 0 0 2,862,000 578,000 138,000 440,000 0 0 0 440,000 .05 .05
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