Dailystocks.com - Ticker-based level links to all the information for the Stocks you own. Portal for Daytrading and Finance and Investing Web Sites
DailyStocks.com
What's New
Site Map
Help
FAQ
Log In
Home Quotes/Data/Chart Warren Buffett Fund Letters Ticker-based Links Education/Tips Insider Buying Index Quotes Forums Finance Site Directory
OTCBB Investors Daily Glossary News/Edtrl Company Overviews PowerRatings China Stocks Buy/Sell Indicators Company Profiles About Us
Nanotech List Videos Magic Formula Value Investing Daytrading/TA Analysis Activist Stocks Wi-fi List FOREX Quote ETF Quotes Commodities
Make DailyStocks Your Home Page AAII Ranked this System #1 Since 1998 Bookmark and Share


Welcome!
Welcome to the investing community at DailyStocks where we believe we have some of the most intelligent investors around. While we have had an online presence since 1997 as a portal, we are just beginning the forums section now. Our moderators are serious investors with MBA and CFAs with practical experience wwell-versed in fundamental, value, or technical investing. We look forward to your contribution to this community.

Recent Topics
Article by DailyStocks_admin    (02-25-09 05:38 AM)

Wilshire Enterprises Inc. CEO IZAK S WILZIG bought 278933 shares on 2-17-2009 at $1.1

BUSINESS OVERVIEW

Wilshire Oil Company of Texas (the "Company", "Registrant" or "Wilshire") was incorporated under the laws of the State of Delaware on December 7, 1951. The Company's principal executive offices are located at 921 Bergen Avenue, Jersey City, New Jersey 07306, (201) 420-2796.

The Company is engaged in the exploration and development of oil and gas, both in its own name and through several wholly-owned subsidiaries in the United States and Canada. The Company's real estate division owns investment real estate properties in Arizona, Texas, Florida, Georgia and New Jersey. The Company also holds investments in certain marketable securities.

FINANCIAL INFORMATION RELATING TO INDUSTRY SEGMENTS

For financial segment information please see Note 8, "Segment Information" of the "Notes to Consolidated Financial Statements", presented elsewhere herein. The Company has no export sales or sales to affiliated customers.

DESCRIPTION OF BUSINESS

OIL AND GAS OPERATIONS

For a glossary of oil and gas terms, see "Properties - Oil and Gas Properties - Glossary."

The Company conducts its oil and gas operations on the North American continent. 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.

As of March 15, 1997, 15 people are employed by the Company. Eleven employees are directly engaged in the search for new oil and gas properties. In addition, the Company also has consultants.

Prospects for lease acquisitions are developed by staff geologists or acquired from various co-venturers and/or consultants.

Once a property is acquired, the Company subcontracts for surveying and drilling operations. Many of the Company's present producing oil and gas properties are operated by independent contractors or under operating agreements with other companies pursuant to which the Company pays a proportionate share of operating expenses based upon its interests. The Company also acts as operator of various properties, charging joint venture partners for their proportionate share of expenses.

The Company does not engage in the refining of crude oil or the distribution of petroleum products. Crude oil and natural gas productions are sold to oil refineries and natural gas pipeline companies.

The Company participated in the drilling of 9 wells (.87 net) in 1996 compared to 11 (1.3 net) in 1995. The United States program in 1996 consisted of the drilling of 8 development wells (.86 net). Three (.66 net) of these wells were successfully completed as oil wells and four (.10 net) were successfully completed as gas wells. The three oil wells were drilled in the state of Texas and four gas wells were drilled in the state of Oklahoma. The Canadian drilling program in 1996 consisted of the drilling of one development well (.01 net). This well was successfully completed as an oil well. Overall, the Company's drilling program had a success ratio of 89%.

The Company's crude oil and condensate production is sold at posted field prices, primarily to major crude oil and condensate purchasers. For average posted field prices, for both oil and gas, see "Properties - Oil and Gas Properties - Production." The Company has one purchaser, Sinclair Oil Corporation that purchased in excess of 10% of its 1996 consolidated oil and gas revenues. Sinclair purchased 11.1%. Sinclair is located in the United States.

The loss of any one customer in the domestic hydrocarbon market is not considered material. The Company is not dependent on any patent, trademark or license.

The Company's oil and gas business is subject to all of the operating risks normally associated with the exploration for and production of oil and gas. In accordance with customary industry practices, the Company maintains insurance coverage limiting financial loss resulting from certain of these operating hazards.

COMPETITION

The oil and gas industry is intensely competitive and competes with other industries in supplying the energy and fuel requirements of industrial, commercial and individual customers.

The principal method of competition in the production of oil and gas is the successful location and acquisition of properties which produce commercially profitable quantities of oil and gas.

The Company competes with many other companies in the search for and acquisition of oil and gas properties and leases for exploration and development. Many of these companies have substantially greater financial, technical and other resources than the Company. Competition among petroleum companies for favorable oil and gas prospects can be expected to continue. The Company is not a significant factor in the oil and gas industry.

