Business Context and Reporting Period
Company: Calcasieu Real Estate & Oil Co., Inc. (Note: Metadata referenced "CKX Lands, Inc." but the filing text identifies Calcasieu Real Estate & Oil Co., Inc.)
Filing Type: Form 10-Q
Period: Quarter and six months ended June 30, 2003
Operations: The company derives revenue primarily from oil and gas properties, with additional income from agriculture and timber. It holds significant land assets and securities available for sale.
Key Financial Metrics
| Metric | Six Months Ended June 30, 2003 | Six Months Ended June 30, 2002 |
|---|---|---|
| Total Revenue | $813,293 | $680,078 |
| Net Income | $450,460 | $354,375 |
| Net Income per Share | $0.23 | $0.18 |
| Operating Cash Flow | $482,397 | $474,763 |
| Cash and Equivalents (Ending) | $432,812 | $572,556 |
| Total Assets | $6,625,191 | $6,652,702 |
| Total Liabilities | $44,996 | $227,975 |
| Shareholder Equity | $6,580,195 | $6,424,727 |
Revenue Breakdown (Six Months 2003): Oil and gas ($678,743), Agriculture ($102,036), Timber ($32,514).
Debt: The company reported no long-term debt. Current liabilities totaled $44,996, primarily consisting of deferred taxes and trade payables.
Material Changes vs. Prior Period
- Net Income Increase: Net income for the first six months of 2003 increased 27.1% compared to the same period in 2002, driven almost entirely by higher revenues from oil and gas properties.
- Quarterly Decline: Despite the six-month gain, Q2 2003 net income ($198,683) decreased from Q2 2002 ($264,384). This was due to lower mineral lease income and reduced receipts from working interests in the Woodlawn field.
- Expense Timing: General and administrative expenses increased in Q2 2003 compared to Q2 2002 due to the timing of franchise tax payments.
- Liquidity: Cash and cash equivalents decreased by approximately $150,515 over the six-month period, primarily due to dividend payments and purchases of securities available for sale.
Guidance, Outlook, and Risks
Management Commentary: Management believes current revenues are sufficient for existing and anticipated future operations. Long-term trends depend on replacing depleting mineral production and increasing income from timber and agriculture. No material additional liabilities are anticipated.
Dividend Policy: The Board decided to disburse all income deemed unnecessary for prudent future operations as dividends, a change influenced by federal taxation of dividends. Dividends paid for the six months ended June 30, 2003, totaled $489,019.
Unusual Items: Oil and gas income for the second quarter included a $36,324 first payment from the settlement of the "Strohe suit." Total remaining payments from this settlement are currently unknown.
Risks: The filing notes that future performance relies on the ability to find new production to replace mineral depletion. The company participates in no off-balance sheet entities.
Investor Verification Checklist
- Strohe Suit Settlement: Verify the total potential value and payment schedule of the Strohe suit settlement, as only the first payment ($36,324) is currently quantified.
- Woodlawn Field Production: Confirm the status and future revenue potential of the working interests in the Woodlawn field, which contributed to recent revenue declines.
- Dividend Sustainability: Assess the impact of the new policy to distribute all excess income as dividends on the company's ability to fund future capital expenditures or acquisitions.
- Asset Valuation: Review the valuation of "Securities Available for Sale" ($1,499,478) and the unrealized gains included in other comprehensive income.