-----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, N/9jwytpsDmiHNLtSG+Zq5ATp3/gMqaxXTU0S0Dl36Vmk75VlKUP00TpZhQdzUx9 Xof6H9dTHKKLV1tf0J2hBg== 0000072633-02-000004.txt : 20020414 0000072633-02-000004.hdr.sgml : 20020414 ACCESSION NUMBER: 0000072633-02-000004 CONFORMED SUBMISSION TYPE: 10-K/A PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 20011031 FILED AS OF DATE: 20020215 FILER: COMPANY DATA: COMPANY CONFORMED NAME: NORTH EUROPEAN OIL ROYALTY TRUST CENTRAL INDEX KEY: 0000072633 STANDARD INDUSTRIAL CLASSIFICATION: OIL ROYALTY TRADERS [6792] IRS NUMBER: 222084119 STATE OF INCORPORATION: DE FISCAL YEAR END: 1031 FILING VALUES: FORM TYPE: 10-K/A SEC ACT: 1934 Act SEC FILE NUMBER: 001-08245 FILM NUMBER: 02551526 BUSINESS ADDRESS: STREET 1: P O BOX 456 STREET 2: 43 WEST FRONT STREET SUITE 19-A CITY: RED BANK STATE: NJ ZIP: 07701 BUSINESS PHONE: 9087414008 MAIL ADDRESS: STREET 1: P O BOX 456 STREET 2: 43 WEST FRONT STREET SUITE 19-A CITY: RED BANK STATE: NJ ZIP: 07701 10-K/A 1 tenk01a.txt SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D. C. 20549 FORM 10-K/A (Mark One) [X] Annual report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the fiscal year ended October 31, 2001 or ---------------- [ ] Transition report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the transition period from to . ---------------- ---------------- Commission file number 1-8245 ------ NORTH EUROPEAN OIL ROYALTY TRUST -------------------------------- (Exact name of registrant as specified in its charter) Delaware 22-2084119 - ----------------------- ------------------------------------ (State of organization) (IRS Employer Identification Number) Suite 19A, 43 West Front Street, Red Bank, N.J. 07701 ---------------------------------------------- ---------- (Address of principal executive offices) (Zip Code) Registrant's telephone number including area code: 732-741-4008 --------------------------------------------------------------- Securities registered pursuant to Section 12(b) of the Act: Title of each class Name of each exchange on which registered - ---------------------------- ----------------------------------------- Units of Beneficial Interest New York Stock Exchange 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 by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. [X] - 2 - As of December 31, 2001, 8,931,414 units of beneficial interest of the Registrant were outstanding, and the aggregate market value of outstanding units of beneficial interest of the Registrant, which may be voted, held by non-affiliates of the Registrant was approximately $174,007,453 on such date. (The Trustees and the Managing Director are the only persons deemed to be affiliates of the Registrant.) Documents Incorporated by Reference ----------------------------------- Items 10, 11, 12 and 13 of Part III have been partially or wholly omitted from this report and the information required to be contained therein is incorporated by reference from the Registrant's definitive proxy statement, dated January 10, 2002, for the annual meeting to be held on February 13, 2002. - 3 - Item 8. Financial Statements and Supplementary Data -------------------------------------------- NORTH EUROPEAN OIL ROYALTY TRUST -------------------------------- INDEX TO FINANCIAL STATEMENTS ------------------------------ Page Number ----------- Report of Independent Public Accountants F-1 Financial Statements: Statements of Assets, Liabilities and Trust Corpus as of October 31, 2001 and 2000 F-2 Statements of Income and Expenses on a Cash Basis for the Years Ended October 31, 2001, 2000 and 1999 F-3 Statements of Undistributed Earnings for the Years Ended October 31, 2001, 2000 and 1999 F-4 Statements of Changes in Cash and Cash Equivalents for the Years Ended October 31, 2001, 2000 and 1999 F-5 Notes to Financial Statements F-6 - F-10 Schedules are omitted because they are not applicable or not required or because the required information is included in the financial statements or notes thereto. - 4 - REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS ---------------------------------------- To North European Oil Royalty Trust: We have audited the accompanying statements of assets, liabilities and trust corpus of North European Oil Royalty Trust as of