The principal raw materials and resources necessary for the exploration for, and the acquisition, development, production and sale of, crude oil and natural gas are leasehold or freehold prospects under which oil and gas reserves may be discovered, drilling rigs and related equipment to explore for and develop such reserves, casing and other capital assets required for the development and production of the reserves and knowledgeable personnel to conduct all phases of oil and gas operations. The Company must compete for such raw materials and resources with both major oil companies and independent operators and also with other industries for certain personnel and materials. Although the Company believes its current inventories of raw materials and resources are adequate to preclude any significant disruption of operations in the immediate future, the continued availability of such materials and resources to the Company cannot be assured.

SEASONALITY

The oil business is generally not seasonal in nature. Gas demand and prices paid for gas have become seasonal, showing a decrease during the summer and fall.

ENVIRONMENTAL MATTERS

The petroleum industry is subject to numerous federal, state and provincial environmental statutes, regulations and other pollution controls in both the United States and Canada. In general, the Company is and will continue to be subject to present and future environmental statutes and regulations.

The Company's expenses relating to preserving the environment during 1996 were not significant in relation to operating costs and the Company expects no material changes in 1997. Environmental regulations have had no materially adverse effect on the Company's petroleum operations to date, but no assurance can be given that environmental regulations will not, in the future, result in a curtailment of production or otherwise have materially adverse effects on the Company's operations or financial condition.

REGULATION - UNITED STATES OPERATIONS

The Company's operations are affected from time to time, in varying degrees, by political developments, laws and regulations. In particular, oil and gas production operations are affected by changes in taxes and other laws relating to the petroleum industry and by constantly changing administrative regulations. The long-term effects of all the federal enactments and programs, whether beneficial or detrimental to the future operations and income of the Company, cannot be predicted at this time.

Rates of production of oil and gas have for many years been subject to conservation laws and regulations. State regulatory agencies set allowable rates of production and limit the number of days a month a well can produce. The petroleum industry has also been subject to tax laws dealing specifically with it, such as the Crude Oil Windfall Profit Tax Act. In addition, oil and gas operations are subject to extensive regulation or termination by government authorities on account of ecological and other considerations. All of the jurisdictions in which the Company operates have statutes and administrative regulations governing the drilling and production of oil and gas.

REGULATION - CANADIAN OPERATIONS

The Company's Canadian subsidiary, Wilshire Oil of Canada, Ltd., operates primarily in the Province of Alberta, with some activity in the Province of British Columbia and Saskatchewan.

The petroleum and natural gas industry operates under federal and provincial legislation and regulations which govern land tenure, royalties, production rates, environmental protection, exports and other matters. Federal legislation monitors the price of oil and gas in export trade and the quantities of such products exportable from Canada. Provincial legislation has been enacted for the purpose of regulating operations in the Provinces.

OIL PRICES

Oil prices actually being paid by purchasers in the United States are publicly announced throughout the country and vary depending on locality and qualitative specifications of the crude oil. All prices are subject to future modification by appropriate agency action.

JACOBS ENGINEERING INVESTMENT

Wilshire made a significant investment in Jacobs Engineering Group, Inc. ("Jacobs") initially during 1986 by purchasing 278,300 shares of common stock at an average price of $7.25 per share. Subsequently, the Company purchased additional shares, the stock split, stock dividends were received and the Company sold certain shares. The Company realized gains on sales of common shares of Jacobs of $8,449,000 in 1996 compared to $9,182,000 in 1995. On December 31, 1996, Wilshire held 679,760 shares at an average cost of $10.83 per share.

Jacobs, headquartered in Pasadena, California, is listed on the New York Stock Exchange. It is a world-wide leader in engineering design, construction management and operation of industrial facilities, plants and governmental projects.

Jacobs reported record results for its fiscal year ended September 30, 1996. From 1995 to 1996, revenues increased from $1.7 billion to $1.8 billion, net income increased from $32 million to $40 million, and net income per share increased from $1.27 to $1.56.

The closing price of Jacobs' common stock on the New York Stock Exchange on December 31, 1996 was 2.2 times more than Wilshire's average cost of the shares it currently holds. Wilshire's cost as of December 31, 1996 was $7,363,000. The aggregate market value of the Jacobs common stock held by Wilshire on December 31, 1996 (based on the closing price on that date) was $16,059,000, or $8,696,000 in excess of Wilshire's cost basis.

The stock of Jacobs held by Wilshire continues to be important to Wilshire as it broadens the Company's base and adds substantially to the value of the Company's assets.

REAL ESTATE OPERATIONS

The Company's real estate operations are conducted in the states of Arizona, Texas, Florida, Georgia and New Jersey. They are not seasonal in nature.

The Company's Arizona properties includes the following:

o 378 unit garden apartment complex
o 340 unit garden apartment complex
o 70 unit midrise apartment building
o 53,000 sq. ft. multi-tenant two story office building
o 65,000 sq. ft. retail/medical use complex

The Texas property is a 228 unit apartment complex.

The Florida property consists of two office buildings having a combined area of 28,000 square feet.

The Georgia property is a 72 unit apartment complex.

The Company's properties in New Jersey include apartment properties having 307 units as well as various commercial/retail properties.

The Company utilizes property management companies to assist in the management of its properties. Expenses incurred in operating the properties include, among other things, administrative costs, utilities, repairs and maintenance and property taxes.

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 several months. 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.

The real estate industry is intensely competitive in nature. The Company competes with many other real estate operators and is not a significant factor in the market it operates in.

