UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-K
Annual Report Pursuant to Section 13 or 15(d) of
The Securities Exchange Act of 1934
For Fiscal Year Ended December 31, 2002 Commission File Number 0-9669
| For Fiscal Year Ended December 31, 2003 | Commission File Number 0-9669 |
CALCASIEU REAL ESTATE AND OIL CO., INC.
(Exact
(Exact Name of registrant as specified in its charter)
Louisiana 72-0144530
(State of other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
One Lakeside Plaza 70601
Lake Charles, Louisiana (Zip Code)
(Address of principal executive offices)
Registrant's
| Louisiana | 72-0144530 | |
(State of 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) | |
Registrant’s telephone number, including area code: (337) 494-4256
Securities registered pursuant to Section 12(b) of the Act:
Title of each Class Name of each exchange
on which registered
None Not Applicable
Securities registered pursuant to Section 12(g) of the Act:
Common Stock, No Par Value
(Title of Class)
| Common Stock with no par value | American Stock Exchange | |
| (Title of each class) | (Name of exchange on which registered) |
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 of 15(d) of the Securities Exchange Act of 1934 during the preceding 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]x No [_]
State¨
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. Yes¨ No x
Indicate by check mark whether the Registrant is an accelerated filer (as defined in Rule 12-b2 of the Act). Yes ¨ No x
As of June 30, 2003, the aggregate market value of the voting stockcommon equity held by non-affiliates of(based on the registrant. Trading in the Company's common stock is limited and sporadic
and its common stock has no readily established market value.
most recent sale prior to June 30, 2003) was approximately $10,737,617.
Indicate the number of shares outstanding of each of the registrant'sregistrant’s classes of common stock as of the latest practicable date. Common Stock, No Par Value, 1,955,0441,942,495 shares outstanding at February 18, 2003.
As of June 30, 2002 the total market value of all outstanding stock was
$10,009,825.
2004.
Documents Incorporated by Reference
Document Part
Portions of Form 10K
-------- ----------------
Definitivethe Registrant’s definitive Proxy Statement Parts Iprepared in connection with the 2004 Annual Meeting of Stockholders are incorporated by reference into Part III, Items 10, 11, 12, 13 and III
PART I
Item 1.BUSINESS
Calcasieu Real Estate & Oil Co., Inc., a Louisiana corporation incorporated in 1930 and headquartered in Lake Charles, Louisiana, is a company which managesowns and operates real estate holdings involved inthat generate oil and gas royalty holdings,royalties, timber managementsales and agriculture.agriculture rents. Originally formed to receive mineral royalties spun off by a bank to its shareholders, the Company has pursued a goal of acquiring land-holdings in Southwest Louisiana.
Operations
The Company'sCompany’s income is derived from the acreage and mineral interests it owns.owns either totally or as an undivided owner of land managed as a unit under the name Walker Louisiana Properties. The largest source of income is from oil and gas production from these properties. The next largest sources are from agriculture and timber grown on the Company'sCompany’s land. The Company is not involved in exploration and production. The Company has a small working interestsinterest in four wells,one field, which occurred as a back-in under the original mineral leases.lease, but has no control over the operations. The Company does not anticipate taking a working interest in any future production.
Industry Segments
In addition to anproduction of oil and gas segment, thegas. The Company has also created
"Agriculture Properties" and "Timber Properties". Includeddoes not consider itself to be involved in oil and gas properties revenues areproducing activities inasmuch as: (1) it does not search for crude oil or natural gas in their natural states; (2) it does not acquire property for the purpose of exploration or the removing of oil or gas; and (3) it is not involved in construction, drilling and production activities necessary to retrieve oil and gas. All of the Company’s oil and gas income is derived from leases on Company owned lands or mineral lease payments and payments for seismic work.
Note 6rights deeded to the Financial Statements on page 25 sets forthCompany at its inception in 1930. The Company receives royalties from 23 different operators each with a different lease. The largest mineral participation by Calcasieu in any of these units is 4.339%. The Company is a part owner in Walker Louisiana Properties lands which receives oil and gas income from 29 different operators each with a different lease. The largest mineral participation by Calcasieu in any of these units is 2.858%. Calcasieu has no reserve information on any of these properties and it would be uneconomical and unpractical to acquire this information.
Of the business segments.
Company’s net 13,941 acres, there are 6,134 acres planted in trees with the remainder being primarily agriculture land. There is approximately 870 acres of marsh land whose only economic use is for hunting, trapping and prospective mineral production. Income from oil and gas royalties and mineral leasing comes from both agriculture and timber lands.
Oil and gas royalties are paid by the operators who own the wells. Timber income is paid by the highest bidder of the timber. There are several mills in the immediate area who compete for timber. All of the agriculture income comes from tenants who pay annual rents. The prices paid for oil, gas and timber depend on national and international market conditions.
We do not separate financial information in the enclosed financial statements because neither agriculture nor timber produce as much as 15% of total receipts.
Employees
The Company currently employs a total of five persons, including officers, in a part-time capacity. The Company is subject to no union contracts nor does the Company have any hospitalization, pension, profit sharing or deferred compensation plans. Walker Louisiana Properties employs its own staff, none of whom are Company officers or directors. One employee of Walker is devoted full-time to Agriculture and one employee of Walker is devoted full-time to Timber.
Customers
The Company had two customers, the sales to which equal or exceed 10% of the Company'sCompany’s total oil and gas revenues, exclusive of revenues paid Walker
Louisiana Properties.revenues. In 2002,2003, sales to Cox & Perkins accounted for 71.1%41% of revenues, sales to Kerr-McGee accounted for 13% of revenues and sales to Riceland Petroleum accounted for 14.3%9% of oil and gas revenues. All income is derived from domestic customers.
Item 2.PROPERTIES
The Company owns a total of 13,67213,941 net acres of agricultural, timber and marsh land in fee in the Parishes of Allen, Beauregard, Calcasieu, Cameron, Jefferson Davis, LaFourche, Sabine, St. Landry and Vermilion in Louisiana. Of this 1
5,7666,431 acres represents the Company'sCompany’s one-sixth undivided ownership in 34,59635,088 acres which is managed by an entity called Walker Louisiana Properties, a joint venture, for the benefit of the six owners. Also managed by Walker Louisiana Properties is an additional
40% interest in 1,577 acres of this same property. The remainder of the Company'sCompany’s acreage is managed by the Company'sCompany’s officers. All amounts on the financial statements included herein reflect the combined totals of the two operations.
The table below shows, for the years ended December 31, 2002,2003, December 31, 2001,2002, and December 31, 2000,2001, net gas produced in thousands of cubic feet (MCF) and net oil (including condensate and natural gas liquids) produced in barrels (Bbl), average sales prices and average production costs, relating to oil and gas attributable to the royalty interests and working interest held by the Company.
| Year Ended 12/31/03 | Year Ended 12/31/02 | Year Ended 12/31/01 | |||||||
Net gas produced (MCF) | 153,046 | 157,180 | 189,254 | ||||||
Average gas sales price (Per MCF)(1) | $ | 5.11 | $ | 3.04 | $ | 5.66 | |||
Net Oil Produced (Bbl) | 25,618 | 33,069 | 13,225 | ||||||
Average Oil Sales price (Per Bbl)(1) | $ | 30.04 | $ | 26.02 | $ | 25.40 | |||
| (1) | Before deduction of |
Item 3.LEGAL PROCEEDINGS
There are no material pending legal proceedings to MCF equivalents atwhich the rate of 6 MCF's per
barrel, representing the approximate relative energy content of oil and
natural gas.
