t e j o n R a n c h c om pa n y 2 0 1 2 a n n u a l r e p o rt
The science and tech-
nology used to measure
and determine specific
locations certainly has
changed over the years.
The primary tool of the
surveyor used to be the
Transit. Consisting of
a telescope mounted on
a tripod with a compass
and leveling vial, survey-
ors used the transit to
determine the angular
relationship between
fixed points. Today, they
use Global Positioning
Systems (GPS) to secure
measurement readings
from satellites within
seconds.
Location. Location. Locatio n.
T e j o n R a n c h
C o m p a n y is a
diversified real estate
development and agri-
business company
committed to responsibly
using its land and
resources to meet the
housing, employment
and lifestyle needs of
Californians and to create
value for its shareholders.
The Company’s Vision
is guided by the Ranch’s
historic core values of
conservation and good
stewardship.
1.
Tejon
Ranch
Commerce
Center
California
Aqueduct
N
Strategically located in
the center of the state,
the mountains and hills
of Tejon Ranch serve as
the transition point from
Southern California to the
San Joaquin Valley.
+
To Our Valued S hareholders
One of the first things I
heard when I started my
real estate career some
40 years ago was that the
three most important
words in real estate were
location, location and
location. Decades later,
some may dismiss that no-
tion as an old fashioned
simplistic cliché, but like
many “old sayings” it has
stood the test of time because it is
largely true. While other factors
may come into play when analyz-
ing the value of a piece of real
estate, location is by far the most
important part of the equation.
And without a doubt, Tejon Ranch
has location in abundance.
Robert A. Stine
President &
Chief Executive Officer
at the Gulf of Mexico and
San Diego, the main inland
route to the gold fields was
through Tejon Ranch. The
Los Angeles-Stockton Road
cut through the Ranch in
two directions, one down
Tejon Canyon and the other
through Grapevine Canyon.
The route through Grape-
vine Canyon eventually be-
came part of the Butterfield
Overland Stage Coach Line. In
1854, the Federal Government es-
tablished Fort Tejon, home to the
1st Dragoons, along this critical
transportation corridor. By the
1860s, the area around Fort Tejon
had grown to become the third
largest settlement in Southern
California. Further north over the
St rate gic Location
Throughout the history of
California, Tejon Ranch’s
strategic location has en-
sured that it would play a
vital role in the growth of
trade, transportation and
commerce, as well as the
development of real es-
tate in the Golden State.
The discovery of gold in
California in 1848 brought
about the largest mass
migration in U.S. history.
For those arriving by sea
Interstate 5 winds
through Grapevine
Canyon.
Grapevine was Rose Sta-
tion, a lively watering stop
for the stage coaches. In
the 1870s, it boasted several
general stores, a post office
and a tavern.
The same intrinsic
factors that made Tejon
Ranch an important loca-
tion for trade, transporta-
tion and commerce over
the last two centuries are
still in play today. The Los
Angeles-Stockton Road
through Grapevine Canyon
3.
has evolved to become Interstate
5, California’s principal north-
south highway. The site where the
historic Rose Station once stood
is now home to the Tejon Ranch
Commerce Center, which serves
as a center of modern day Califor-
nia commerce as well as a welcome
stop for the thousands of travel-
ers who pass through Tejon Ranch
every day.
The Tejon Ranch Com-
merce Center already hosts nearly
4.5 million square feet of indus-
trial space with an additional 16.5
million available. It is home to
major distribution facilities for
IKEA and Famous Footwear, and
last year we added Dollar General
(606,000 square feet) and Cater-
pillar (400,000 square feet) to the
mix of world class com-
panies located within our
development.
Located at the geographic
center of state, and situated
directly on I-5, California’s leading
transportation corridor, companies
located at Tejon can serve 97% of
California consumers within a
single day’s truck turn. That’s
a huge advantage for companies
looking to serve the entirety of
California, and even the adjacent
western states beyond. According
to John Flanigan, Dollar General’s
executive vice president of global
supply chain, it was a key reason
why they chose the Tejon Ranch
Commerce Center. Here’s what
he had to say when the deal was
announced:
“The Tejon Ranch distribution
center is strategically located to serve our
supply chain needs as we continue to
expand westward. From its
central location, our supply
chain team can deliver goods to
stores in northern and southern
California in a day.”