The Company's real estate operations are subject to existing federal and state laws regarding environmental quality and pollution control. Environmental regulations had no materially adverse effect on the Company's real estate operations during 1996, but no assurance can be given that environmental regulations will not, in the future, have a materially adverse effect on the Company's operations.

CEO BACKGROUND

Two directors, constituting the Class I Directors, are to be elected at the 2005 Annual Meeting for three-year terms expiring in 2008. There is no cumulative voting. The Board's nominees for Class I Directors are Miles Berger and Eric J. Schmertz, Esq.

YEAR SHARES OF COMMON
BECAME STOCK BENEFICIALLY
DIRECTOR OWNED ON MARCH 20,
PRINCIPAL OCCUPATION OF THE 2005 AND PERCENTAGE
NAME CLASS AND AGE (a) COMPANY OF CLASS (b)
------------------------- --------------------- ----- ------------------------- ------------- -------- -------------------
Miles Berger .................................. I Chairman of Berger Organization, 2002 1,000(c)
Real Estate Management (0.01%)
And Development Company,
Newark, NJ Age 52

Milton Donnenberg (d) ......................... II Formerly President, Milton Donnenberg 1981 18,962(e)
Assoc., Realty Management, (0.24%)
Carlstadt, NJ Age 82

S. Wilzig Izak ................................ II Chairman of the Board since 1987 178,298(f)
September 20, 1990; Chief Executive (2.25%)
Officer since May 1991; Executive Vice
President (1987-1990); prior thereto,
Senior Vice President Age 46

Eric J. Schmertz, Esq. ........................ I Of Counsel to the Dweck law firm; 1983 19,959(e)
Distinguished Professor Emeritus (0.25%)
and formerly Dean, Hofstra University
School of Law, Hempstead, NY Age 79

Ernest Wachtel ................................ lll President, Ellmax Corp., Builders and 1970 98,491(e)
Realty Investors, Elizabeth, NJ Age 80 (1.25%)

W. Martin Willschick .......................... lll Manager, Treasury Services, City of 1997 11,062(g)
Toronto, Canada Age 53 (0.14%)


MANAGEMENT DISCUSSION FROM LATEST 10K

The Company's oil and gas operating performance is influenced by several factors. The most significant are the prices received for the sale of oil and gas and the sales volume. For 1996, the average price of oil that the Company received was $19.47 compared to $15.69 for 1995, a price increase of 24%. Average gas prices received by the Company in 1996 were 30% higher than 1995 average gas prices. The average price of gas for 1996 was $1.60 compared to $1.23 for 1995.

Sales prices received by the Company for oil and gas have fluctuated significantly from period to period. The fluctuations in oil prices during these periods primarily reflected market uncertainty regarding the inability of the Organization of Petroleum Exporting Countries ("OPEC") to control the production of its member countries, as well as concerns related to global supply and demand for crude oil. Gas prices received by the Company fluctuate generally with changes in the spot market price for gas. It is impossible to predict future price movements with certainty.


RESULTS OF OPERATIONS

YEAR ENDED DECEMBER 31, 1996 ("1996") COMPARED WITH YEAR ENDED DECEMBER 31, 1995
("1995")

Net income for the year ended December 31 increased from $4,300,000 in 1995 to $4,709,000 in 1996.

Oil and gas revenues increased from $5,672,000 in 1995 to $5,720,000 in 1996. This increase was attributable to higher oil & gas prices in 1996.

Real estate revenues increased from $8,600,000 in 1995 to $9,296,000 in 1996. This increase was principally due to higher rents and the operations of the five real estate properties acquired during the first quarter of 1996.

Oil and gas production expense decreased in 1996. Oil and gas production expense decreased from $2,524,000 in 1995 to $2,209,000 in 1996. Production expense decreased due to, among other things, less oil and gas activities in 1996.

Depreciation, depletion and amortization of oil and gas assets amounted to $1,936,000 in 1996 compared to $2,401,000 in 1995. This decrease is principally attributable to an increase in the estimated value of the Company's oil & gas reserves. Real estate depreciation was $1,157,000 in 1996 compared to $1,037,000 in 1995.

General and administrative expense was relatively stable, amounting to $1,447,000 in 1996 compared to $1,415,000 in 1995.

The Company realized gains on sales of common shares of Jacobs Engineering Group, Inc.("Jacobs") of $8,449,000 in 1996 compared to $9,182,000 in 1995. As of December 31, 1996, the Company held 679,760 shares of Jacobs.

Interest expense decreased from $4,144,000 in 1995 to $3,939,000 in 1996. This decrease is attributable to a reduction in long-term debt and lower interest rates during 1996.

The provision for income taxes includes Federal, state and Canadian taxes. Differences between the effective tax rate and the statutory income tax rates are due to foreign resource tax credits in Canada, additional provision to cover the settlement of a tax examination, and the dividend exclusion in the United States.

RESULTS OF OPERATIONS

YEAR ENDED DECEMBER 31, 1995 ("1995") COMPARED WITH YEAR ENDED DECEMBER 31, 1994
("1994")

Net income for the year ended December 31 increased from $3,577,000 in 1994 to $4,300,000 in 1995.