Walker Louisiana Properties
Net income before income taxes from Walker in 2002 was $394,789 a decrease
of 23% from 2001. This was due to a decrease in the Company's share of oil and
gas income of $89,324 and a decrease of $28,272 in agriculture income. The
Company's share of Walker's general and administrative expenses including
property taxes was $83,470.
2
Calcasieu Acreage
Net income before income taxes from the Calcasieu acreage in 2002 was
$679,679 a decrease of 11.9% from 2001. Oil and gas income increased $40,674 in
2002 over 2001, while timber income decreased $109,930.
Item 3. LEGAL PROCEEDINGS
The Company is a co-defendant in a lawsuit filedparty. There are no proceedings known to be contemplated by owners of eighty acres,
which the defendants owned half the minerals. The landowners are asserting that
the mineral interest prescribed. A settlement has been reached whereby the
Company will receive all moneys held in escrow for their one-half for past
production. Production ceased over one year ago.governmental authorities. The Company is forfeiting
one-halfwas notified by the United States Department of its ownership of the minerals on the 80 acresJustice during 2003 that it was not going to the plaintiff, and
the plaintiffs are ratifying the company's remaining ownership.
The Company has been notified bypursue a bill from the National Pollution Funds Center that the Company protested as well as the other various owners of the land managed by Walker
Louisiana Properties, together with certain past owners, are jointly and
severally liable for $588,843, the cost of an environmental clean-up. The
Company is contesting the claim since the damage occurred prior to the Company's
ownership and the Company is an innocent landowner. The Company also contends
the damage did not come under the National Pollution Funds purview.
being owed.
Item 4.SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
There were no matters submitted to security holders during the fourth quarter.
PART II
Item 5.MARKET FOR THE REGISTRANT'SREGISTRANT’S COMMON STOCKEQUITY AND RELATED SECURITY HOLDERSTOCKHOLDER MATTERS
As of February 18, 2003,2004, the common stock of Calcasieu Real Estate and Oil Co., Inc. was owned by 685 stockholders.approximately 671 stockholders and the stock price was $7.35. During the three years precedingprior to December 8, 2003, there was no established public trading market for the date hereof,common stock and there hashad been only limited and sporadic trading in the Company's
Common Stock,common stock, principally among its shareholders. InOn December 8, 2003, the year ended December 31, 2002, 37,500 shares were traded with a high
of 6.50 and a low of 4.80. The last trade during this period was on December 31,
2002, for 4000 shares at a price of 5.20. Below is theCompany began trading range.
Volume High Low
------ ---- ----
01/01/02 - 03/31/02 12,000 6.50 6.20
04/01/02 - 06/30/02 4,500 6.25 5.12
07/01/02 - 09/30/02 5,900 6.25 4.60
10/01/02 - 12/31/02 15,100 6.00 4.80
3
Dividends were paid per share on Common Stock as follows by record date: March
29, 2000, $.05; June 30, 2000, $.05; September 27, 2000, $.05; December 29,
2000, $.05 regular and $.05 extra; March 30, 2001, $.05; June 28, 2001, $.05;
September 24, 2001, $.05; December 28, 2001, $.05 regular and $.05 extra; April
3, 2002, $.05; June 25, 2002 $.05; September 26, 2002, $.05; and December 27,
2002, $.05 regular and $.05 extra. There are no restrictions on the payingAmerican Stock Exchange under the symbol CKX. The following table sets forth the high and low sales prices for the common stock by quarter during 2003 and 2002.
| 2003 | ||||||||||||
Common Stock Market Price | Q1 | Q2 | Q3 | Q4 | ||||||||
High | $ | 7.00 | $ | 5.70 | $ | 6.05 | $ | 7.40 | ||||
Low | $ | 5.00 | $ | 4.75 | $ | 5.00 | $ | 5.50 | ||||
| 2002 | ||||||||||||
Common Stock Market Price | Q1 | Q2 | Q3 | Q4 | ||||||||
High | $ | 6.50 | $ | 6.25 | $ | 6.25 | $ | 6.00 | ||||
Low | $ | 6.20 | $ | 5.12 | $ | 4.60 | $ | 4.80 | ||||
The Company has paid cash dividends each year since 1990. A summary of dividends.
cash dividends declared each quarter for the last two years is set forth in the table on page 37 of this Annual Report on Form 10-K.
Item 6.SELECTED FINANCIAL DATA
| Ended 12/31/99 | Ended 12/31/00 | Ended 12/31/01 | Ended 12/31/02 | Ended 12/31/03 | |||||||||||
Revenues | $ | 2,646,491 | $ | 2,497,118 | $ | 1,618,587 | $ | 1,462,205 | $ | 2,111,141 | |||||
Income from operations | 2,274,903 | 2,094,098 | 1,195,601 | 1,015,916 | 1,524,968 | ||||||||||
Net Income | 1,545,060 | 1,436,029 | 872,606 | 736,538 | 1,093,005 | ||||||||||
Earnings per common share (1) | .78 | .73 | .45 | .38 | .56 | ||||||||||
Total assets | $ | 5,212,540 | $ | 6,035,717 | $ | 6,407,663 | $ | 6,623,665 | $ | 7,124,504 | |||||
Stockholders equity | $ | 4,931,003 | $ | 5,794,517 | $ | 6,179,065 | $ | 6,424,727 | $ | 6,922,509 | |||||
Cash Dividends declared per common share | .08 | .25 | .25 | .25 | .29 | ||||||||||
| (1) | Earnings per common share |
There are based onno factors that materially affect the weighted average
outstanding sharescomparability of 1,955,044the information shown above, other than fluctuations in 2002, 1,955,044 in 2001, 1,956,000 in
2000, 1,979,000 in 1999volumes and 1,995,000 in 1998.
prices of commodities sold.
Item 7. MANAGEMENT'SMANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
Business
You should read the
The following discussion and analysis of our financial
condition and results of operations and financial condition should be read together with "Selected Financial Data"the other financial information and ourthe financial statements and related notes appearingincluded elsewhere in this Annual Report on Form 10-K.
Forward Looking Statements
This discussion and analysisAnnual Report contains forward-looking statements relating to the Company’s operations that involveare based on management’s current expectations, estimates and projections about the Company’s business. Words such as “anticipates,” “expects,” “intends,” “plans,” “targets,” “projects,” “believes,” “seeks,” “estimates” and similar expressions are intended to identify such forward-looking statements. These statements are not guarantees of future performance and are subject to certain risks, uncertainties and assumptions.
Overview
Incomeother factors, some of which are beyond our control and are difficult to predict. Therefore, actual outcomes and results may differ materially from what is expressed or forecasted in such forward-looking statements. You should not place undue reliance on these forward-looking statements, which speak only as of the date of this report. Unless legally required, the Company undertakes no obligation to update publicly any forward-looking statements, whether as a result of new information, future events or otherwise.
Among the factors that could cause actual results to differ materially are:
In addition, such statements could be affected by general domestic in international economic and political conditions. Unpredictable or unknown factors not discussed herein also could have material adverse effects on forward-looking statements.
Overview
We own and receive income from land located in Southwest Louisiana. Over 70% of our income is derived from mineral activity conducted by others. It consists of oil and gas royalties, oil and gas leases and seismic leases. We also receive rental income from farm land and income from the sale of timber grown on our land.