What’s the reason
behind its success? There
are a number of factors
that have led the Tejon
Ranch Commerce Center to
becoming one of the fast-
est growing commercial/
industrial developments in
California, let alone Kern
County, but its strategic
location has to be chief
among them.
4.
Our leasing and sales
efforts also benefit from
our jurisdictional location.
Kern County has earned a
well deserved reputation
for being business-friendly.
This is a key advantage for
us. The county’s stream-
lined permit processing
enabled the Caterpillar
Caterpillar’s
California Distribution
Center at the Tejon Ranch
Commerce Center opened
in August 2012, only 8
months after the close of
escrow.
Future site of
The Outlets at Tejon Ranch
Caterpillar
IKEA
Dollar
General
Famous
Footwear
N
“From its central location,
our supply chain team can
deliver goods to stores in
northern and southern
California in a day.” –
John Flanigan, Executive Vice
President, Dollar General
+
California
Aqueduct
N
The location of the pro-
posed landmark commu-
nity of Centennial is the
perfect canvas on which
to create a new model for
development, one focused
on sustainability, wellness,
and economic vitality.
+
project to progress from the sign-
ing of the deal to delivery of the
building in only eight months.
That type of speed is unheard of
in the balance of California.
The Tejon Ranch Commerce
Center has also become a prime
retail destination. Research con-
ducted in early 2011 revealed that
nearly 25% of Southern Califor-
nia residents already stop there on
their travels north or the return
trip south. As evidence of the
volume of business transacted at
the Commerce Center, Starbucks’
Tejon store is one of the top per-
formers in the chain.
That’s why we think this is
the perfect location for an outlet
center. To that end, we’ve part-
nered with The Rockefeller Group
on The Outlets at Tejon
Ranch, a high-end outlet
retail center being planned
for the east side of the
Commerce Center at the
Laval Road exit. As cur-
rently envisioned, phase one
of the development would
encompass approximately
325,000 square feet of retail
space, and some 80 stores
and restaurants. Phase two
would add an additional
180,000 square feet. We’re
making great progress in
our leasing effort as major out-
let brands have almost universally
embraced both the market and
the location. If all goes well, The
Outlets at Tejon Ranch should
be ready to welcome its first
customers in the spring of 2014.
Not only do we expect the
outlet center to be an unqualified
success in its own right, but we
believe it will also serve as a
catalyst to drive land values on
adjacent retail parcels.
Our planned residential com-
munities, Tejon Mountain Village
and Centennial, will also benefit
from their strategic locations. It’s
interesting to note that real estate
development is not a new concept
for their particular locations as
they will be built in the same area
that comprised the Fort
Tejon settlement, once
one of California’s larg-
est. And the area already
contains the necessary in-
frastructure needed for a
new community; adjacent
highways, utilities, water
delivery systems, fiber optic
lines, etc. This past year
we finished the installation
of the Bear Trap Turnout,
which allows us to tap into
the giant pipes of the
California Aqueduct
7.
Artist rendering of The
Outlets at Tejon
Ranch, which is slated
to open in Spring 2014.
system that cross Tejon Ranch.
This will enable us to use a
portion of our State Water Project
allocation for Tejon Mountain
Village. In addition to having
ready access to infrastructure,
Centennial and Tejon Mountain
Village are also conveniently
located within an hours’ drive of
the Los Angeles metropolitan area
and its millions of people.
Geo logic Location
A look below the surface of the
land also reveals the importance of
Tejon’s location. Our oil and gas
fields, located in the area where
valley land collides with the moun-
tains, have been active producers
since the 1930s. In the last few
years, we’ve seen growing inter-
est in our oil fields. 2012
was another year of strong
exploration activities, in-
creased drilling, and record
production—nearly 800,000
barrels.
and minerals. We want to make it
easier for you to clearly track
the revenue realized from this
important part of our diversified
operation.
Rich L oc ation
Above our mineral estate in the
Southern San Joaquin Valley you’ll
find some of the richest, most
fertile soil in the country. Our
agricultural division capitalizes
on this fact, using nearly 4,300
acres of land in the valley portion
of the Ranch to grow permanent
high value crops like wine grapes,
almonds and pistachios. Over the
last three years, our farming opera-
tion has netted the Company over
$25 million, that’s approximately
$2,000 in profit per acre per year.