Oil and gas revenues were $5,672,000 in 1995 compared to $7,926,000 in 1994. This decrease was attributable to production declines from year to year. Much of this decrease in production is typical of the natural decline experienced in a "horizontal well" drilling program.

Real estate revenues increased from $7,885,000 in 1994 to $8,600,000 in 1995, an increase of $715,000. This increase was principally due to higher rents and increased occupancy.

Oil and gas production expense decreased in 1995. Oil and gas production expense decreased from $2,846,000 in 1994 to $2,524,000 in 1995. Production expense decreased due to, among other things, lower production in 1995.

Depreciation, depletion and amortization of oil and gas assets amounted to $2,401,000 in 1995 compared to $3,150,000 in 1994. This decrease is principally attributable to a lower depletable pool and lower oil and gas revenues in 1995. Real estate depreciation was $1,037,000 in 1995 compared to $870,000 in 1994.

General and administrative expense was relatively stable, amounting to $1,415,000 in 1995 compared to $1,386,000 in 1994.

The Company realized gains on sales of common shares of Jacobs Engineering Group, Inc.("Jacobs") of $9,182,000 in 1995 compared to $5,457,000 in 1994. As of December 31, 1995, the Company held 1,059,660 shares of Jacobs.

Interest expense increased from $3,638,000 in 1994 to $4,144,000 in 1995 due to higher interest rates in general in 1995.

The provision for income taxes includes Federal and Canadian taxes. Differences between the effective tax rate and the statutory income tax rates are due to foreign resource tax credits in Canada, additional provision to cover the settlement of a tax examination, and the dividend exclusion in the United States.

EFFECTS OF INFLATION

The effects of inflation on the Company's financial condition are not considered to be material by management.

ACCOUNTING FOR INCOME TAXES

Statement of Finanancial Accounting Standard No. 109- "Accounting for Income Taxes" became effective for the Company beginning in the first quarter of 1993. SFAS 109 requires, among other things, an asset and liability approach to accounting for income taxes. SFAS 109 did not have a material impact on the Company's consolidated financial statements.

ACCOUNTING FOR CERTAIN INVESTMENTS IN DEBT AND EQUITY SECURITIES

On December 31, 1993 the Company adopted Statement of Financial Accounting Standards No. 115 "Accounting for Certain Investments in Debt and Equity Securities" (SFAS 115). The investments of the Company are principally equity securities, held for indefinite periods of time. These securities are carried at fair value and the difference between cost and fair value is charged/credited directly to shareholders' equity, net of income taxes. As of December 31, 1996, the net unrealized gain on marketable securities was $9,047,000. This amount, net of related deferred income taxes of $4,071,000, is included as a credit to shareholders' equity in the Company's 1996 consolidated financial statements.

LIQUIDITY AND CAPITAL RESOURCES

At December 31, 1996 the Company had approximately $15 million in marketable securities at cost, with a market value of approximately $24 million. The current ratio at December 31, 1996 was 3 to 1 on a market basis, which management considers adequate for the Company's current business. The Company's working capital was approximately $19 million at December 31, 1996.

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.

During the first quarter of 1996, the Company acquired real estate properties from The Trust Company of New Jersey at an aggregate purchase price of approximately $3 million. 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 several months. 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 $(486,000), $745,000, and $4,446,000 in 1996, 1995 and 1994, respectively. The variations in the three years principally relate to changes in accounts receivable and accounts payable and accrued liabilities.

Net cash provided by (used in) investing activities was $3,456,000, $4,159,000 and $(12,266,000) in 1996, 1995 and 1994, respectively. The variations principally relate to purchases of real estate properties and transactions in securities. Purchases of real estate properties amounted to $3 million in 1996 and $10.2 million in 1994. Proceeds from sales of marketable securities amounted to $10,044,000 in 1996, $10,501,000 in 1995 and $6,710,000 in 1994. The Company acquired $3,000,000 of preferred stock of The Trust Company of New Jersey in 1994. Additionally, purchases of marketable securities amounted to $294,000 in 1996, $3,130,000 in 1995, and $5,204,000 in 1994.

Net cash provided by (used in) financing activities was ($3,374,000), ($4,215,000) and $7,167,000 in 1996, 1995 and 1994, respectively. The variations principally relate to the issuance, renegotiation, and repayments of long-term debt. Long-term mortgage loans incurred in connection with the Company's 1994 real estate acquisitions amounted to $8,704,000. Additionally, in 1996, the Company borrowed new monies and also restructured its existing loans which are collateralized by securities. See Footnote No. (4) to the consolidated financial statements for a schedule of long-term debt.

The Company believes it has adequate capital resources to fund operations for the foreseeable future.

Financial Accounting Standards Board Statement No. 69 Disclosures

The following disclosures are those required to be made by publicly traded enterprises under Financial Accounting Standards Board Statement No. 69, Disclosures About Oil and Gas Producing Activities.

The SEC defines proved oil and gas reserves as those estimated quantities of crude oil, natural gas and natural gas liquids which geological and engineering data demonstrate with reasonable certainty to be recoverable in future years from known reservoirs under existing economic and operating conditions. Proved developed oil and gas reserves are those that can be recovered through existing wells with existing equipment and operating methods.