October 31, 2001 and 2000 and the related statements of income and expenses on a cash basis, undistributed earnings and changes in cash and cash equivalents for each of the three years in the period ended October 31, 2001. These financial statements are the responsibility of the Trust's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with auditing standards generally accepted in the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. The accounts of the Trust are maintained on the cash basis of accounting under which income is not recorded until collected instead of when earned, and expenses are recorded when paid instead of when incurred. Thus, the accompanying financial statements are not intended to present financial position and results of operations in conformity with generally accepted accounting principles which require the use of the accrual basis of accounting (see Note 1). In our opinion, the financial statements referred to above present fairly, in all material respects, the assets, liabilities and trust corpus of North European Oil Royalty Trust as of October 31, 2001 and 2000, and its income and expenses, undistributed earnings and changes in cash and cash equivalents for each of the three years in the period ended October 31, 2001, all on the cash basis of accounting. As discussed in Note 3, the Trust has a contingent liability relating to unclaimed units and distributions. No reserves are established or reflected in the financial statements for the possibility that funds would be required to satisfy such claims. /s/ ARTHUR ANDERSEN LLP Roseland, New Jersey November 8, 2001 (except with respect to Note 4 as to which the date is December 4, 2001) F-1 - 5 - NORTH EUROPEAN OIL ROYALTY TRUST -------------------------------- STATEMENTS OF ASSETS, LIABILITIES AND TRUST CORPUS (NOTE 1) ----------------------------------------------------------- OCTOBER 31, 2001 AND 2000 ------------------------- ASSETS 2001 2000 ------ ------------ ------------ Current Assets -- Cash and cash equivalents (Note 1) $5,391,320 $2,946,596 Producing gas and oil royalty rights (Note 1) 1 1 ------------ ------------ $5,391,321 $2,946,597 ============ ============ LIABILITIES AND TRUST CORPUS ---------------------------- Current liabilities -- Cash distributions payable to unit owners, paid November 2001 and 2000 $5,332,083 $2,932,645 Contingent liability (Note 3) Trust corpus (Notes 1 and 2) 1 1 Undistributed earnings (Note 1) 59,237 13,951 ------------ ------------ $5,391,321 $2,946,597 ============ ============ The accompanying notes to financial statements are an integral part of these statements. F-2 - 6 - NORTH EUROPEAN OIL ROYALTY TRUST -------------------------------- STATEMENTS OF INCOME AND EXPENSES ON A CASH BASIS (NOTE 1) ---------------------------------------------------------- FOR THE YEARS ENDED OCTOBER 31, 2001, 2000 AND 1999 --------------------------------------------------- 2001 2000 1999 ------------ ------------ ------------ German gas, sulfur and oil royalties received $22,453,630 $14,155,028 $10,667,478 Interest income 137,305 96,460 70,026 Trust expenses (684,111) (583,226) ( 569,081) ------------ ------------ ------------ Net income on a cash basis $21,906,824 $13,668,262 $10,168,423 ============ ============ ============ Net income per unit on a cash basis $2.47 $1.54 $1.17 ======= ======= ======= Cash distributions paid or to be paid: Dividends and distributions per unit paid or to be paid to former unlocated shareholders (Note 3) $0.00 $0.00 $0.00 Distributions per unit paid or to be paid to unit owners (Note 4) 2.46 1.56 1.17 ------- ------- ------- $2.46 $1.56 $1.17 ======= ======= ======= The accompanying notes to financial statements are an integral part of these statements. F-3 - 7 - NORTH EUROPEAN OIL ROYALTY TRUST -------------------------------- STATEMENTS OF UNDISTRIBUTED EARNINGS (NOTE 1) --------------------------------------------- FOR THE YEARS ENDED OCTOBER 31, 2001, 2000 AND 1999 --------------------------------------------------- 2001 2000 1999 ------------ ------------ ------------ Balance, beginning of year $ 13,951 $ 58,044 $ 69,998 Reimbursement for prior payment of past dividends and distributions 0 0 1,017 Net income on a cash basis 21,906,824 13,668,262 10,168,423 ------------ ------------ ------------ 21,920,775 13,726,306 10,239,438 ------------ ------------ ------------ Less: Dividends and distributions paid to former unlocated shareholders (Note 3) 0 1,043 6,318 Current year distributions paid or to be paid to unit owners (Note 4) 21,861,538 13,711,312 10,175,076 ------------ ------------ ------------ 21,861,538 13,712,355 10,181,394 ------------ ------------ ------------ Balance, end of year $ 59,237 $ 13,951 $ 58,044 ============ ============ ============ The accompanying notes to financial statements are an integral part of these statements. F-4 - 8 - NORTH EUROPEAN OIL ROYALTY TRUST -------------------------------- STATEMENTS OF CHANGES IN CASH AND CASH EQUIVALENTS (NOTE 1) ----------------------------------------------------------- FOR THE YEARS ENDED OCTOBER 31, 2001, 2000 AND 1999 --------------------------------------------------- 2001 2000 1999 ------------ ------------ ------------ Sources of cash and cash equivalents: German gas, sulfur and oil royalties received $22,453,630 $14,155,028 $10,667,478 Interest income 137,305 96,460 70,026 Reimbursement for prior payment of past dividends and distributions 0 0 1,017 ------------ ------------ ------------ 22,590,935 14,251,488 10,738,521 Uses of cash and cash equivalents: Payment of Trust expenses 684,111 583,226 569,081 Distributions and dividends paid (Note 3) 19,462,100 13,040,838 10,616,169 ------------ ------------ ------------ 20,146,211 13,624,064 11,185,250 ------------ ------------ ------------ Net increase (decrease) in cash and cash equivalents during the year 2,444,724 627,424 ( 446,729) Cash and cash equivalents, beginning of year 2,946,596 2,319,172 2,765,901 ------------ ------------ ------------ Cash and cash equivalents, end of year $ 5,391,320 $2,946,596 $ 2,319,172 ============ ============ ============ The accompanying notes to financial statements are an integral part of these statements. F-5 - 9 - NORTH EUROPEAN OIL ROYALTY TRUST -------------------------------- NOTES TO FINANCIAL STATEMENTS ----------------------------- OCTOBER 31, 2001, 2000 AND 1999 ------------------------------- (1) Summary of significant accounting policies: ---------------------- Basis of accounting - --------------------- The accounts of North European Oil Royalty Trust (the "Trust") are maintained on a cash basis of accounting with the exception of the accrual for distributions to be paid to unit owners (those distributions approved by the Trustees for the Trust). The Trust's distributable income represents royalty income received by the Trust during the period plus interest income less any expenses incurred by the Trust, all on a cash basis. In the opinion of the Trustees, the use of the cash basis provides a more meaningful presentation to unit owners of the results of operations of the Trust. Use of Estimates - ------------------ The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amount of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements. Actual results may differ from those estimates. Producing gas and oil royalty rights - -------------------------------------- The rights to certain gas and oil royalties in Germany were transferred to the Trust at their net book value by North European Oil Company (the "Company") (see Note 2). The net book value of the royalty rights has been reduced to one dollar ($1) in view of the fact that the remaining net book value of royalty rights is de minimis relative to annual royalties received and distributed by the Trust and does not bear any meaningful relationship to the fair value of such rights or the actual amount of proved producing reserves. F-6 - 10 - Federal and state income taxes- ------------------------------- The Trust, as a grantor trust, is exempt from Federal and state income taxes under a private letter ruling issued by the Internal Revenue Service. Cash and cash equivalents- -------------------------- Included in cash and cash equivalents are amounts deposited in bank accounts and amounts invested in certificates of deposit and U. S. Treasury bills with maturities of three months or less from the date of purchase. Net income per unit on the cash basis- -------------------------------------- Net income per unit on the cash basis is based upon the number of units outstanding