Our future oil and gas income is dependent to some extent on future technological developments that could result in the discovery of oil and gas deposits that are currently unknown or uneconomical to recover. At some point in time current oil and gas production will be depleted. We do not conduct exploration, development or production activities. Our oil and gas income is derived from Company lands and has been discovered and produced by others under mineral leases from the Company. Consequently, the Company has little control over its oil and gas income.
We are placing more emphasis on growing timber for the past
three years, depletedfuture of the Company. We are also always looking to purchase additional land in our area at the right price.
Critical Accounting Policies and were pluggedEstimates
The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and abandoned. Calcasieu has a 13%
royalty interestassumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting periods. Actual results could differ from those estimates. The most significant accounting estimates inherent in a new oil wellthe preparation of our financial statements include the following items:
Our accounts receivable consists of incomes received after year end for royalties produced prior to year end. When there are royalties that have not been received at North Gordon. This well paid Calcasieu
$400,000 after severance taxthe time of the preparation of the financial statements for months in 2002. An injection well has been completed which
could extend the life of this well for threeprior year, we estimate the amount to four years.
Lease and seismic income has decreased steadily overbe received based on the last four years.
Theremonth’s royalties that were received from that particular company. We do not maintain an allowance for doubtful accounts because we can confirm virtually all of our receivables before they are two mineral leases on Walkerbooked as income.
Our past inventory was for harvested crops. Since all agricultural income is now from land which have the potential for being
drilled.
4
Agriculture income decreased 16.7% in 2002 from 2001. The main crop on
company land is rice. Prices and government support payments for rice were at
their lowest in years in 2002. Under new regulations the Company willrents we no longer be able to qualify for government support payments. As a consequence we are
being forced to go to cash rentals on all farm properties instead of
crop-sharing. We expect agriculture income to decrease another 25% in 2003.
Timber income decreased $108,894. This was due to a combination of reduced
sales, lower prices and increased expenses. have inventory.
The Company has begun a program of
reforesting all vacant pasture land and cut-over land.
Comparison of 2002 and 2001
Revenues decreased 9.7% in 2002 from 2001 due to decrease in income in each
of the Company's segments. Income from operations decreased 14.8% in 2002 from
2001 as costs and expenses increased in each segment. The biggest increase in
expenses was in severance taxes. Net income afteraccounts for income taxes was down $136,038
in 2002 from 2001 or 15.6%
accordance with Statement of Financial Accounting Standards No. 109, “Accounting for Income Taxes (SFAS 109)” which requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of temporary differences between the financial statement carrying amounts and the tax bases of assets and liabilities.
Reforestation expenses are added to the timber asset account and depleted over seven years. As timber is sold the original cost is amortized based on the volume as compared to the original cost. When we purchase land that portion that represents the timber value is set up as an asset labeled timber.
Liquidity and Capital Resources
The Company has a strong liquid position.current ratio of better than four to one and no long-term debt or contingencies. We have no off balance sheet liabilities. The Company maintains a strong
liquid position to help maintainonly material current liability at December 31, 2003, was the dividend on our common stock declared in December and providepaid in January. Additional sources of liquidity are the Company with the
resourcesCompany’s securities available-for-sale and a bank line of credit for $1,000,000. We maintain our liquidity position in order to be able to purchase real estate that comesmight come on the marketmarket.
We have no current commitments for capital expenditures. Unless an opportunity arises to purchase additional land, we will not need to make capital expenditures in the next twelve months other than normal reforesting expenditures.
We believe that our existing sources of liquidity, including expected cash flows from operating activities, existing cash balances and existing credit facility, will satisfy our cash requirements for at least the next twelve months.
Results of Operations
The following table shows, for the periods indicated, certain operating data expressed as a percentage of revenues.
| 2003 | 2002 | 2001 | |||||||
Revenues | 100.0 | % | 100.0 | % | 100.0 | % | |||
Costs and expenses: | |||||||||
Oil and gas production | 9.6 | % | 7.1 | % | 3.9 | % | |||
Agricultural | .6 | % | .7 | % | .5 | % | |||
Timber | 1.9 | % | 2.8 | % | 2.0 | % | |||
General and administrative | 14.1 | % | 16.9 | % | 18.0 | % | |||
Depreciation, depreciation, amortization | 1.6 | % | 2.7 | % | 1.8 | % | |||
Total costs and expenses | 27.8 | % | 30.2 | % | 26.1 | % | |||
Income from operations | 72.2 | % | 69.8 | % | 73.9 | % | |||
Other income | 2.7 | % | 3.7 | % | 5.4 | % | |||
Income before income taxes | 74.9 | % | 73.5 | % | 79.3 | % | |||
Provision for income taxes | 23.1 | % | 22.9 | % | 25.4 | % | |||
Net Income | 51.8 | % | 50.6 | % | 53.9 | % |
Oil and gas production costs were higher as a percentage of revenues in 2003 over 2002 due to the write-off of the remaining amount for minerals from 1998 purchase of real estate. Oil and gas production costs were higher as a percentage of revenue in 2003 over 2002 due to both the write-off but also because oil and gas properties income were a smaller proportion of total revenues in 2001 and agricultural and timber revenues were a larger proportion of total revenues in 2001. Other income as a percentage of revenues was higher in 2001 compared to 2002 and 2003 due to a realized gain on investments. Other income as a percentage of revenues was lower in 2003 compared to 2002 and 2001 partly due to greater total revenues.
Net income increased 48.4% in 2003 over 2002 due primarily to an attractive price.
Managementincrease in the average sales price of both oil and gas. Gas production was down 2.6% and oil production was down 22.5%. Oil and gas revenues peaked in 1999 and continued high in 2000 primarily due to the Company’s income from the North Indian Village Field. These wells were depleted, plugged and abandoned in 2002. In 2002 a well
was completed at South Gordon by Cox and Perkins which has been the largest source of income for 2002 and 2003. The operator believes thatthere is a reasonable possibility this well will continue to produce at current rates through 2005. When production slows it will drop dramatically.
Although the Company's liquidityCompany does not have access to reserve information on the oil and gas wells from which the Company receives income, we engaged an independent geologist, Stanley N. Warburton, to make estimates as to the remaining life of our five largest income sources in 2003. Listed below are the operators, fields, 2003 income and the geologist’s assessment.
Cox & Perkins – | South Gordon Field - $736,700. One well. Began production in 2001. Declining life of 4 to 6 years. | |
Kerr, McGee – | Roanoke Field - $234,100. One well. Began production in 2000. Most of 2003 income was from prior years production. Production had declined 48% by the end of 2003 compared to its peak in 2001. Declining remaining life of 4 to 5 years. | |
Riceland – | South Jennings Field - $153,000. Currently 8 wells on a 1,920 acre unit. Been producing since 1940. Declining life of 8 to 10 years. | |
GulfMark – | Vinton Field - $130,000. Shallow salt dome production. Current income levels will decline sharply over next 2 years. | |
Meridian – | Lakeside Field - $107,500. One well. Production began in 2001. Production declined 20% between 2002 and 2003. Declining remaining life of 6 to 8 years. | |
The Company has a 2.083% royalty interest in one new gas well and a 4.167% royalty interest in a second new gas well both at Castor Creek. No income was received in 2003 from these wells and it is too early to determine their effect on future income.
Revenues include $189,722 in oil and gas royalties which were received in 2003, but were attributable to production in prior years. They were held by the operators pending determination of ownership. These revenues will not be sufficientrecurring. Included in oil and gas expenses is $77,816 for the write-off of the amount remaining on Walker Louisiana Properties books for the purchase of minerals from Fina in 1998. This expense will not be recurring. The net effect of these items was to meetincrease net income by $50,790.
