FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
(X) QUARTERLY REPORT UNDER SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1995
OR
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
for the transition period from to
For Quarter Ended Commission File Number
March 31, 1995 1-7183
TEJON RANCH CO.
(Exact name of Registrant as specified in its charter)
Delaware 77-0196136
(State or other jurisdiction of (IRS Employer Identification No.)
incorporation or organization)
P.O. Box 1000, Lebec, California 93243
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code...(805) 248-6774
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
Total Shares of Common Stock issued and outstanding on March 31, 1995,
were 12,682,244.
1
PART I FINANCIAL INFORMATION
TEJON RANCH CO. AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
(In thousands, except per share amounts)
(Unaudited)
THREE MONTHS ENDED
March 31
1995 1994
Revenues:
Livestock $ 328 $ 260
Farming 122 84
Oil and Minerals 263 294
Commercial and Land Use 326 349
Interest Income 370 396
1,409 1,383
Costs and expenses:
Livestock 598 451
Farming 802 355
Oil and Minerals 11 36
Commercial and Land Use 446 391
Corporate Expenses 575 500
Interest Expense 79 95
2,511 1,828
Operating Loss (1,102) (445)
Income Tax Benefit (441) (178)
Net Income (Loss) $ (661) $ (267)
Net Income (Loss) Per Share $ (.05) $ (.02)
See Notes to Consolidated Condensed Financial Statements.
2
TEJON RANCH CO. AND SUBSIDIARIES
CONSOLIDATED CONDENSED BALANCE SHEETS
(In thousands)
MARCH 31, 1995 DECEMBER 31, 1994*
(Unaudited)
ASSETS
CURRENT ASSETS
Cash and Cash Equivalents $ 479 $ 68
Marketable Securities 21,362 23,718
Accounts & Notes Receivable 953 2,125
Inventories:
Cattle 3,513 3,020
Farming 1,055 39
Other 84 69
Prepaid Expenses and Other 1,082 1,223
Total Current Assets 28,528 30,262
PROPERTY AND EQUIPMENT-NET 14,478 13,284
OTHER ASSETS 1,300 1,374
TOTAL ASSETS $ 44,306 $ 44,920
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Trade Accounts Payable $ 1,362 $ 1,061
Other Accrued Liabilities 93 465
Other Current Liabilities 1,884 1,950
Total Current Liabilities 3,339 3,476
LONG-TERM DEBT 1,950 1,950
DEFERRED CREDITS 2,736 2,736
Total Liabilities 8,025 8,162
STOCKHOLDERS' EQUITY
Common Stock 6,341 6,341
Additional Paid-In Capital 387 387
Retained Earnings 29,741 30,402
Marketable Securities -
Unrealized Gains (Losses), Net (188) (372)
Total Stockholders' Equity 36,281 36,758
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $ 44,306 $ 44,920
See Notes to Consolidated Condensed Financial Statements.
* The Balance Sheet at December 31, 1994 has been derived from the
audited financial statements at that date.
3
TEJON RANCH CO. AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOW
(In thousands)
(Unaudited)
THREE MONTHS ENDED
March 31
1995 1994
OPERATING ACTIVITIES
Net Income (Loss) $ (661) $ (267)
Items Not Effecting Cash:
Depreciation and Amortization 238 222
Decrease in Deferred Items -0- (29)
Gain on Sale of Investments 2 (41)
Changes in Operating Assets and
Liabilities:
Receivables, Inventories and
Other Assets, Net (279) 694
Current Liabilities, Net (137) (2,376)
NET CASH USED IN
OPERATING ACTIVITIES (837) (1,797)
INVESTING ACTIVITIES
Maturities and Sales of Marketable
Securities 3,124 7,534
Funds Invested in Marketable
Securities (518) (5,373)
Property and Equipment
Expenditures (1,414) (561)
Net Change in Breeding Herds 49 (1)
Other 7 (29)
NET CASH PROVIDED BY
INVESTING ACTIVITIES 1,248 1,570
INCREASE (DECREASE) IN CASH AND CASH
EQUIVALENTS 411 (227)
Cash and Cash Equivalents at
Beginning of Year 68 247
CASH AND CASH EQUIVALENTS AT
END OF PERIOD $ 479 $ 20
See Notes to Consolidated Condensed Financial Statements.