Estimated future cash inflows are computed by applying year-end prices of oil and gas to year-end quantities of proved reserves. Future price changes are considered only to the extent provided by contractual arrangements. Estimated future development and production costs are determined by estimating the expenditures to be incurred in developing and producing the proved oil and gas reserves at the end of the year, based on year-end costs and assuming continuation of existing economic conditions. Estimated future income tax expenses are calculated by applying year-end statutory tax rates (adjusted for permanent differences and tax credits) to estimated future pretax net cash flows related to proved oil and gas reserves, less the tax basis of the properties involved.

These estimates are furnished and calculated in accordance with requirements of the Financial Accounting Standards Board and the SEC. Due to unpredictable variances in expenses and capital forecasts, crude oil and natural gas price changes and the fact that the basis for such estimates vary significantly, management believes the usefulness of these projections is limited. Estimates of future net cash flows do not represent management's assessment of future profitability or future cash flow to the Company. Management's investment and operating decisions are based upon reserve estimates that include proved reserves prescribed by the SEC as well as probable reserves, and upon different price and cost assumptions from those used here. It should be recognized that applying current costs and prices at a 10 percent standard discount rate allows for comparability but does not convey absolute value. The discounted amounts arrived at are only one measure of financial quantification of proved reserves.

There were no oil and gas estimates filed with or included in reports to any other federal or foreign governmental authority or agency within the last twelve months.

Reserves in the United States were estimated by Ramsey Engineering Inc. and the Company. Reserves in Canada were estimated by Citidal Engineering, Ltd.

"Total Costs Both Capitalized and Expensed, Incurred in Oil and Gas Producing Activities" (including capitalized interest), "Cost Incurred in Property Acquisition, Exploration and Development Activities" and "Results of Operations from Oil and Gas Producing Activities" during the three years ended December 31, 1996, 1995 and 1994 are included in Note 9 of the Notes to Consolidated Financial Statements, presented elsewhere herein.

MANAGEMENT DISCUSSION FOR LATEST QUARTER

The following discussion addresses the Company’s results of operations for the three and nine month period ended September 30, 2008 compared to the three and nine month period ended September 30, 2007 and the Company’s consolidated financial condition as of September 30, 2008. It is presumed that readers have read or have access to Wilshire’s 2007 Annual Report on Form 10-K which includes disclosures regarding critical accounting policies as part of Management’s Discussion and Analysis of Financial Condition and Results of Operations.

Forward-Looking Statements

This Report on Form 10-Q for the quarter and nine months ended September 30, 2008 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 uncertainties relating to the closing of the proposed merger described herein, environmental risks relating to the Company’s real estate properties, competition, the substantial capital expenditures required to fund the Company’s 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. For additional information regarding risk factors impacting the Company and its forward-looking statements, see Item 1A of the Company’s Annual Report on Form 10-K, as amended for the year ended December 31, 2007.

Effects of Recent Accounting Pronouncements

In May 2008, the FASB issued SFAS No. 162, “The Hierarchy of Generally Accepted Accounting Principles.” SFAS No. 162 identifies the sources of accounting principles and provides entities with a framework for selecting the principles used in preparation of financial statements that are presented in conformity with Generally Accepted Accounting Principles (“GAAP”). The current GAAP hierarchy has been criticized because it is directed to the auditor rather than the entity, it is complex, and it ranks FASB Statements of Financial Accounting Concepts, which are subject to the same level of due process as FASB Statements of Financial Accounting Standards, below industry practices that are widely recognized as generally accepted but that are not subject to due process. The FASB believes the GAAP hierarchy should be directed to entities because it is the entity (not its auditors) that is responsible for selecting accounting principles for financial statements that are presented in conformity with GAAP. The adoption of FASB 162 is not expected to have a material impact on the Company’s consolidated financial position

In March 2008, the FASB issued SFAS No. 161, “Disclosures about Derivative Instruments and Hedging Activities, an amendment of FASB Statement No. 133” , which requires additional disclosures about the objectives of the derivative instruments and hedging activities, the method of accounting for such instruments under SFAS No. 133 and its related interpretations, and a tabular disclosure of the effects of such instruments and related hedged items on our consolidated financial position, financial performance and cash flows. SFAS No. 161 is effective beginning January 1, 2009. The Company does not have any derivative instruments or utilize any hedging activities and therefore, SFAS No. 161 is not applicable to the Company at this time.

In December 2007, the FASB issued SFAS No. 141-R, “Business Combinations” (“SFAS 141-R”). SFAS 141-R changes the accounting for acquisitions specifically eliminating the step acquisition model, changing the recognition of contingent consideration from being recognized when it is probable to being recognized at the time of acquisition, disallowing the capitalization of transaction costs and changes when restructurings related to acquisition can be recognized. The standard is effective for fiscal years beginning on or after December 15, 2008 and will only impact the accounting for acquisitions that are made after adoption. The Company believes the adoption of SFAS 141-R will not have an effect on the Company’s consolidated financial position or results of operations as there are no current acquisitions being contemplated.