Oil and gas expenses were up 98% due entirely to the above write off and higher severance taxes due to higher sales prices.
Agriculture income was off 10% from 2002 continuing a three year decline as the Company converted totally to cash rents. This income should stabilize at 2003’s level. Timber income was off 15% due to both lower demand and lower prices.
Administrative expenses were up $50,510 or 20.6% over 2002. Of this amount $39,600 was the cost of listing on the American Stock Exchange and $12,633 represents a gift of dirt from Company land to Cameron Parish.
Item 7A.QUANTITIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Significant Market Risk
The Company’s business and operations are subject to certain risks and uncertainties, including:
Reliance Upon Oil and Gas Discoveries
The Company’s most significant risk is its existing capital needsreliance upon others to perform exploration and development for oil and gas on its land. Future income is dependent on others finding new production on the needsCompany’s land to replace present production as it is depleted. Oil and gas prices as well as new technology will affect the possibility of new discoveries.
Commodity Prices
All of the Company’s operating income comes from the sale of commodities produced from its anticipated
future operations.
real estate; oil and gas, forest products, agriculture products. Fluctuations in these commodity prices will directly impact net income.
Interest Rate Risks
The Company has no direct exposure to changes in foreign currency exchange rates and minimal direct exposure to interest rates. The Company has an unsecured line of credit with Bank One at their prime rate, but the Company hasn’t utilized this line and has no current plans to do so.
Item 8.FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
All Financialfinancial statements required by Regulation S-X are listed in the Table of Contents to Financial Statements and Supplemental Schedules appearing immediately after the signature page of this Form 10K and are included herein by reference. See Item 14.
Item 9.DISAGREEMENTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
Not applicable
Item 9A.CONTROLS AND PROCEDURES
The Company maintains disclosure controls and procedures that are designated to ensure that information required to be disclosed in the Company’s Securities Exchange Act reports is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to the Company’s management, including its principal executive officer and principal financial officer, as appropriate, to allow timely decisions regarding required disclosure.
As of December 31, 2003, an evaluation was performed under the supervision and with the participation of the Company’s management, including the principal executive officer and principal financial officer, of the effectiveness of the design and operation of the Company’s disclosure controls and procedures. Based on that evaluation, the Company’s management, including the principal executive officer and principal financial officer, concluded that the Company’s disclosure controls and procedures were effective as of December 31, 2003. There have been no changes in the Company’s internal control over financial reporting during the fiscal quarter ended December 31, 2003 that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.
PART III
Item 10.DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
The information required by Item 10 as to directors and nominees for directors is included in the Registrant'sRegistrant’s definitive proxy statement to be filed pursuant to Section 14(a) of the Securities Exchange Act of 1934 and is includedincorporated herein by reference.
5
Executive officerofficers of Registrant as of February, 2002,2004, are as follows:
Name Age Position with Registrant
---- --- ------------------------
Arthur Hollins, III 72 President & Director
William D. Blake 70 Vice President, Treasurer and Director
Charles D. Viccellio 69 Vice President, Secretary and Director
Name | Age | Position with Registrant | ||
Arthur Hollins, III | 73 | President & Director | ||
William D. Blake | 71 | Vice President, Treasurer and Director | ||
Charles D. Viccellio | 70 | Vice President, Secretary and Director |
The occupations of such executive officers during the last five years and other principal affiliations are:
Name
Arthur Hollins, III
Name | ||
Arthur Hollins, III | Director of the Company since 1975; President of the Company since 1979; Chairman of the Board and President of the First National Bank of Lake Charles from 1968 to 1998; President of Bank One, Southwest Louisiana, from 1998 to April, 1999. Mr. Hollins is a certified public accountant and a graduate of Washington & Lee University. | |
William D. Blake | Director of the Company since 1966; Secretary-Treasurer of the Company from 1966-1979; Vice-President and Treasurer of the Company since 1979; President of Lacassane Co., Inc. and Howell Industries, Inc. Mr. Blake is a graduate of Louisiana State University. | |
Charles D. Viccellio | Vice-President and Secretary of the Company since 1997 and Director of the Company since 1996. Partner in the law firm of Stockwell, Sievert, Viccellio, Clements & Shaddock, LLP. Mr. Viccellio received both his undergraduate and law degrees from Tulane University. | |
There are no family relationships between any of the Company since 1975; Presidentour directors (except Mrs. Leach and Mr. Alexander are brother and sister) and executive officers or any arrangement or understanding between any of the Company since 1979; Chairman of the Board at
the First National Bank of Lake Charles from 1968our executive officers and any other person pursuant to 1998; President of Bank One, Southwest
Louisiana, from 1998which any executive officer was appointed to April, 1999.
William D. Blake Director of the Company since 1966;
Secretary-Treasurer of the Company from 1966-1979;
Vice-President and Treasurer of the Company since
1979; President of Lacassane Co., Inc. and Howell
Industries, Inc.
Charles D. Viccellio Vice-President and Secretary of the Company since
1997 and Director of the Company since 1996.
Partner in the law firm of Stockwell, Sievert,
Viccellio, Clements & Shaddock, LLP.
his office.
Item 11.EXECUTIVE COMPENSATION
The information required by Item 11 is included in the Registrant'sRegistrant’s definitive proxy statement to be filed pursuant to Section 14(a) of the Securities and Exchange Act of 1934 and is includedincorporated herein by reference.
Item 12.SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS
The information required by Item 12 is included in the Registrant'sRegistrant’s definitive proxy statement to be filed pursuant to Section 14(a) of the Securities Exchange Act of 1934 and is includedincorporated herein by reference.
Item 13.CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The information required by Item 13 is included in the Registrant’s definitive proxy statement to be filed pursuant to Section 14(a) of the Securities and Exchange Act of 1934 and is incorporated herein by reference.
Item 14.PRINCIPAL ACCOUNTANTS FEES AND SERVICES
The information required by Item 14 is included in the Registrant’s definitive proxy statement to be filed pursuant to Section 14(a) of the Securities and Exchange Act of 1934 and is incorporated herein by reference.
PART IV
Item 13. 15.EXHIBITS, FINANCIAL STATEMENTS, SCHEDULES AND REPORTS ON FORM 8-A & FORM 8-K
(a)
| A-1. | Financial Statements |
The following documents arefinancial statements of Calcasieu Real Estate & Oil Co., Inc. filed as part of the report:
1. All Financial Statements. See Table of Contents to Financial
Statements and schedulethis Annual Report on Form 10-K are indexed at page 9.
2. Financial Statement Schedules. See Table of Contents to Financial
Statements and Schedules on page 9.
3.18.
A-3. List of Exhibits - None
(b)
| 3.1 | Restated/Articles of Incorporation of the Registrant is incorporated by reference to Exhibit (3)-1 to Form 10 filed April 29, 1981. | |
| 3.2 | Amendment to Articles of Incorporation of the Registrant filed herewith. | |
| 3.3 | By-Laws of the Registrant filed herewith. | |
| 23.1 | Consent of McElroy, Quirk & Burch filed herewith. | |
| 31.1 | Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 filed herewith. | |
| 31.2 | Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 filed herewith. | |
| 32.1 | Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 filed herewith. | |
| 32.2 | Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 filed herewith. | |
| B-1. | Reports on Form 8-A. |
On November 20, 2003, Calcasieu Real Estate & Oil Co., Inc. filed a report on Form 8-K - None
6
| B-2 | Reports on Form 8-K. |
None.