4
TEJON RANCH CO. AND SUBSIDIARIES
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(Unaudited)
March 31, 1995
NOTE A - BASIS OF PRESENTATION
The summarized information furnished by Registrant pursuant to the
instructions to Part I of Form 10-Q is unaudited and reflects all
adjustments which are, in the opinion of Registrant's Management,
necessary for a fair statement of the results for the interim period.
All such adjustments are of a normal recurring nature.
The results of the period reported herein are not indicative of the
results to be expected for the full year due to the seasonal nature of
Registrant's agricultural activities. Historically, the largest
percentage of revenues are recognized during the fourth quarter.
F o r further information, refer to the Consolidated Financial
Statements and footnotes thereto included in Registrant's Annual
Report on Form 10-K for the year ended December 31, 1994.
NOTE B - CALCULATIONS OF EARNINGS PER SHARE
Earnings per share are calculated using the weighted average number of
c o m mon shares outstanding during the period. Common shares
outstanding for the three month period ended March 31, 1995 and 1994
were 12,682,244. Registrant has a Stock Option Plan providing for the
granting of options to purchase a maximum of 230,000 shares of
Registrant's Common Stock to employees, advisors and consultants of
Registrant. Currently, options to purchase 130,000 shares are
outstanding at prices equal to the fair market value at date of grant
(96,000 shares at $20.00, 20,000 shares at $15.00, and 14,000 shares
at $11.88). Stock options granted will be treated as common stock
equivalents in accordance with the treasury method when such amounts
would be dilutive. At March 31, 1995, fully diluted common shares
outstanding are 12,682,763. At March 31, 1994, common stock
equivalents were antidilutive.
NOTE C - MARKETABLE SECURITIES
Registrant has elected to classify its securities as available-for-
s a le per Statement of Financial Accounting Standard No. 115,
Accounting for Certain Investments in Debt and Equity Securities, and
therefore is required to adjust securities to fair value at each
reporting date.
5
Marketable securities consist of the following at:
March 31 December 31
1995 1994
--------------------------------------------
Estimated Fair Estimated Fair
Cost Value Cost Value
--------------------------------------------
Marketable securities:
U.S. Treasury and
agency notes $16,221 $15,964 $18,837 $18,409
Corporate notes 5,453 5,398 5,445 5,309
--------------------------------------------
$21,674 $21,362 $24,282 $23,718
============================================
As of March 31, 1995, the cumulative fair value adjustment is a
$312,000 unrealized loss. The cumulative fair value adjustment to
stockholders' equity, net of tax benefit of $124,000, is an
unrealized loss of $188,000. Registrant's gross unrealized holding
gains equals $84,000, while gross unrealized holding losses equals
$396,000. On March 31, 1995, the average maturity of U.S. Treasury
and agency securities was 2.3 years and corporate notes was 1.5
years. Currently, Registrant has no securities with a weighted
average life of greater than five years. During 1995, Registrant has
recognized losses of $2,000 on the sale of $2.4 million of
securities, carried at historical cost adjusted for amortization and
accretion.
Market value equals quoted market price, if available. If a quoted
market price is not available, market value is estimated using quoted
market prices for similar securities. Registrant's investments in
Corporate notes are with companies with a credit rating of A or
better.
NOTE D - CONTINGENCIES
Registrant leases land to National Cement Company of California, Inc.
("National") for the purpose of manufacturing portland cement from
limestone deposits found on the leased acreage. National, LaFarge
Corporation (the parent company of the previous operator) and
Registrant have been ordered to cleanup and abate an old industrial
waste landfill site on the leased premises. Under the lease
agreements with National and LaFarge, both companies are required to
indemnify Registrant for any costs and liabilities incurred in
connection with the cleanup order.
Due to the financial strength of National and LaFarge, Registrant
believes that a material effect on its financial condition is remote
at this time.
NOTE E - PAYMENT OF DIVIDEND
On March 3, 1995, the Board of Directors voted to declare a cash
dividend of two and one-half cents ($0.025) per share. The dividend
will apply to stockholders of record as of the close of business on
May 17, 1995 with payment to be made on June 19, 1995.
6
MANAGEMENT'S ANALYSIS OF QUARTERLY INCOME STATEMENTS
Results of Operations
Total revenues, including interest income, for the first quarter of
1995 were $1,409,000 compared to $1,383,000 for the first quarter of
1994. The increase in revenues during 1995 is attributable to
increased cattle sales, quarter horse sales, and higher farm
management fees. These increases were partially offset by reduced
oil and mineral revenues and the absence of any firewood sales
revenues during 1995 due to the elimination of the firewood program
in 1993 and 1994. Cattle and quarter horse sales revenues are higher
due to the volume of cattle and horses sold. Oil and mineral
revenues are down due to reductions in oil production and sand and
rock production.