In December 2007, the FASB issued SFAS No. 160, “Noncontrolling Interests in Consolidated Financial Statements – an amendment of ARB No. 51”. This statement is effective for fiscal years beginning on or after December 15, 2008, with earlier adoption prohibited. This statement requires the recognition of a noncontrolling interest (minority interest) as equity in the consolidated financial statements and separate from the Company’s equity. The amount of net income attributable to the noncontrolling interest will be included in the consolidated net income on the face of the consolidated income statement. It also amends certain of ARB No. 51’s consolidation procedures for consistency with the requirements of SFAS 141-R. This statement also includes expanded disclosure requirements regarding the interests of the parent and its noncontrolling interest. The Company believes the adoption of SFAS 160 will not have an effect on the Company’s consolidated financial position or results of operations.

Overview

On June 13, 2008, the Company entered into an Agreement and Plan of Merger among the Company, NWJ Apartment Holdings Corp. (the "Parent") and NWJ Acquisition Corp., a wholly-owned subsidiary of the Parent ("Merger Sub"). Both the Parent and Merger Sub are affiliates of NWJ Companies, Inc. ("NWJ"), a privately owned real estate development company based in New York, New York. The merger agreement provides that at the closing of the merger, the Merger Sub will merge with and into the Company, and each outstanding share of the Company's common stock will be converted into the right to receive $3.88 per share in cash, without interest. On September 17, 2008, a special meeting of stockholders was held at which the Company’s stockholders approved the proposal to adopt the merger agreement.

The Company has been informed by the Parent that unless there is a significant improvement in the current economic and lending environment in the United States, the Parent will not be able to secure the financing of the Company's residential properties required to close the merger with the Company. If the merger is not consummated by December 13, 2008, as a result of the failure to obtain such financing, either party may terminate the merger agreement without liability to the other, provided that the terminating party has not breached the merger agreement in a manner that caused the merger not to close by December 13, 2008. Under the terms of the merger agreement, the Parent is obligated to use its commercially reasonable best efforts to arrange the financing of the Company's residential properties unless and until the merger agreement is terminated.

Net loss for the three months ended September 30, 2008 was $296,000 or $0.04 per diluted share as compared to a net loss of $206,000 or $0.03 per diluted share for the three month period ended September 30, 2007. For the nine months ended September 30, 2008, the Company recorded a net loss of $1,088,000 or $0.14 per diluted share as compared to a net loss of $577,000 or $0.07 per diluted share during the nine months ended September 30, 2007. Operations are shown as continuing and discontinued, with discontinued operations comprised of the results of operations from the Company’s real estate properties held for sale, the gain from real estate properties held for sale that were sold during the period and the wind down of the oil and gas businesses.

In January 2008, the Company closed on the sale of a one bedroom condominium at Jefferson Gardens, New Jersey for gross proceeds of approximately $150,000. After payments of closing costs and providing for taxes, the Company realized a net gain during the nine months ended September 30, 2008 of approximately $61,000 from this sale.

In May 2008, the Company closed on the sale of its Tamarac Office Plaza, Florida, office complex for gross proceeds of $2 million. After payments of closing costs and providing for taxes, the Company realized a net gain during the nine months ended September 30, 2008 of approximately $686,000 from this sale.

During the three and nine months ended September 30, 2007, the Company sold the following real estate assets:



â—Ź

In January and February 2007, the Company closed on the sale of a one bedroom and a two bedroom condominium unit at Jefferson Gardens for gross proceeds of $144,300 and 195,000, respectively.



â—Ź

In February 2007, the Company closed on the sale of a parcel of land located in Lake Hopatcong, New Jersey for gross proceeds of $850,000.



•

In April 2007, the Company closed on the sale of a one bedroom condominium unit at Jefferson Gardens for gross proceeds of $150,000.



â—Ź

In July 2007, the Company closed on the sale of a one bedroom condominium unit at Jefferson Gardens for gross proceeds of $150,000.



â—Ź

In August 2007, the Company closed on the sale of a one bedroom condominium unit at Jefferson Gardens for gross proceeds of $154,500.

After payment of closing costs and providing for taxes, the Company realized net gains from sales of properties of $123,000 and $610,000, respectively, during the three and nine months ended September 30, 2007. A portion of the taxes payable was deferred as a result of an Internal Revenue Service Section 1031 tax deferred exchange for which the Company has identified a replacement property. These gains were included in the statements of operations in discontinued operations – real estate – gain from sales.

Three Months Ended September 30, 2008 as Compared with Three Months Ended September 30, 2007

Continuing Operations:

Loss from continuing operations amounted to $453,000 during the three months ended September 30, 2008 as compared to a loss from continuing operations of $366,000 during the three months ended September 30, 2007. Results per diluted share from continuing operations amounted to $(0.06) during the three months ended September 30, 2008 as compared to $(0.05) during the three months ended September 30, 2007. The 2008 period included the following charges to expense: an increase in general and administrative expense of $159,000, which primarily relates to professional fees incurred related to the proposed sale of the Company, as well as an increase in operating expenses of $34,000 partially offset by a decrease in depreciation expense of $80,000 and an increased income tax benefit of 205,000 resulting from an increased operating loss for the period.