SIGNATURES
Pursuant to the requirement of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this registration statement to be signed on its behalf by the undersigned, thereunto duly authorized.
CALCASIEU REAL ESTATE AND OIL CO., INC.
BY: /s/ Arthur Hollins, III
---------------------------------------------
Arthur Hollins, III, President
| CALCASIEU REAL ESTATE AND OIL CO., INC. | ||
BY: | /s/ Arthur Hollins III | |
Arthur Hollins, III, President | ||
Dated March 5, 2003
11, 2004
Pursuant to the requirements of the Securities Act of 1934, this report has been signed below by the following persons in the capacities with regard to Calcasieu Real Estate and Oil Co., Inc. and on the date indicated:
Arthur Hollins, III President
- ----------------------------------- (Chief Executive Officer and Director)
William D. Blake Vice President & Treasurer
- ----------------------------------- (Principal Financial Officer and Director)
Charles D. Viccellio Vice President & Secretary, (Director)
- -----------------------------------
Henry C. Alexander Director
- -----------------------------------
Troy A. Freund Director
- -----------------------------------
Laura A. Leach Director
- -----------------------------------
Frank O. Pruitt Director
- -----------------------------------
B. James Reaves, III Director
- -----------------------------------
Mary W. Savoy Director
- -----------------------------------
/s/ Arthur Hollins, III Arthur Hollins, III | President (Chief Executive Officer and Director) | |
/s/ William D. Blake William D. Blake | Vice President & Treasurer (Principal Financial Officer and Director) | |
/s/ Charles D. Viccellio Charles D. Viccellio | Vice President & Secretary, (Director) | |
/s/ Henry C. Alexander Henry C. Alexander | Director | |
/s/ Troy A. Freund Troy A. Freund | Director | |
/s/ Laura A. Leach Laura A. Leach | Director | |
/s/ Frank O. Pruitt Frank O. Pruitt | Director | |
/s/ James Reaves, III James Reaves, III | Director | |
/s/ Mary W. Savoy Mary W. Savoy | Director | |
Dated: March 5, 2003
7
CALCASIEU REAL ESTATE & OIL CO., INC.
Lake Charles, Louisiana
C O N T E N T S
Page
REPORT OF MANAGEMENT 9
| Page | ||
REPORT OF INDEPENDENT AUDITORS ON THE FINANCIAL STATEMENTS AND SUPPLEMENTARY INFORMATION | 15 | |
FINANCIAL STATEMENTS | ||
| 16 | ||
| 17 | ||
| 18-19 | ||
| 20-21 | ||
| 22-30 | ||
SUPPLEMENTARY INFORMATION | ||
| 31 | ||
| 32 | ||
| 33 | ||
SCHEDULE OMITTED | ||
Schedules, other than those listed above, have been omitted because of the absence of the conditions under which they are required or because the required information is included in the financial statements or notes thereto. | ||
REPORT OF INDEPENDENT AUDITORS ON THE FINANCIAL STATEMENTS
AND SUPPLEMENTARY INFORMATION 10
FINANCIAL STATEMENTS
Balance sheets 11
Statements
To the Board of income 12
Statements of changes in stockholders' equity 13-14
Statements of cash flows 15-16
Notes to financial statements 17-28
SUPPLEMENTARY INFORMATION
Property, plant and equipment 29
Accumulated depreciation, depletion and amortization 30
SCHEDULE OMITTED
Schedules, other than those listed above, have been omitted because of the
absence of the conditions under which they are required or because the required
information is included in the financial statements or notes thereto.
8
REPORT OF MANAGEMENT
CALCASIEU REAL ESTATE & OIL CO., INC.
Management of Directors
Calcasieu Real Estate & Oil Co., Inc. is responsible for the
preparation, fairness and integrity of the Company's financial statements and
other information included in this Form 10-K. The financial statements have been
prepared in accordance with generally accepted accounting principles applied on
a materially consistent basis. Where necessary, management has made informed
judgments and estimates as to the outcome of events and transactions, with due
consideration given to materiality.
Management believes that the Company's policies, procedures and internal
control systems provide reasonable assurance that assets are safeguarded and
transactions are properly recorded and executed in accordance with its
authorization.
The Company engages independent public accountants who are responsible for
performing an independent audit of the financial statements. Their report,
immediately following, states their opinion on the fairness of the Company's
financial statements.
The Audit Committee of the Board of Directors meets regularly with the
independent accountants, and management to assure that each is meeting its
responsibilities.
/s/ Arthur Hollins III
- -------------------------------
Arthur Hollins III
President
/s/ William D. Blake
- -------------------------------
William D. Blake
Vice-President & Treasurer
9
[LETTERHEAD OF MCELROY, QUIRK & BURCH]
REPORT OF INDEPENDENT AUDITORS
To the Board of Directors
Calcasieu Real Estate & Oil Co., Inc.
Lake Charles, Louisiana
We have audited the accompanying balance sheets of Calcasieu Real Estate & Oil Co., Inc. as of December 31, 20022003 and 2001,2002, and the related statements of income, changes in stockholders'stockholders’ equity, and cash flows for the years ended December 31, 2003, 2002 2001 and 2000.2001. These financial statements are the responsibility of the Company'sCompany’s management. Our responsibility is to express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Calcasieu Real Estate & Oil Co., Inc. as of December 31, 20022003 and 2001,2002, and the results of its operations and its cash flows for the years ended December 31, 2003, 2002 2001 and 2000,2001, in conformity with accounting principles generally accepted in the United States of America.
Our audits were made for the purpose of forming an opinion on the basic financial statements taken as a whole. The supplementary information on pages 29
and 3035 through 37 is presented for the purposes of additional analysis and is not a required part of the basic financial statements. Such information has been subjected to the auditing procedures applied in the audit of the basic financial statements and, in our opinion, is fairly stated in all material respects in relation to the basic financial statements taken as a whole.
/s/ McElroy, Quirk & Burch
Lake Charles, Louisiana
March 5, 2003
10
CALCASIEU REAL ESTATE & OIL CO., INC.
