Business Context and Reporting Period
This Form 10-Q covers the quarterly period ended June 30, 1996, for Calcasieu Real Estate & Oil Co., Inc. (Note: The request metadata listed "CKX LANDS, INC." but the filing text identifies the registrant as Calcasieu Real Estate & Oil Co., Inc.). The company operates in the timber, agriculture, and oil and gas sectors. As of June 30, 1996, 1,997,272 shares of common stock were issued and outstanding.
Key Financial Metrics
| Metric | Six Months Ended June 30, 1996 | Six Months Ended June 30, 1995 |
|---|---|---|
| Total Revenue | $217,411 | $590,403 |
| Net Income | $90,967 | $289,238 |
| Cash Flow from Operations | $(118,950) | $502,726 |
| Cash and Equivalents (Ending) | $194,854 | $426,830 |
| Total Assets | $3,081,857 | $2,895,183 |
| Total Liabilities | $260,906 | $333,988 |
| Shareholders' Equity | $2,820,951 | $2,561,195 |
Revenue Breakdown (Six Months 1996): Oil & Gas ($191,763), Agriculture ($15,225), Timber ($10,423).
Investment Portfolio: The company holds 4,796 shares of Calcasieu Marine National Bank valued at $731,676 (market value) on the balance sheet.
Material Changes vs. Prior Period
- Revenue Decline: Net income for the six months ended June 30, 1996, decreased by 68.5% compared to the same period in 1995. This was primarily driven by a significant drop in timber income.
- Timber Volatility: In 1995, the company harvested an 1,100-acre tract generating over $400,000 in timber income. No comparable large-scale harvest occurred in the first half of 1996.
- Quarterly Improvement: Despite the six-month decline, Q2 1996 income increased by 167.7% over Q1 1996 due to higher oil and gas income, increased timber income, and reduced general and administrative expenses.
- Cash Flow: Operating cash flow turned negative ($118,950 outflow) in the first half of 1996, compared to a positive $502,726 in 1995. This was largely due to a $58,399 increase in prepaid income taxes and a $141,298 increase in income taxes payable (timing differences).
- Investment Appreciation: Unrealized appreciation on investments increased significantly from $66,781 in 1995 to $335,895 in 1996, reflecting the revaluation of the Calcasieu Marine National Bank holdings.
Outlook, Risks, and Management Commentary
- Bank Acquisition: Hibernia Corporation has agreed to acquire Calcasieu Marine National Bank for $196 per share in cash. The transaction is expected to close in the third quarter of 1996. The company currently values these shares at $150 per share.
- Liquidity: Management believes current revenues are sufficient to meet existing and anticipated future needs. No material additional liabilities are anticipated.
- Future Trends: Long-term revenue trends are expected to depend more on timber sales development than on oil and gas operations.
- Risks: The company's financial performance is highly sensitive to the timing and volume of timber harvests, as evidenced by the variance between 1995 and 1996 results.
Investor Verification Checklist
- Verify the closing date and final terms of the Hibernia Corporation acquisition of Calcasieu Marine National Bank to confirm the realized gain on the investment.
- Confirm the schedule for future timber harvests to assess the sustainability of revenue streams given the volatility observed in 1995 vs. 1996.
- Review the reconciliation of the negative operating cash flow to ensure the increase in prepaid taxes and payables is a timing issue rather than a liquidity constraint.
- Monitor the company's ability to maintain dividend payments ($39,947 per quarter) given the reduced net income and negative operating cash flow in the first half of 1996.