at the end of the period (see Note 3). As of October 31, 2001, 2000 and 1999, there were 8,886,804, 8,886,804 and 8,696,646 units of beneficial interest outstanding, respectively. (2) Formation of the Trust: ----------------------- The Trust was formed on September 10, 1975. As of September 30, 1975, the Company was liquidated and the remaining assets and liabilities of the Company, including its royalty rights, were transferred to the Trust. The Trust on behalf of the owners of beneficial interest in the Trust holds overriding royalty rights covering gas and oil production in certain concessions or leases in the Federal Republic of Germany. These rights are held under contracts with local German exploration and development subsidiaries of Exxon Mobil Corp. and the Royal Dutch Group. Under these contracts, the Trust receives various percentage royalties on the proceeds of the sales of certain products from the areas involved. At the present time, royalties are received for sales of gas well gas, oil well gas, crude oil, distillate and sulfur. (3) Contingent liability: --------------------- The Trust serves as fiduciary for certain unlocated or unknown shareholders of the Trust's corporate predecessors, North European Oil Corporation (the "Corporation") and North European Oil Company. From the liquidation of the Company to October 31, 2000, 721,364 Trust units were issued in exchange for Corporate or Company shares and dividends of $354,101 and distributions of $4,236,544 were paid to former unlocated Corporation and Company shareholders. For the year ended October 31, 2001, no units were issued in F-7 - 11 - exchanges and no dividends and no distributions were paid to former unlocated Corporation and Company shareholders. On February 26, 1996 the settlement of litigation between the Trust and the Delaware State Escheator was approved by the Delaware Court of Chancery. As of that date, there were a total of 875,748 authorized but unissued units representing the unexchanged shares of the Trust's corporate predecessors. Out of this total, 760,560 units were subject to the settlement. Pursuant to the Court approved settlement, 380,280 units were issued to the Delaware Escheator on April 17, 1996. Of the Trust units remaining to be issued to the Delaware Escheator, approximately 50% (190,128 units) have been issued to the Delaware Escheator as of June 30, 2000 and the remaining balance will be issued by June 30, 2005. Through June 30, 2000, claims by unlocated or unknown shareholders of the Trust's corporate predecessors for units and past dividends and distributions thereon ("subsequent claims") were paid by the Delaware Escheator and the Trust on a 50:50 basis. From July 1, 2000 to June 30, 2005, subsequent claims will be paid by the Delaware Escheator and the Trust on a 75:25 basis. Any subsequent claims will reduce the number of units to be issued to the Delaware Escheator in 2005. Following the final issuance of units to the Delaware Escheator in 2005, the Trust's contingent liability for past dividends and distributions attributable to all unexchanged Corporation and Company shares subject to the settlement will be completely eliminated. Under the terms of the settlement, the maximum liability of the Delaware Escheator for subsequent claims is limited to the value of the units received, plus current distributions on units retained, less the Delaware Escheator's share of subsequent claims. As of the receipt of the November, 2001 distribution, the maximum liability of the Delaware Escheator will be $11,638,204. Under the Trust Agreement as deemed amended by the February 26, 1996 Order of the Delaware Court of Chancery, the Trust is not required to make payments of arrearages of Company dividends or Trust distributions with respect to units issued or to be issued to the Delaware Escheator. As of October 31, 2001, there remained a total of 303,786 units that could be issued to unlocated or unknown Corporation and Company shareholders. Of this total, 190,122 units are subject to the settlement and remain to be issued to the Delaware Escheator. If all shares, represented by the units already issued as well as the units remaining to be issued, were presented for exchange, $487,023 in dividends and $29,889,710 in distributions