BALANCE SHEETS
December 31, 20022003 and 2001
ASSETS 2002 2001
---------- ---------
CURRENT ASSETS
Cash and cash equivalents $ 583,327 $1,419,084
Accounts receivable 152,373 93,748
Inventory-harvested crops 10,125 11,042
Prepaid income taxes 61,113 171,143
Prepaid expense and other 3,680 3,309
---------- ---------
Total current assets 810,618 1,698,326
---------- ---------
SECURITIES AVAILABLE-FOR-SALE 1,361,123 377,732
---------- ---------
PROPERTY AND EQUIPMENT (less accumulated depreciation,
depletion and amortization of $448,521 in 2002 and
$449,534 in 2001) 91,949 94,043
Timber (less accumulated depletion of $314,659 in
2002 and $281,343 in 2001) 484,161 498,569
Land 3,904,851 3,738,993
---------- ----------
4,480,961 4,331,605
---------- ----------
$6,652,702 $6,407,663
========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Trade payables and accrued expenses $ 8,863 $ 5,968
Dividends payable 195,742 195,737
Income taxes payable:
Current - -
Deferred, net 23,370 26,893
---------- ----------
Total current liabilities 227,975 228,598
---------- ----------
COMMITMENTS AND CONTINGENT LIABILITIES (Note 12)
STOCKHOLDERS' EQUITY
Common stock, no par value; 3,000,000 shares
authorized; 2,100,000 shares issued 72,256 72,256
Retained earnings 6,642,737 6,387,579
Accumulated other comprehensive income 16,563 26,059
---------- ----------
6,731,556 6,485,894
Less cost of treasury stock (2002 144,956 shares
and 2001 144,956 shares) 306,829 306,829
---------- ----------
6,424,727 6,179,065
---------- ----------
$6,652,702 $6,407,663
========== ==========
| 2003 | 2002 | |||||
ASSETS | ||||||
CURRENT ASSETS | ||||||
Cash and cash equivalents | $ | 527,219 | $ | 583,327 | ||
Accounts receivable | 239,815 | 152,373 | ||||
Inventory-harvested crops | — | 10,125 | ||||
Prepaid income taxes | 26,475 | 61,113 | ||||
Prepaid expense and other | 4,860 | 3,680 | ||||
Total current assets | 798,369 | 810,618 | ||||
SECURITIES AVAILABLE-FOR-SALE | 1,922,870 | 1,361,123 | ||||
PROPERTY AND EQUIPMENT (less accumulated depreciation, depletion and amortization of $67,223 in 2003 and $448,521 in 2002) | 12,680 | 91,949 | ||||
Timber (less accumulated depletion of $343,459 in 2003 and $314,659 in 2002) | 498,975 | 484,161 | ||||
Land | 3,891,610 | 3,904,851 | ||||
| 4,403,265 | 4,480,961 | |||||
| $ | 7,124,504 | $ | 6,652,702 | |||
LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||
CURRENT LIABILITIES | ||||||
Trade payables and accrued expenses | $ | 13,256 | $ | 8,863 | ||
Dividends payable | 136,204 | 195,742 | ||||
Income taxes payable: | ||||||
Current | — | — | ||||
Deferred, net | 52,535 | 23,370 | ||||
Total current liabilities | 201,995 | 227,975 | ||||
STOCKHOLDERS’ EQUITY | ||||||
Common stock, no par value; 3,000,000 shares authorized; 2,100,000 shares issued | 72,256 | 72,256 | ||||
Retained earnings | 7,169,864 | 6,642,737 | ||||
Accumulated other comprehensive income | 55,905 | 16,563 | ||||
| 7,298,025 | 6,731,556 | |||||
Less cost of treasury stock (2003 157,505 shares and 2002 144,956 shares) | 375,516 | 306,829 | ||||
| 6,922,509 | 6,424,727 | |||||
| $ | 7,124,504 | $ | 6,652,702 | |||
See Notes to Financial Statements.
11
CALCASIEU REAL ESTATE & OIL CO., INC.
STATEMENTS OF INCOME
Years Ended December 31, 2003, 2002 2001 and 2000
2002 2001 2000
---- ---- ----
Revenues $1,454,498 $1,618,587 $2,497,118
---------- ---------- ----------
Costs and expenses:
Oil and gas production 102,654 62,636 78,176
Agricultural 10,515 8,176 10,601
Timber 40,741 32,910 61,359
Depreciation, depletion and
amortization 38,886 28,566 38,490
---------- ---------- ----------
192,796 132,288 188,626
---------- ---------- ----------
Income from operations 1,261,702 1,486,299 2,308,492
---------- ---------- ----------
Other income (expense):
Interest income 23,760 28,243 38,907
Dividends on stock 27,595 27,617 11,402
Realized gain on sale of investments
in available-for-sale securities - 27,654 -
Gain on sale of assets 2,167 4,991 414
General and administrative (245,786) (290,698) (214,394)
---------- --------- ----------
(192,264) (202,193) (163,671)
---------- --------- ----------
Income before income taxes 1,069,438 1,284,106 2,144,821
---------- --------- ----------
Federal and state income taxes:
Current 330,063 415,864 706,592
Deferred 2,807 (4,364) 2,200
---------- --------- ----------
332,870 411,500 708,792
---------- --------- ----------
Net income (per common share)-
2002 $.38; 2001 $.45; 2000
$.73 $ 736,568 $ 872,606 $1,436,029
========== ========= ==========
| 2003 | 2002 | 2001 | ||||||||
Revenues | $ | 2,111,141 | $ | 1,454,498 | $ | 1,618,587 | ||||
Costs and expenses: | ||||||||||
Oil and gas production | 203,183 | 102,654 | 62,636 | |||||||
Agricultural | 13,278 | 10,515 | 8,176 | |||||||
Timber | 39,014 | 40,741 | 32,910 | |||||||
General and administrative | 296,295 | 245,786 | 290,698 | |||||||
Depreciation, depletion and amortization | 34,403 | 38,886 | 28,566 | |||||||
| 586,173 | 438,582 | 422,986 | ||||||||
Income from operations | 1,524,968 | 1,015,916 | 1,195,601 | |||||||
Other income (expense): | ||||||||||
Interest income | 10,647 | 23,760 | 28,243 | |||||||
Dividends on stock | 36,604 | 27,595 | 27,617 | |||||||
Realized gain on sale of investments in available-for-sale securities | 5,187 | — | 27,654 | |||||||
Gain on sale of assets | 3,931 | 2,167 | 4,991 | |||||||
| 56,369 | 53,522 | 88,505 | ||||||||
Income before income taxes | 1,581,337 | 1,069,438 | 1,284,106 | |||||||
Federal and state income taxes: | ||||||||||
Current | 486,474 | 330,063 | 415,864 | |||||||
Deferred | 1,858 | 2,807 | (4,364 | ) | ||||||
| 488,332 | 332,870 | 411,500 | ||||||||
Net income (per common share) - 2003 $.56; 2002 $.38; 2001 $.45 | $ | 1,093,005 | $ | 736,568 | $ | 872,606 | ||||
See Notes to Financial Statements.
12
CALCASIEU REAL ESTATE & OIL CO., INC.
STATEMENTS OF CHANGES IN STOCKHOLDERS'STOCKHOLDERS’ EQUITY
Years Ended December 31, 2003, 2002 2001 and 2000
| Comprehensive Income | Retained Earnings | Accumulated Other Comprehensive Income | Capital Stock Issued | Treasury Stock | ||||||||||||||
Balance, January 1, 2001 | $ | — | $ | 6,004,642 | $ | 24,448 | $ | 72,256 | $ | 306,829 | ||||||||
Comprehensive income: | ||||||||||||||||||
Net income | 872,606 | 872,606 | — | — | — | |||||||||||||
Other comprehensive income: | ||||||||||||||||||
Unrealized gains on securities available for sale: | ||||||||||||||||||
Unrealized holding gains occurring during period net of taxes of $3,212 | 5,464 | — | — | — | — | |||||||||||||
Less reclassification adjustments for gains included in net income, net of taxes of $2,569 | (3,853 | ) | — | — | — | — | ||||||||||||
Other comprehensive income, net of tax | 1,611 | — | 1,611 | — | — | |||||||||||||
Total comprehensive income | $ | 874,217 | — | — | — | — | ||||||||||||
Dividends | (489,669 | ) | — | — | — | |||||||||||||
Balance, December 31, 2001 | 6,387,579 | 26,059 | 72,256 | 306,829 | ||||||||||||||
Comprehensive income: | ||||||||||||||||||
Net income | $ | 736,568 | 736,568 | — | — | — | ||||||||||||
Other comprehensive income: | ||||||||||||||||||
Unrealized gains on securities available for sale: | ||||||||||||||||||
Unrealized holding gains occurring during period net of taxes of $6,330 | (9,496 | ) | — | — | — | — | ||||||||||||
Other comprehensive income, net of tax | (9,496 | ) | — | (9,496 | ) | — | — | |||||||||||
Total comprehensive income | $ | 727,072 | — | — | — | — | ||||||||||||
Dividends | (481,410 | ) | — | — | — | |||||||||||||
(continued on next page)
CALCASIEU REAL ESTATE & OIL CO., INC.
