Business Context and Reporting Period
Company: Calcasieu Real Estate & Oil Co., Inc. (Note: Input metadata referenced "CKX Lands, Inc." but the filing text identifies Calcasieu Real Estate & Oil Co., Inc.)
Filing Type: Form 10-Q
Period Ended: September 30, 1996
Business Overview: The Company operates in oil and gas, agriculture, and timber sectors. It holds significant land assets and investment securities.
Key Financial Metrics (Nine Months Ended Sept 30, 1996)
- Total Revenue: $419,835 (Down from $683,095 in prior year).
- Net Income: $664,504 (Up from $333,010 in prior year).
- Net Income Per Share: $0.33 (Up from $0.17 in prior year).
- Operating Cash Flow: $774,010 provided by operating activities.
- Cash and Equivalents: $429,765 (Sept 30, 1996) vs. $447,961 (Sept 30, 1995).
- Total Assets: $3,312,051.
- Total Liabilities: $289,415 (Current only; no long-term debt listed on balance sheet).
- Shareholders' Equity: $3,022,636.
Material Changes vs. Prior Period
- Revenue Composition: Oil and gas income increased 44.1% due to higher prices and lease fees. Timber income dropped 78.3% due to a lack of clear-cutting compared to a 138-acre sale in 1995. Agriculture income fell 15% while farm costs rose 54.2%.
- Operating Income: Decreased 50.3% year-over-year, driven primarily by the decline in timber revenue.
- Extraordinary Gain: The Company recorded a $751,410 gain on the sale of CM Bank stock in the quarter ended Sept 30, 1996. This non-operating gain significantly boosted net income despite lower operating earnings.
- Investment Activity: Proceeds from the bank stock sale were invested in U.S. Treasury notes and bonds. Investment securities increased to $516,421 (available for sale).
Guidance, Outlook, and Risks
- Management Outlook: Management believes current revenues are sufficient for existing and anticipated future needs. No material additional liabilities are anticipated.
- Strategic Focus: Long-term trends are expected to depend more on property development (specifically timber sales) than oil and gas operations.
- Corporate Events: Director Adolph Marx passed away during the quarter. The Board expanded to ten directors, electing Charles D. Viccellio and Laura A. Leach to fill vacancies.
- Risks/Contingencies: The filing does not explicitly detail specific legal contingencies or market risks beyond the volatility of commodity prices (oil, gas, timber) implied by the revenue fluctuations.
Investor Verification Checklist
- Verify the sustainability of the $751,410 one-time gain from the CM Bank stock sale and its impact on reported profitability.
- Confirm the timeline and volume of future timber sales, as this is cited as the primary driver for long-term revenue.
- Review the 54.2% increase in farm costs to understand if this is a temporary anomaly or a structural cost increase.
- Assess the liquidity position given the shift of cash into U.S. Treasury securities pending new investment opportunities.
- Confirm the current status of the Board of Directors following the recent changes in composition.