The above table details the comparative revenues, expenses and net operating income (“NOI”) for Wilshire’s residential and commercial real estate segments, and reconciles the combined NOI to consolidated loss from continuing operations. NOI is based on operating revenue and expenses directly associated with the operations of the real estate properties, but excludes depreciation and interest expense. Wilshire assesses and measures segment operating results based on NOI, which is a direct measure of each property’s contribution to the results of the Company before considering revenues from treasury activities, overhead expenses and other costs that are not directly related to the performance of a property. The Company believes NOI is a more descriptive measure of the Company’s performance than consolidated income (loss) from continuing operations. NOI is not a measure of operating results or cash flow as measured by accounting principles generally accepted in the United States of America and is not necessarily indicative of cash available to fund cash needs and should not be considered an alternative to cash flows as a measure of liquidity.

Residential Segment

The residential segment is comprised of Sunrise Ridge Apartments and Van Buren Apartments, both in Arizona, Wellington Estates and Summercreek Apartments, both in Texas, and Alpine Village Apartments in New Jersey. During the three month period ended September 30, 2008, NOI increased by $8,000 or 1.1% to $725,000 as compared to $717,000 during the same period in 2007.

Revenues increased $35,000 or 1.8% during the quarter ended September 30, 2008 to $2,004,000, compared to $1,969,000 during the quarter ended September 30, 2007. Operating expenses increased $27,000 or 2.2% to $1,279,000. The increase in revenues was primarily attributable to the Company’s Texas and New Jersey apartment complexes, which experienced a slight increase in occupancy during the period. The increase in operating expenses was primarily attributable to the Company’s Arizona and Texas apartment complexes.

Commercial Segment

The commercial segment is comprised of Royal Mall Plaza in Mesa, Arizona and Tempe Corporate Center in Tempe, Arizona. Revenues during the quarter ended September 30, 2008, as compared to the quarter ended September 30, 2007, decreased $113,000 or 25.5% to $330,000 and operating expenses increased $7,000 or 3.8% to $190,000. The revenue decrease was primarily attributable to decreased occupancy at both Tempe Corporate Center and Royal Mall (Arizona) resulting in decreased rental revenues in the amounts of $43,000 and $70,000, respectively.

The increase in operating expenses is primarily attributable to increased costs at Royal Mall (Arizona).

Other Operating Expenses

Depreciation expense amounted to $284,000 during the three months ended September 30, 2008, a decrease of $80,000 from $364,000 during the three months ended September 30, 2007. The decrease in depreciation expense relates to the retirement of certain assets during the past year.

General and administrative expense increased $159,000, or 17.8%, to $1,051,000 during the three months ended September 30, 2008 as compared to $892,000 during the same period in 2007. The increase in general and administrative expense is primarily attributable to professional fees incurred related to the proposed sale of the Company.

Other income (loss) decreased from income of $185,000 in the 2007 quarter to $80,000 in the 2008 quarter, a decrease of $105,000. The decrease is primarily relates to declining interest rates and reduced dividend income during the three months ended September 30, 2008 as compared to the same period in 2007.

Interest expense decreased to $443,000 during the three months ended September 30, 2008 as compared to $447,000 during the three months ended September 30, 2007. The decrease primarily relates to the reduction in the Company’s mortgage liability and the payoff of the mortgage on the Tamarac Office Plaza which was sold in May 2008.

The benefit for income taxes amounted to $380,000 and $175,000 during the three month period ended September 30, 2008 and 2007, respectively. The change in the benefit for income taxes is related to an increased loss from continuing operations during the 2008 quarter as compared to the 2007 quarter.
Discontinued Operations, Net of Taxes:

Real Estate

The after tax loss from discontinued operations for the three months ended September 30, 2008 amounted to $120,000 as compared to an after tax loss of $45,000 during the three months ended September 30, 2007. The loss during the 2008 period reflects the loss from operations of $120,000. The loss during the 2007 period is comprised of a loss from discontinued operations of $168,000 which was partially offset by a gain from the sale of a two condominium units at Jefferson Gardens for gross proceeds of $305,000 that resulted in an after tax gain of $123,000.

The loss from operating properties classified as discontinued operations decreased by $48,000 to a loss of $120,000 during the quarter ended September 30, 2008 as compared to a loss of $168,000 during the same period in 2007.

Oil and Gas

During the quarter ended September 30, 2008, the Company recorded income from the wind down of its former oil and gas business, of $277,000 as compared to income of $205,000 during the same period in 2007. The net income from the wind down of the oil and gas business during the quarter ended September 30, 2008 relates to foreign currency gain during the period and a tax refund in the amount of $85,000. The net income from the wind down of the oil and gas business during the quarter ended September 30, 2007 relates to a foreign currency gain and interest income during the period.

Nine Months Ended September 30, 2008 as Compared with Nine Months Ended September 30, 2007

Continuing Operations:

Loss from continuing operations amounted to $1,632,000 during the nine months ended September 30, 2008 as compared to a loss from continuing operations of $1,142,000 during the nine months ended September 30, 2007. Results per diluted share from continuing operations amounted to $(0.21) during the nine months ended September 30, 2008 as compared to $(0.14) during the nine months ended September 30, 2007. The 2008 period included the following charges to expense: an increase in general and administrative expense of $211,000, increased operating expenses of $32,000, which was offset by a decrease in depreciation expense of $196,000 and an increase in income tax benefit of $352,000 resulting from an increase in the loss from operations.