Beautiful Location
“California is certainly
blessed by natural beauty
and is supremely blessed on
Tejon Ranch.” Those were
the words of the Sierra
Club’s Bill Corcoran when
we announced our historic
land use and conservation
agreement in 2008, and
truer words were never spo-
ken. Our 422 square miles
hold some of the most
beautiful vistas in the state.
Due to the growth
we’re seeing in our oil and
gas operations and the
increasing importance of
this area to our business
operations, we’ve decided
to create a new segment
in our financial reporting
dedicated solely to oil, gas
Workers constructing the
Bear Trap Turnout,
which provides access to
the California Aque-
duct—the primary source
of water for Tejon
Mountain Village.
8.
Geghus
Ridge
N
One of the views in Tejon
Mountain Village, where
future homeowners can
establish their own lega-
cies as they enjoy the nat-
ural beauty and gracious
living of one of Califor-
nia’s great ranchos.
+
Tejon
Mountain
Village
N
The entry to Tejon Moun-
tain Village will be located
on Tejon Lake Drive, just
to the north and west of
Tejon (Castac) Lake.
+
difficulties inherent with entitling
land in California and operating in
a constraining regulatory environ-
ment. However, as a Company, we
are uniquely positioned to over-
come these challenges. We own the
land outright and are not burdened
by debt service requirements. This
allows us to be patient—not rush
to market before the market is
ready, to do things right, and focus
on creating long term value. And
the progress we’ve made to date on
both the Tejon Ranch Commerce
Center and Tejon Mountain
Village, which last year was
affirmed by the 5th District Court
of Appeals, is noteworthy. There
are very few places—and com-
panies—in California that have
achieved what we’ve achieved and
where the future is so bright.
As always, we appre-
ciate your support as we
endeavor to maximize the
value of this extraordinary
asset that’s situated in an
extraordinary location.
Traversing Tejon Ranch re-
veals a dramatic tapestry of rugged
mountains, steep canyons, oak-
covered rolling hills, and broad
valleys. Oaks of almost every
kind can be found on the land, as
can conifer forests, Joshua trees,
and spectacular spring displays of
wildflowers as far as the eye can
see. We believe the opportunity to
live within and view our beautiful
landscape will be a key component
of our future marketing program.
Imagine… a new generation of
families having the opportunity
to establish their own legacies in
this remarkable landscape, building
ranches and homes where they can
enjoy an upscale ranch lifestyle and
experience the natural beauty and
gracious living of one of Califor-
nia’s great ranchos. When it comes
to the value associated with
our future residential and
resort development, our
spectacular landscape and
beautiful location are key.
Marty Whitman,
chairman of the Third Av-
enue Fund, one of our larg-
est shareholders, once said
that the best thing about
Tejon Ranch was that it was
in California. And on the
flip side, he said one of the
Ranch’s greatest challenges
is that it is in California.
We certainly recognize the
Robert A. Stine
President &
Chief Executive Officer
Another spectacular view from
Tejon Mountain
Village— looking down
Grapevine Canyon into
the southern San Joaquin
Valley.
11.