Operating activities during the first quarter of 1995 resulted in a
net loss of $661,000, or $.05 per share, compared to a net loss of
$267,000, or $.02 per share, for the same period in 1994. The
decrease in net income compared to 1994 is primarily due to the
$400,000 pre tax charge-off ($240,000, or $.02, after tax) of almond
trees destroyed by wind during a winter storm in January 1995. In
addition to the charge-off of trees, cost of sales on cattle
increased due to a higher number of cattle being sold and to the
higher cost of the purchased cattle being sold. Partially offsetting
these unfavorable variances was the increase in revenues as described
above and reductions in firewood expenses due to the elimination of
the firewood program.
As explained in Management's Discussion and Analysis of Financial
Condition and Results of Operations of Registrant's 1994 Form 10-K,
Registrant's farming operations suffered damages as a result of high
winds that were associated with a series of winter storms. Nearly
all of the loss occurred in Registrant's producing almond orchards.
Approximately 200 acres of trees were uprooted by a combination of
high winds and saturated soil conditions due to heavy rainfall. The
loss of these trees resulted in the charge-off described above.
Registrant is currently replanting the damaged acreage with new
almond trees. The loss of mature trees will affect future revenues
until the replanted crops begin full production which could take
three to five years.
Registrant's farming revenues are likely to be significantly lower
than in 1994 due to the loss of trees as described above and
expectations of a smaller nut crop. Partially offsetting the
reduction in production is the expectation of higher almond prices
due to the estimated small nut crop statewide.
As described in Part I, Item 1 - "Business - Farming Operations" of
Registrant's 1994 Form 10-K Laval Farms Limited Partnership (Laval),
formerly named Tejon Agricultural Partners, entered into an agreement
for the sale of its farmland and eventual dissolution of the
partnership. As of April 20, 1995 all of the 13,000 acres that
existed at the start of the sale program have been sold. Laval is
continuing to utilize Registrant's management services until the
partnership is dissolved. Registrant is currently receiving $10,000
per month for management services and is expected to receive this fee
for the remainder of 1995.
7
Registrant is involved in various environmental proceedings related
to leased acreage. For a further discussion refer to Registrant's
1994 Form 10-K, Part I, Item 3, - "Legal Proceedings". There have
been no changes since the filing of the 1994 Form 10-K.
Prices received by Registrant for many of its products are dependent
upon prevailing market conditions and commodity prices. Therefore,
Registrant is unable to accurately predict revenue, just as it cannot
pass on any cost increases caused by general inflation, except to the
extent reflected in market conditions and commodity prices. The
operations of the Registrant are seasonal and results of operations
cannot be predicted based on quarterly results.
Liquidity and Capital Resources
Cash and short-term investments on March 31, 1995 were $21.8 million
compared to $23.8 million on December 31, 1994. Working capital on
March 31, 1995 was $25.2 million compared to $26.8 million on
December 31, 1994. The decrease in working capital at March 31, 1995
as compared to December 31, 1994 is primarily due to the purchase of
property and capital improvement expenditures.
Cash provided from operations and cash and short-term investments on
hand are expected to be sufficient to satisfy all anticipated working
capital and capital expenditure needs in the near term.
Impact of Accounting Change
None
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
Not Applicable
Item 2. Changes in Securities
Not Applicable
Item 3. Defaults upon Senior Securities
Not Applicable
Item 4. Submission of Matters to a Vote of Security Holders
Not Applicable
Item 5. Other Information
None
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits - None
(b) Reports - None
8
SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of
1934, Registrant has duly caused this report to be signed on its
behalf by the undersigned thereunto duly authorized.
TEJON RANCH CO.
(Registrant)
BY
Date Allen E. Lyda
Vice President, Finance
& Treasurer
9
5
1,000
3-MOS
DEC-31-1995
MAR-31-1995
479
21,632
953
0
4,652
28,528
27,433
(12,955)
44,306
3,339
0
6,341
0
0
29,940
44,306
1,409
1,409
1,857
1,857
575
0
79
(1,102)
(441)
(661)
0
0
0
(661)
(.05)
(.05)