The above table details the comparative revenues, expenses and net operating income (“NOI”) for Wilshire’s residential and commercial real estate segments, and reconciles the combined NOI to consolidated loss from continuing operations. NOI is based on operating revenue and expenses directly associated with the operations of the real estate properties, but excludes depreciation and interest expense. Wilshire assesses and measures segment operating results based on NOI, which is a direct measure of each property’s contribution to the results of the Company before considering revenues from treasury activities, overhead expenses and other costs that are not directly related to the performance of a property. The Company believes NOI is a more descriptive measure of the Company’s performance than income (loss) from continuing operations. NOI is not a measure of operating results or cash flow as measured by accounting principles generally accepted in the United States of America and is not necessarily indicative of cash available to fund cash needs and should not be considered an alternative to cash flows as a measure of liquidity.

Residential Segment

Revenues from the residential segment increased $18,000 or 0.3% to $5,815,000 during the nine months ended September 30, 2008 as compared to $5,797,000 during the same period in 2007. In addition, operating expenses increased $30,000 or 0.8% to $3,854,000 during the nine months ended September 30, 2008 as compared to the nine month period ended September 30, 2007. The slight increase in revenues was primarily attributable to increased rental revenues at the Company’s Texas and New Jersey locations of $132,000, which was partially offset by a decrease in rental revenues at the Arizona properties of $114,000.

Commercial Segment

Commercial segment revenues decreased $154,000 or 12.3% for the nine months ended September 30, 2008 to $1,093,000 as compared to $1,247,000 for the nine months ended September 30, 2007. Operating expenses increased $2,000 or 0.4% to $519,000 for the nine months ended September 30, 2008 as compared to $517,000 for the same period in 2007. The revenue decrease was primarily attributable to decreases in occupancy rates at both Tempe Corporate Center and Royal Mall (Arizona) resulting in decreased rental revenues of $83,000 and $70,000, respectively.

Other Operating Expenses

Depreciation expense amounted to $902,000 during the nine months ended September 30, 2008, a decrease of $196,000 or 17.9% from $1,098,000 during the nine months ended September 30, 2007. The decrease in depreciation expense primarily relates to the retirement of certain assets during the past year.

General and administrative expense increased $211,000, or 8.0%, to $2,848,000 during the nine month period ended September 30, 2008 as compared to $2,637,000 during the same period in 2007. The increase is primarily related to professional fees incurred related to the proposed sale of the Company which was partially offset by the absence of costs associated with the preliminary investigation described in the Company’s Form 10-K for the year ended December 31, 2007.

Other income (loss) decreased from income of $458,000 during the nine months ended September 30, 2007 to a loss of $200,000 during the nine months ended September 30, 2008, a decrease of $658,000. The decrease is primarily related to the $553,000 loss on the sale of the Company’s marketable securities in the 2008 period.

Interest expense increased slightly to $1,336,000 during nine months ended September 30, 2008 as compared to $1,335,000 during the nine months ended September 30, 2007.

The benefit for income taxes increased to $1,119,000 during the nine months ended September 30, 2008 as compared to $767,000 during the nine months ended September 30, 2007. The change in the benefit for income taxes is related to the increased loss from continuing operations during the nine months ended September 30, 2008 as compared to the nine months ended September 30, 2007.

Discontinued Operations, Net of Taxes:

Real Estate

Income from discontinued operations amounted to after tax income of $357,000 for the nine months ended September 30, 2008 as compared to after tax income of $89,000 for the same period in 2007. The income during the 2008 period reflects the sales of one condominium unit at Jefferson Gardens in January 2008 for an after-tax gain of approximately $61,000 and the sale of the Tamarac Office Plaza in May 2008 for an after-tax gain of approximately $686,000, which was partially offset by a loss from operations of $390,000 during the nine months ended September 30, 2008. The income during the 2007 period reflects the sale of five condominium units at Jefferson Gardens and the sale of the Lake Hopatcong land resulting in gross proceeds of $1.6 million and after tax gain of $610,000, partially offset by a loss from operations of $521,000.

The loss from operating properties classified as discontinued operations decreased to a loss of $390,000 during the nine months ended September 30, 2008 as compared to a loss of $521,000 during the nine month period ended September 30, 2007.

Oil and Gas

During the nine months ended September 30, 2008, the Company recorded income from the wind down of its former oil and gas business, of $187,000 as compared to income of $476,000 during the nine months ended September 30, 2007. The net income from the wind down of the oil and gas business during the nine months ended September 30, 2008 relates to a foreign currency gain during the period and a tax refund in the amount of $85,000. The net income from the wind down of the oil and gas business during the nine months ended September 30, 2007 relates to a foreign currency gain and interest income during the period.

Liquidity and Capital Resources

At September 30, 2008, the Company had working capital, including restricted cash, of $10.4 million, compared to working capital of $14.7 million at December 31, 2007. The decline in working capital during the period is primarily attributable to the inclusion of $3.9 million of long-term mortgage debt which has been reclassified to current debt as such amount is due in June 2009.

SHARE THIS PAGE:  Add to Delicious Delicious  Share    Bookmark and Share



 
Icon Legend Permissions Topic Options
You can comment on this topic
Print Topic

Email Topic

1285 Views