Consolidated Balance Sheets
($ in thousands)
Assets
Current Assets:
Cash and cash equivalents
Marketable securities - available-for-sale
Accounts receivable
Inventories
Prepaid expenses and other current assets
Deferred tax assets
Total current assets
Property and equipment - net of depreciation (includes $72,115 at December 31, 2012 and
$67,442 at December 31, 2011, attributable to Centennial Founders LLC, Note 15)
Investments in unconsolidated joint ventures
Long-term water assets
Long-term deferred tax assets
Other assets
Total assets
Liabilities and Stockholders’ Equity
Current Liabilities:
Trade accounts payable
Accrued liabilities and other
Income taxes payable
Deferred income
Current portion of long-term debt
Total current liabilities
Long-term debt, less current portion
Long-term deferred gains
Other liabilities
Pension liability
Total liabilities
Commitments and contingencies
Equity:
Tejon Ranch Co. Stockholders’ Equity
Common stock, $.50 par value per share:
Authorized shares - 30,000,000
Issued and outstanding shares - 20,085,865 at December 31, 2012 and 19,975,706 at December 31, 2011
Additional paid-in capital
Accumulated other comprehensive loss
Retained earnings
Total Tejon Ranch Co. Stockholders’ Equity
Non-controlling interest
Total equity
Total liabilities and equity
$
$
$
2012
7,219
65,049
8,768
3,839
4,881
997
90,753
146,590
54,022
28,565
5,376
2,550
327,856
3,845
2,132
—
1,195
41
7,213
212
2,248
6,508
3,416
19,597
December 31
2011
$
$
$
18,372
68,566
7,832
3,587
4,317
1,099
103,773
128,430
53,893
28,336
6,845
699
321,976
3,496
2,025
2,484
2,125
37
10,167
253
2,664
5,474
2,979
21,537
10,043
198,117
(5,118)
65,550
268,592
39,667
308,259
327,856
$
9,988
194,273
(4,756)
61,109
260,614
39,825
300,439
321,976
$
12.
Consolidated Statements of Operations
($ in thousands, except per share amounts)
Revenues:
Real estate - commercial/industrial
Real estate - resort/residential
Mineral resources
Farming
Total revenues
Costs and Expenses:
Real estate - commercial/industrial
Real estate - resort/residential
Mineral resources
Farming
Corporate expenses
Total expenses
Operating income
Other Income:
Investment income
Interest income (expense)
Other income
Total other income
Income from operations before
equity in earnings of unconsolidated joint ventures
Equity in earnings of unconsolidated joint ventures, net
Income before income tax expense
Income tax expense
Net income
Net loss attributable to non-controlling interest
Net income attributable to common stockholders
Net income per share attributable to common stockholders, basic
Net income per share attributable to common stockholders, diluted
2012
9,941
583
14,012
22,553
47,089
12,271
4,761
334
13,323
13,272
43,961
3,128
1,242
(12)
113
1,343
4,471
2,535
7,006
2,723
4,283
(158)
4,441
0.22
0.22
$
$
$
$
Consolidated Statements of Comprehensive Income (Loss)
($ in thousands)
Net income
Other comprehensive income (loss):
Unrealized gains (losses) on available for sale securities
Benefit plan adjustments
SERP liability adjustments
Equity in other comprehensive income of unconsolidated joint venture
Other comprehensive income (loss) before taxes
(Provisions) benefit for income taxes related to other comprehensive income (loss) items
Other comprehensive income (loss)
Comprehensive income
Comprehensive loss attributable to non-controlling interests
Comprehensive income attributable to common stockholders
2012
4,283
$
182
(922)
(12)
152
(600)
238
(362)
3,921
(158)
4,079
$
Year Ended December 31
2010
2011
13,746
16,134
12,206
21,012
63,098
13,221
3,942
209
12,575
12,277
42,224
20,874
1,260
—
98
1,358
22,232
916
23,148
7,367
15,781
(113)
15,894
0.80
0.80
$
$
$
$
10,294
281
6,362
18,576
35,513
10,535
3,089
124
10,914
5,612
30,274
5,239
979
(9)
61
1,031
6,270
541
6,811
2,852
3,959
(216)
4,175
0.23
0.22
Year Ended December 31
2011
2010
3,959
15,781
$
(82)
(2,574)
(1,825)
217
(4,264)
1,699
(2,565)
13,216
(113)
13,329
(3)
(505)
578
(108)
(38)
(2)
(40)
3,919
(216)
4,135
$
$
$
$
$
$
$
13.
