UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
| x | QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended June 30, 2004
| ¨ | TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT |
For the transition period from to
Commission file Number 0-9669
CALCASIEU REAL ESTATE & OIL CO., INC.
(Exact name of small business issuer as specified in its charter)
| Louisiana | 72-0144530 | |
| (state or other jurisdiction of incorporation or organization) |
(I.R.S. Employer Identification No.) | |
|
One Lakeside Plaza, Lake Charles, Louisiana |
70601 | |
| (Address of principal executive offices) | (Zip Code) |
Issuer’s telephone number 337-494-4256
Check whether the issuer (1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the past 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 ¨
The number of shares outstanding of the issuer’s No Par Value common stock as of June 30, 2004 was 1,942,495.
Transitional Small Business Disclosure Format. Yes ¨ No x
Calcasieu Real Estate & Oil Co., Inc.
Form 10-QSB
For the Quarter Ended June 30, 2004
INDEX
Calcasieu Real Estate & Oil Co., Inc.
Balance Sheet
June 30, 2004
Assets
| Current Assets |
|||
| Cash and cash equivalents |
$ | 1,415,665 | |
| Accounts receivables |
367,868 | ||
| Total Current Assets |
1,783,533 | ||
| Securities Available for Sale |
1,193,266 | ||
| Property and Equipment (less accumulated depreciation of $69,137) |
10,767 | ||
| Timber (less accumulated depletion of $347,141) |
504,817 | ||
| Land |
3,887,776 | ||
| 4,403,360 | |||
| $ | 7,380,159 | ||
See accompanying notes
1
Calcasieu Real Estate & Oil Co., Inc.
Balance Sheet
June 30, 2004
Liabilities & Stockholders’ Equity
| Current Liabilities |
|||
| Trade payables and accrued expenses |
$ | 4,202 | |
| Income taxes payable: |
|||
| Current |
34,427 | ||
| Deferred |
28,208 | ||
| Total Current Liabilities |
66,837 | ||
| Stockholders’ Equity |
|||
| Common stock, no par value: 3,000,000 shares authorized; 2,100,000 shares issued |
$ | 72,256 | |
| Retained earnings |
7,597,167 | ||
| Accumulated other comprehensive income |
19,415 | ||
| 7,688,838 | |||
| Less cost of treasury stock (157,505 shares) |
375,516 | ||
| 7,313,322 | |||
| $ | 7,380,159 | ||
See accompanying notes
2
Calcasieu Real Estate & Oil Co., Inc.
Statements of Income
| Quarter Ended June 30, 2004 |
Quarter Ended June 30, 2003 |
Six Months Ended June 30, 2004 |
Six Months Ended June 30, 2003 | |||||||||
| Revenues |
$ | 615,085 | $ | 363,087 | $ | 1,142,822 | $ | 813,293 | ||||
| Costs and expenses: |
||||||||||||
| Oil and gas production |
32,562 | 16,276 | 67,421 | 35,621 | ||||||||
| Agriculture |
1,016 | 1,001 | 2,548 | 3,837 | ||||||||
| Timber |
6,914 | 4,549 | 8,613 | 12,356 | ||||||||
| General and administrative |
76,641 | 63,535 | 182,551 | 130,810 | ||||||||
| Depreciation and depletion |
3,755 | 2,330 | 5,596 | 4,376 | ||||||||
| 120,888 | 87,691 | 266,729 | 187,000 | |||||||||
| Income from operations |
494,197 | 275,396 | 876,093 | 626,293 | ||||||||
| Other income(expense): |
||||||||||||
| Gain-Sale of land |
1,426 | |||||||||||
| Interest income |
19,944 | 3,879 | 24,009 | 8,486 | ||||||||
| Dividends on stock |
5,371 | 7,916 | 13,319 | 15,833 | ||||||||
| Gain-Sale of Securities |
86,458 | 86,458 | ||||||||||
| 111,773 | 11,795 | 125,212 | 24,319 | |||||||||
| Income before income taxes |
605,970 | 287,191 | 1,001,305 | 650,612 | ||||||||
| Federal and state income taxes: |
||||||||||||
| Current |
193,877 | 88,508 | 314,167 | 200,152 | ||||||||
| Deferred |
||||||||||||
| 193,877 | 88,508 | 314,167 | 200,152 | |||||||||
| Net Income |
$ | 412,093 | $ | 198,683 | $ | 687,138 | $ | 450,460 | ||||
| Per common stock (2004; 1,942,495 shares; 2003; 1,952,294 shares) |
$ | .21 | $ | .10 | $ | .35 | $ | .23 | ||||
| Dividends per share |
$ | .07 | $ | .10 | $ | .14 | $ | .15 | ||||
See accompanying notes
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Calcasieu Real Estate & Oil Co., Inc.