would be payable. In the opinion of the Trustees, based in part on the history of exchanges during the last ten fiscal years, the maximum liability of the Delaware Escheator would be adequate to cover the Delaware Escheator's share of any subsequent claims. In any event, the Trust's contingent liability for such claims will be eliminated in 2005. F-8 - 12 - (4) Subsequent Event: ----------------- In implementation of the provisions of the order of the Delaware Court of Chancery dated February 26, 1996 (the "Delaware Order"), and reported on Form 8-K filed February 26, 1996, on December 4, 2001, the Trust and the Administrator of Unclaimed Property, Office of the New York State Comptroller (the "New York Administrator") entered into a Settlement Agreement covering Units for which owners were unlocated but New York state addresses were shown in predecessor corporation records. The New York Settlement Agreement covers 89,220 Units attributable to stock ownership by unlocated shareholders of predecessor corporate entities. Of the Units covered by the Settlement Agreement, 44,610 would be issued to the New York Administrator prior to December 31, 2001 and the balance of 44,610 will be issued on or before June 30, 2005. The Settlement Agreement provides for processing of claims in the period until June 30, 2005 and the sharing of any costs relating to any claims which are allowed. After June 30, 2005, under the Delaware Order, no payments will be required for arrearages in dividends or distributions to allowed claims and the existing contingent liability concerning them will be eliminated. The 44,610 Units issued now will receive regular distributions of Trust royalty income. Their issuance results in a de minimis reduction (amounting to 0.502%) in Trust distributions to existing owners. Management of the Trust intends to continue the implementation program permitted by the Delaware Order with other states, but the impact of any such implementation will be minimal in view of the limited numbers of addresses listed in each of the other states. F-9 - 13 - (5) Quarterly results (unaudited): ------------------------------ The table below summarizes the quarterly results and distributions of the Trust for the years ended October 31, 2001 and 2000. Fiscal 2001 by Quarter and Year ------------------------------------------------------------- First Second Third Fourth Year ---------- ---------- ---------- ---------- ------------- Royalties received $6,441,960 $5,574,374 $4,983,996 $5,453,300 $22,453,630 Net income on a cash basis 6,322,861 5,395,154 4,870,571 5,318,238 21,906,824 Net income per unit on a cash basis .71 .61 .55 .60 2.47 Current year cash distributions paid or to be paid 6,309,631 5,420,950 4,798,874 5,332,083 21,861,538 Current year cash distributions per unit .71 .61 .54 .60 2.46 Fiscal 2000 by Quarter and Year ------------------------------------------------------------- First Second Third Fourth Year ---------- ---------- ---------- ---------- ------------- Royalties received $3,499,675 $3,682,978 $3,966,769 $3,005,606 $14,155,028 Net income on a cash basis 3,366,006 3,541,412 3,866,073 2,894,771 13,668,262 Net income per unit on a cash basis .39 .41 .43 .33 1.54 Current year cash distributions paid or to be paid 3,391,704 3,565,637 3,821,326 2,932,645 13,711,312 Current year cash distributions per unit .39 .41 .43 .33 1.56 F-10 - 14 - SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Trust has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. NORTH EUROPEAN OIL ROYALTY TRUST Dated: February 14, 2002 By: /s/ John H. Van Kirk ------------------------- John H. Van Kirk, Managing Trustee Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated. Dated: February 14, 2002 /s/ John H. Van Kirk -------------------------------- John H. Van Kirk, Trustee Dated: February 14, 2002 /s/ Robert P. Adelman -------------------------------- Robert P. Adelman, Trustee Dated: February 14, 2002 /s/ Samuel M. Eisenstat -------------------------------- Samuel M. Eisenstat, Trustee Dated: February 14, 2002 /s/ Willard B. Taylor -------------------------------- Willard B. Taylor, Trustee Dated: February 14, 2002 /s/ Rosalie J. Wolf -------------------------------- Rosalie J. Wolf, Trustee -----END PRIVACY-ENHANCED MESSAGE-----