Consolidated Statements of Equity
Additional
Accumulated
Other
Paid-In Comprehensive
Capital Income Loss
Common
Stock Shares
Outstanding
$
17,019,428
—
—
2,608,735
78,894
56,131
—
(15,718)
19,747,470
—
—
205,165
52,069
—
(28,998)
19,975,706
—
—
Common
Stock
-
8,509
—
—
1,306
39
28
—
(8)
9,874
—
—
103
26
—
(15)
9,988
—
—
$
-
$ 126,829
—
—
58,454
1,960
(28)
(2,944)
(455)
183,816
—
—
5,773
(26)
5,507
(797)
194,273
—
—
13,641
179,172
—
(82,654)
20,085,865
7
89
—
(41)
$ 10,043
363
(89)
5,832
(2,262)
$ 198,117
$
(2,151)
—
(40)
—
—
—
—
—
(2,191)
—
(2,565)
—
—
—
—
(4,756)
—
(362)
—
—
—
—
(5,118)
Total Tejon
Ranch Co.’s
Retained Stockholders’
Equity
Earnings
Non-
controlling
Interest
Total
Equity
$ 41,040
4,175
—
—
$ 174,227
4,175
(40)
59,760
$ 40,154
(216)
—
—
$ 214,381
3,959
(40)
59,760
—
—
—
—
45,215
15,894
—
—
—
—
—
61,109
4,441
—
1,999
—
(2,944)
(463)
236,714
15,894
(2,565)
5,876
—
5,507
(812)
260,614
4,441
(362)
—
—
—
—
39,938
(113)
—
—
—
—
—
39,825
(158)
—
1,999
—
(2,944)
(463)
276,652
15,781
(2,565)
5,876
—
5,507
(812)
300,439
4,283
(362)
—
—
—
—
$ 65,550
370
—
5,832
(2,303)
$ 268,592
—
—
—
—
$ 39,667
370
—
5,832
(2,303)
$ 308,259
($ in thousands, except share information)
Balance, December 31, 2009
Net income (loss)
Other comprehensive income
Rights offering, net of expenses
Exercise of stock options and
related tax benefit of $204
Restricted stock issuance
Stock compensation
Shares withheld for taxes
Balance at December 31, 2010
Net income
Other comprehensive income
Exercise of stock options and
related tax benefit of $634
Restricted stock issuance
Stock compensation
Shares withheld for taxes
Balance at December 31, 2011
Net income
Other comprehensive income
Exercise of stock options and
related tax benefit of $8
Restricted stock issuance
Stock compensation
Shares withheld for taxes
Balance at December 31, 2012
14.
Consolidated Statements of Cash Flows
($ in thousands)
Operating Activities
Net income
Adjustments to reconcile net income to net cash provided by (used in) operating activities:
2012
Year Ended December 31
2010
2011
$
4,283
$
15,781
$
3,959
Depreciation and amortization
Amortization of premium/discount of marketable securities
Equity in earnings
Non-cash retirement plan expense
Gain on sale of real estate
Gain on sale of easements
Deferred income taxes
Amortization of stock compensation expense (reversal)
Excess tax benefit from stock-based compensation
Distribution of earnings from unconsolidated joint ventures
Changes in operating assets and liabilities:
Receivables, inventories and other assets, net
Current liabilities, net
Net cash provided by (used in) operating activities
Investing Activities
Maturities and sales of marketable securities
Funds invested in marketable securities
Property and equipment expenditures
Reimbursement proceeds Kern County - Laval Interchange
Reimbursement proceeds from Communities Facilities District
Proceeds from sale of real estate
Proceeds from sale of easements
Investment in unconsolidated joint ventures
Distribution of equity from unconsolidated joint ventures
Investments in long-term water assets
Other
Net cash provided by (used in) investing activities
Financing Activities
Borrowings of short-term debt
Repayments of short-term debt
Repayments of long-term debt
Net proceeds from rights offering
Proceeds from exercise of stock options
Taxes on vested stock grants
Net cash provided by (used in) financing activities
Increase (decrease) in cash and cash equivalents
Cash and cash equivalents at beginning of year
Cash and cash equivalents at end of year
Supplemental cash flow information
Accrued capital expenditures included in current liabilities
Sale of assets accounted as direct finance leases
Taxes paid (net of refunds)
4,954
874
(2,535)
1,047
(676)
—
1,810
5,440
8
7,200
(1,761)
(6,552)
14,092
19,809
(16,984)
(20,669)
—
—
—
—
(6,154)
1,512
(797)
10
(23,273)
1,500
(1,500)
(39)
—
370
(2,303)
(1,972)
(11,153)
18,372
7,219
2,293
913
4,021
$
$
$
$
3,629
641
(916)
528
(4,058)
(15,750)
(162)
5,340
(634)
—
2,570
2,515
9,484
19,143
(39,448)
(13,649)
—
—
4,988
15,750
(4,457)
—
—
(495)
(18,168)
—
—
(35)
—
5,876
(812)
5,029
(3,655)
22,027
18,372
590
—
5,002
$
$
$
$
2,119
198
(541)
800
(559)
—
(1,351)
(2,944)
(227)
1,440
(56)
361
3,199
15,720
(34,751)
(14,196)
1,613
10,860
604
—
(4,594)
4,100
(11,981)
(943)
(33,568)
(16,400)
6,850
(33)
59,760
1,999
(463)
51,713
21,344
683
22,027
—
—
875
$
$
$
$
15.