STATEMENTS OF CHANGES IN STOCKHOLDERS'STOCKHOLDERS’ EQUITY
Years Ended December 31, 2003, 2002 2001 and 2000
2001
(Continued)
| Comprehensive Income | Retained Earnings | Accumulated Other Comprehensive Income | Capital Stock Issued | Treasury Stock | |||||||||||||
Balance, December 31, 2002 | 6,642,737 | 16,563 | 72,256 | 306,829 | |||||||||||||
Comprehensive income: | |||||||||||||||||
Net income | $ | 1,093,005 | 1,093,005 | — | — | — | |||||||||||
Other comprehensive income: | |||||||||||||||||
Unrealized gains on securities available for sale: | |||||||||||||||||
Unrealized holding gains occurring during period net of taxes of $37,269 | 42,454 | — | — | — | — | ||||||||||||
Less reclassification adjustments for gains included in net income, net of taxes of $2,075 | (3,112 | ) | — | — | — | — | |||||||||||
Other comprehensive income, net of tax | 39,342 | — | 39,342 | — | — | ||||||||||||
Total comprehensive income | $ | 1,132,347 | |||||||||||||||
Purchase of treasury stock | — | — | — | 68,687 | |||||||||||||
Dividends | (565,878 | ) | — | — | — | ||||||||||||
Balance, December 31, 2003 | $ | 7,169,864 | $ | 55,905 | $ | 72,256 | $ | 375,516 | |||||||||
See Notes to Financial Statements.
14
CALCASIEU REAL ESTATE & OIL CO., INC.
STATEMENTS OF CASH FLOWS
Years Ended December 31, 2003, 2002 2001 and 2000
| 2003 | 2002 | 2001 | ||||||||||
CASH FLOWS FROM OPERATING ACTIVITIES | ||||||||||||
Net income | $ | 1,093,005 | $ | 736,568 | $ | 872,606 | ||||||
Noncash (income) expenses included in net income: | ||||||||||||
Depreciation, depletion and amortization | 34,403 | 38,886 | 29,566 | |||||||||
Realized (gains) on sale of available-for-sale securities | (5,187 | ) | — | (27,654 | ) | |||||||
(Gain) on sale of assets | (3,799 | ) | (2,572 | ) | (4,991 | ) | ||||||
Loss on asset retirement | 77,215 | 375 | — | |||||||||
Deferred income tax | 1,858 | 2,807 | (4,365 | ) | ||||||||
Change in assets and liabilities: | ||||||||||||
(Increase) decrease in trade accounts and other receivables | (87,442 | ) | (58,625 | ) | 35,471 | |||||||
(Increase) decrease in inventory | 10,125 | 917 | (6,616 | ) | ||||||||
(Increase) decrease in prepaid income taxes | 34,638 | 110,030 | (96,265 | ) | ||||||||
(Increase) in prepaid expenses | (1,180 | ) | (371 | ) | — | |||||||
Increase (decrease) in trade payables | 4,393 | 2,895 | (8,879 | ) | ||||||||
Net cash provided by operating activities | 1,158,029 | 830,910 | 788,873 | |||||||||
CASH FLOWS FROM INVESTING ACTIVITIES | ||||||||||||
Proceeds from rights of way | 3,000 | — | 500 | |||||||||
Proceeds from sale of timber and land | 16,858 | 4,655 | 22,041 | |||||||||
Available-for-sale securities: | ||||||||||||
Purchases | (2,143,912 | ) | (1,692,887 | ) | (590,114 | ) | ||||||
Sales | 1,654,000 | 700,000 | 1,300,000 | |||||||||
Purchase of land, property and equipment | (49,980 | ) | (197,025 | ) | (250,610 | ) | ||||||
Net cash provided by (used in) investing activities | (520,034 | ) | (1,185,257 | ) | 481,817 | |||||||
CASH FLOWS FROM FINANCING ACTIVITIES | ||||||||||||
Dividends paid, net of refunds | (625,416 | ) | (481,410 | ) | (489,669 | ) | ||||||
Payments to acquire treasury stock | (68,687 | ) | — | — | ||||||||
Net cash (used in) financing activities | (694,103 | ) | (481,410 | ) | (489,669 | ) | ||||||
Net increase (decrease) in cash and cash equivalents | (56,108 | ) | (835,757 | ) | 781,021 | |||||||
Cash and cash equivalents: | ||||||||||||
Beginning | 583,327 | 1,419,084 | 638,063 | |||||||||
Ending | $ | 527,219 | $ | 583,327 | $ | 1,419,084 | ||||||
(continued on next page)
CALCASIEU REAL ESTATE & OIL CO., INC.
STATEMENTS OF CASH FLOWS
Years Ended December 31, 2003, 2002 2001 and 2000
2001
(Continued)
2002 2001 2000
------- ------- -------
SUPPLEMENTAL DISCLOSURES OF CASH FLOW
INFORMATION
Cash payments for:
Interest $ - $ - $ -
Income taxes 238,120 522,640 932,752
SUPPLEMENTAL SCHEDULE OF NONCASH INVESTING
AND FINANCING ACTIVITIES
Net change in unrealized and realized
gains on available-for-sale securities (9,496) 1,611 12,362
| 2003 | 2002 | 2001 | ||||||||
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION | ||||||||||
Cash payments for: | ||||||||||
Interest | $ | — | $ | — | $ | — | ||||
Income taxes | 404,548 | 238,120 | 522,640 | |||||||
SUPPLEMENTAL SCHEDULE OF NONCASH INVESTING AND FINANCING ACTIVITIES | ||||||||||
Net change in unrealized and realized gains on available-for-sale securities | 39,342 | (9,496 | ) | 1,611 | ||||||
See Notes to Financial Statements.
16
CALCASIEU REAL ESTATE & OIL CO., INC.
NOTES TO FINANCIAL STATEMENTS
Note 1. Nature of Business and Significant Accounting Policies
Nature of business:
The Company'sCompany’s business is the ownership and management of land. The primary activities consist of leasing its properties for mineral (oil and gas) and agriculture and raising timber.
Significant accounting policies:
Cash and cash equivalents:
For purposes of the statement of cash flows, cash equivalents include time deposits, certificates of deposit, and all highly liquid debt instruments with original maturities of three months or less.
Inventory:
Inventory consists of harvested crops valued at estimated selling price at the date of the balance sheet.
Pervasiveness of estimates:
The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.
Agricultural revenue:
Most agricultural income is derived under U.S. Government subsidy
programs. Under these programs, loans are made against crops as
harvested. However, delivery of the crops fulfills any further
obligation under the loan agreement, and thus revenues are
recognized as the harvested crops are delivered. Differences in
the price at ultimate sale of the products could result from
quantity, grade, and price, and additional revenues are derived
at that time.
17
NOTES TO FINANCIAL STATEMENTS
Investment securities:
The Company complies with the provisions of Financial Accounting Standards Board Statement No. 115,Accounting for Certain Investments in Debt and Equity Securities.Securities. Under the provisions of this statement, management must make a determination at the time of acquisition whether certain investments in debt and equity securities are to be held as investments to maturity, held as available for sale, or held for trading. Management, under a policy adopted by the board of directors of the Company, made a determination that all debt and equity securities owned at that date and subject to the provisions of the statement would be classified as held available-for-sale.