Statement of Changes in Cash Flows
| Six Months Ended June 30, 2004 |
Six Months Ended June 30, 2003 |
|||||||
| Cash Flows From Operating Activities |
||||||||
| Net Income |
$ | 687,138 | $ | 450,460 | ||||
| Noncash (income) expenses included in net income: |
||||||||
| Depreciation and depletion |
5,596 | 4,376 | ||||||
| (Gain) on sale of assets |
(87,884 | ) | ||||||
| (Increase) decrease in current assets |
(96,718 | ) | 21,115 | |||||
| Increase (decrease) in current liabilities |
(135,158 | ) | 6,446 | |||||
| Net cash provided by operating activities |
372,974 | 482,397 | ||||||
| Cash Flows From Investing Activities |
||||||||
| Proceeds from sale of land |
5,454 | |||||||
| Purchase of available for sale securities |
(1,060,770 | ) | (798,905 | ) | ||||
| Sale of available for sale securities |
1,840,342 | 701,657 | ||||||
| Purchase of property and equipment |
(9,719 | ) | (20,265 | ) | ||||
| Net cash provided by (used in) investing activities |
775,307 | (117,513 | ) | |||||
| Cash Flows From Financing Activities |
||||||||
| Dividends paid net of refunds |
(259,835 | ) | (489,019 | ) | ||||
| Purchase of treasury stock |
(26,380 | ) | ||||||
| Net cash (used in) investing activities |
(259,835 | ) | (515,399 | ) | ||||
| Net increase (decrease) in cash and cash equivalents |
888,446 | (150,515 | ) | |||||
| Cash and cash equivalents: |
||||||||
| Beginning |
527,219 | 583,327 | ||||||
| Ending |
$ | 1,415,665 | $ | 432,812 | ||||
See accompanying notes
4
Calcasieu Real Estate & Oil Co., Inc.
Statement of Changes in Stockholders’ Equity
Six Months Ended June 30, 2004
| Comprehensive Income |
Retained Earnings |
Accumulated Other Comprehensive Income |
Capital Stock Issued |
Treasury Stock | ||||||||||||||
| Balance, December 2003 |
$ | 7,169,864 | $ | 55,905 | $ | 72,256 | $ | 375,516 | ||||||||||
| Comprehensive income: |
||||||||||||||||||
| Net income first quarter |
$ | 275,045 | 275,045 | |||||||||||||||
| Other comprehensive income: |
||||||||||||||||||
| Unrealized gains of securities available for sale: |
||||||||||||||||||
| Unrealized holdings gains occurring during quarter net of taxes of $619 |
1,027 | 1,027 | ||||||||||||||||
| Total comprehensive income |
$ | 276,072 | ||||||||||||||||
| Dividends |
(123,861 | ) | ||||||||||||||||
| Balance, March 31, 2004 |
$ | 7,321,048 | $ | 56,932 | $ | 72,256 | $ | 375,516 | ||||||||||
| Comprehensive income: |
||||||||||||||||||
| Net income second quarter |
$ | 412,093 | 412,093 | |||||||||||||||
| Other comprehensive income: |
||||||||||||||||||
| Realized gains on securities sold |
||||||||||||||||||
| Net of taxes of $30,535 |
(55,923 | ) | (55,923 | ) | ||||||||||||||
| Unrealized holdings gains occurring during quarter net of taxes of $12,271 |
18,406 | 18,406 | ||||||||||||||||
| Total comprehensive income |
$ | 374,576 | ||||||||||||||||
| Dividends |
(135,974 | ) | ||||||||||||||||
| Balance, June 30, 2004 |
$ | 7,597,167 | $ | 19,415 | $ | 72,256 | $ | 375,516 | ||||||||||
See accompanying notes
5
Calcasieu Real Estate & Oil Co., Inc.
Notes to Financial Statements
June 30, 2004
(Unaudited)
Note 1. Basis of Presentation
In the opinion of management, the accompanying balance sheet and related interim statements of income, cash flows, and stockholders’ equity include all adjustments, consisting only of normal recurring items, necessary for their fair presentation in accordance with generally accepted accounting principles of the results for the interim periods presented. Interim results are not necessarily indicative of results for a full year. The information included in this Form 10-QSB should be read in conjunction with Management’s Discussion and Analysis and financial statements and notes thereto included in the Calcasieu Real Estate & Oil Co., Inc. 2003 Form 10-K.