Performance Graph
The following graph is a comparison of cumulative total shareowner returns for the Company, the Dow Jones Equity Market
Index, and the Dow Jones Real Estate Index for the period shown.
comparison of five year cumulative total returns
180.00
140.00
s
r
a
l
l
o
d
100.00
60.00
20.00
12.31.07
12.31.08
12.31.09
12.31.10
12.30.11
12.30.12
tejon ranch
dj equity mkt
dj real estate
- Assumes $100 invested on December 31, 2007
- Total return assumes reinvestment of dividends
- Fiscal year ending December 31
tejon ranch
dj equity mkt
dj real estate
2008
-39.44%
-37.16%
-40.07%
2009
18.11%
28.79%
30.81%
2010
-5.72%
16.65%
26.93%
2011
-11.14%
1.34%
6.05%
2012
14.71%
16.33%
18.91%
The stock price performance depicted in the above graph is not necessarily indicative of future price performance.
The Performance Graph will not be deemed to be incorporated by reference in any filing by the Company under the Securities
Act of 1933 or the Securities Exchange Act of 1934, except where the Company specifically incorporates the Performance Graph by
reference.
The Dow Jones Real Estate Index, for the most part, includes companies which have revenues substantially greater
than those of the Company. The Company is unaware of any industry or line-of-business index that is more
nearly comparable.
quarter
First
Second
Third
Fourth
high
$31.64
$30.94
$31.08
$30.78
2012
low
$24.33
$25.10
$25.25
$25.70
high
$36.97
$37.70
$37.00
$27.47
2011
low
$25.24
$32.31
$23.71
$22.80
As of March 5, 2013, there were 353 registered owners of record of our Common Stock.
16.
Directors
Executive Officers
Kent G. Snyder
Chairman of the Board,
Tejon Ranch Company;
Real Estate Attorney
John L. Goolsby
Private Investments and Real Estate
Anthony L. Leggio
President,
Bolthouse Properties LLC
Norman Metcalfe
Real Estate and Investments
George G.C. Parker
Dean Witter Distinguished
Professor of Finance,
Stanford Business School
Geoffrey L. Stack
Managing Director,
SARES-REGIS Group,
Real Estate Development
and Management
Robert A. Stine
President and Chief Executive Officer,
Tejon Ranch Company
Daniel R. Tisch
Managing Member,
Tower View LLC,
Investment Management
Michael H. Winer
Portfolio Manager,
Third Avenue Management LLC,
Investment Management
Robert A. Stine
President and
Chief Executive Officer
Allen E. Lyda
Executive Vice President,
Chief Financial Officer
and Assistant Secretary
Dennis J. Atkinson
Senior Vice President – Agriculture
Joseph E. Drew
Senior Vice President – Real Estate
Gregory J. Tobias
Vice President,
General Counsel & Secretary
Corporate Directory
Corporate Office
Stock Transfer Agent & Registrar
Form 10-k
Tejon Ranch Company
Post Office Box 1000
4436 Lebec Road
Tejon Ranch, California 93243
Telephone: (661) 248-3000
Computershare Shareowner Services LLC
480 Washington Boulevard
Jersey City, NJ 07310-1900
Securities Listing
Auditors
Tejon Ranch Company
Common Stock is listed on
the New York Stock Exchange
under the ticker symbol: TRC
Ernst & Young LLP
A copy of this report and the Company’s
Annual Report to the Securities and Ex-
change Commission on Form 10-k, without
exhibits, will be provided without charge to
any stockholder submitting a written request
to the Corporate Secretary:
Tejon Ranch Company
Post Office Box 1000
Tejon Ranch, California 93243
w w w. t e j o n r a n c h . c o m