Note 2. Earnings Per Share
Net income per share of common stock for the interim periods is based on the weighted average number of shares outstanding for each period.
Note 3. Contingencies
There are no material contingencies known to management. The Company does not participate in off balance sheet arrangements.
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| Item | 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations |
Results of Operations
Revenue
Revenue for the six months ended June 30, 2004, was $1,142,822, an increase of $329,529 or 40.5% over the first six months of 2003. Revenue for the quarter ended June 30, 2004, was $615,085, an increase of $251,998 or 69.4% over the second quarter of 2003. Virtually all of this increased revenue was from oil and gas income. Both agriculture income and timber income which together totaled $148,192 were up for the six months ended June 30, 2004, a total of $13,642, or 10.1%, over the six months ended June 30, 2004. New production for 2004 from the Castor Creek field produced revenue of $352,301 for the quarter ended June 30, 2004, and $391,622 for the six months ended June 30, 2004. This accounted for more than the total increase in oil and gas revenues for 2004 over 2003. The income from the North Gordon field was up 9.5% due to higher oil prices. Oil and gas revenue from the Castor Creek field and the North Gordon field represented 67.4% of all revenues for the six months ended June 30, 2004. Other oil and gas production decreased in the current year compared to the prior year while average prices increased.
Operating Expenses
Total operating expenses increased $79,729, or 42.6% for the six months ended June 30, 2004, over the six months ended June 30, 2003. Of this amount $31,800 represented higher oil and gas severance taxes due to greater oil and gas production. General and administrative expenses increased $51,741 in 2004 over 2003. The largest increases represented in this amount were the American Stock Exchange annual fee of $15,000, an increase in insurance of $12,590 and an increase in directors expenses of $8,575. All of the increase in general and administrative expenses for the second quarter of 2004 over the second quarter of 2003 is due to the American Stock Exchange annual fee.
Financial Condition
Current assets plus securities available for sale totaled $2,976,799 on June 30, 2004, compared to $2,128,341 on June 30, 2003. During June, 2004, $1,000,000 of U.S. Securities matured and this amount was not reinvested in U.S. Securities until July, 2004. Current liabilities, which were also total liabilities were $66,837 on June 30, 2004, compared to $44,996 on June 30, 2003.
During the quarter ended June 30, 2004, the Company sold preferred stocks from securities available for sale yielding proceeds of $366,194. These securities were sold because their dividends did not qualify for the federal income tax exclusion and because they would be more adversely affected by interest rate increases. The Company replaced them with common stocks costing $512,974 whose dividends qualified for the exclusion.
7
Management believes existing cash and short-term investments together with funds generated from operations should be sufficient to meet operating requirements and provide funds for strategic acquisitions.
Issues and Uncertainties
This Quarterly Report contains statements that are forward-looking. These statements are based on current expectations and assumptions that are subject to risks and uncertainties. Actual results could differ materially because of issues and uncertainties such as those listed below, which, among others, should be considered in evaluating the Company’s financial outlook.
Revenues from oil and gas provide most of the Company’s income. All of these revenues come from wells operated by other companies from property belonging to Calcasieu Real Estate & Oil Co., Inc. Consequently, these revenues fluctuate due to changes in oil and gas prices and changes in the operations of the other companies.
Item 4. Controls and Procedures
Under the supervision and with the participation of the Company’s Chief Executive Officer and Chief Financial Officer, the Company has evaluated the effectiveness of the design and operation of its disclosure controls and procedures pursuant to Exchange Act Rule 13a -14(c) within 90 days of the filing date of this quarterly report. Based on this evaluation, the Chief Executive Officer and Chief Financial Officer have concluded that these disclosure controls and procedures are effective. There were no significant changes in the Company’s internal controls or in other factors that could significantly affect internal controls subsequent to the date of their evaluation.
Item 6. Exhibits and Reports on Form 8-K
| (A) | Exhibits |
| 31.1 | Certifications |
| 31.2 | Certifications |
| 32.1 | Certification Pursuant to 18 U.S.C. Section 1850 as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. |
| 32.2 | Certification Pursuant to 18 U.S.C. Section 1850 as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. |
| (B) | Report of Form 8-K |
| None | filed. |
Items 1, 2, 3, 4 and 5 are not applicable and have been omitted.
8
Signature
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
| Calcasieu Real Estate & Oil Co., Inc. | ||
| Date: July 26, 2004 |
/s/ William D. Blake | |
| William D. Blake | ||
| Vice-President and Treasurer | ||
| Chief Financial Officer | ||
|
/s/ Arthur Hollins, III | ||
| Arthur Hollins, III | ||
| President and | ||
| Chief Executive Officer |
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