NOTES TO FINANCIAL STATEMENTS
Under the accounting policies provided for investments classified as held available-for-sale, all such debt securities and equity securities that have readily determinable fair value shall be measured at fair value in the balance sheet. Unrealized holding gains and losses for available-for-sale securities shall be excluded from earnings and reported as a net amount (net of income taxes) as a separate component of retained earnings until realized. Realized gains and losses and declines in value judged to be other than temporary on available-for-sale securities are included in income. The cost of securities sold is based on the specific identification method. Interest on debt securities is recognized in income as earned, and dividends on marketable equity securities are recognized in income when declared.
Property and equipment:
Property and equipment is stated at cost. Major additions are capitalized; maintenance and repairs are charged to income currently. Depreciation is computed on the straight-line and accelerated methods over the estimated useful lives of the assets.
Successful efforts accounting method:
The Company uses the successful efforts method of accounting for its oil
and gas operations. Under the successful efforts method, the costs of
acquiring mineral interest, drilling and equipping successful exploratory
wells, and all development wells and related facilities are capitalized.
All other exploration costs, including geological and geophysical costs,
lease rentals and the cost of drilling unsuccessful exploratory wells are
charged to expense. Due to the Company's small percentage ownership (in
relation to the total) of oil
18
NOTES TO FINANCIAL STATEMENTS
and gas properties, reserve information is not available to the Company for
mineral interests acquired. Depletion of these interests is computed on the
straight-line and accelerated methods over an estimated life of five to
seven years. Acquisition costs of proved mineral interests for which
reserve information is available are depleted using the unit-of-production
method based on production and estimated proved reserves. Related tangible
and intangible costs are depreciated and amortized using the
unit-of-production method based on production and estimated proved
developed reserves.
Earnings per share:
Earnings per share is based on the weighted average number of common shares outstanding during the years.
Income taxes:
Deferred income tax assets and liabilities are determined using the liability (or balance sheet) method. Under this method, the net deferred tax asset or liability is determined based on the tax effects of the temporary differences between the book and tax bases of the various balance sheet assets and liabilities and gives current recognition to changes in tax rates and laws.
Comprehensive income:
Accounting principles generally require that recognized revenue, expenses,
gains and losses be included in net income. Although certain changes in
assets and liabilities, such as unrealized gains and losses on
available-for-sale securities, are reported as a separate component of the
equity section of the balance sheet, such items, along with net income, are
components of comprehensive income.
19
NOTES TO FINANCIAL STATEMENTS
Note 2. Securities Available-for-Sale
Debt and equity securities have been classified in the balance sheet according to management'smanagement’s intent in the noncurrent asset sections under the headings securities available-for-sale. The carrying amount of securities and their approximate fair values at December 31, 2003 and 2002 and 2001 follow:
| Gross Amortized Cost | Gross Unrealized Gains | Unrealized Losses | Fair Value | |||||||||
December 31, 2003 | ||||||||||||
Available-for-sale securities: | ||||||||||||
Equity securities | $ | 155,861 | $ | 46,689 | $ | — | $ | 202,550 | ||||
Preferred equity securities | 329,373 | 46,887 | — | 376,260 | ||||||||
US government securities (maturing within one year) | 1,344,861 | — | 801 | 1,344,060 | ||||||||
| $ | 1,830,095 | $ | 93,576 | $ | 801 | $ | 1,922,870 | |||||
December 31, 2002 | ||||||||||||
Available-for-sale securities: | ||||||||||||
Equity securities | $ | 155,861 | $ | 22,446 | $ | 17,778 | $ | 160,529 | ||||
Preferred equity securities | 378,186 | 41,423 | 21,229 | 398,380 | ||||||||
Corporate bonds (maturing within one year) | 100,896 | 1,661 | — | 102,557 | ||||||||
US government securities (maturing within one year) | 699,657 | — | — | 699,657 | ||||||||
| $ | 1,334,600 | $ | 65,530 | $ | 39,007 | $ | 1,361,123 | |||||
Gross realized gains and gross realized losses on sales of available-for-sale securities during 2003 and 2001 are presented below. There were no gross realized gains and gross realized losses on sales of available-for-sale securities during 2002 and 2000.
2001 Gains Losses
---- ----- ------
Gross realized gains:
U.S. government and agency securities $ 27,654 $ -
=========== ========
20
2003 | Gains | Losses | ||||
Gross realized gains: | ||||||
Preferred equity securities | $ | 5,187 | $ | — | ||
2001 | Gains | Losses | ||||
Gross realized gains: | ||||||
U.S. government and agency securities | $ | 27,654 | $ | — | ||
NOTES TO FINANCIAL STATEMENTS
Note 3. Oil and Gas Properties
Results of operations for oil and gas producing activities at December 31, 2003, 2002 2001 and 20002001 is as follows:
2002 2001 2000
---------- ---------- ----------
Gross revenues:
Royalty interests $1,096,175 $1,106,226 $1,555,838
Working interests 22,573 40,396 63,851
---------- ---------- ----------
1,118,748 1,146,622 1,619,689
Less:
Production costs 102,654 62,636 78,176
---------- ---------- ----------
Results before income tax
expenses 1,016,094 1,083,986 1,541,513
Income tax expenses 316,266 347,370 509,419
---------- ---------- ----------
Results of operations from
producing activities
(excluding corporate
overhead) $ 699,828 $ 736,616 $1,032,094
========== ========== ==========
| 2003 | 2002 | 2001 | |||||||
Gross revenues: | |||||||||
Royalty interests | $ | 1,793,639 | $ | 1,096,175 | $ | 1,106,226 | |||
Working interests | 1,806 | 22,573 | 40,396 | ||||||
| 1,795,445 | 1,118,748 | 1,146,622 | |||||||
Less: | |||||||||
Production costs | 203,183 | 102,654 | 62,636 | ||||||
Results before income tax expenses | 1,592,262 | 1,016,094 | 1,083,986 | ||||||
Income tax expenses | 484,950 | 316,266 | 347,370 | ||||||
Results of operations from producing activities (excluding corporate overhead) | $ | 1,107,312 | $ | 699,828 | $ | 736,616 | |||
Costs incurred in oil and gas activities:
There were no major costs incurred in connection with the Company'sCompany’s oil and gas operations (which are conducted entirely within the United States) at December 31, 2003, 2002 2001 and 2000.
2001.
Reserve quantities (unaudited):
Reserve information relating to estimated quantities of the Company'sCompany’s interest in proved reserves of natural gas and crude (including condensate and natural gas liquids) is not available. Such reserves are located entirely within the United States. A schedule indicating such reserve quantities is, therefore, not presented. The wells remain in production at December 31, 2002, including royalty
interests and working interests obtained through back-in provisions of
royalty agreements. Production from such royalty interests and working
interests comprises 100% of the Company'sAll oil and gas revenues in
2002, 2001royalties come from Company owned properties that were developed and 2000.
21
NOTES TO FINANCIAL STATEMENTS
Actual production has exceeded original estimates of reserves, and
remaining reserves have not been revised. Therefore, the Company is
not able to complete the computations of discounted future cash flows
and reconciliation thereof.
Note 4. Income Taxes
The Company files federal income tax returns on a calendar year basis.
The net deferred tax liability in the accompanying balance sheet includes the following components at December 31, 20022003 and 2001:
2002 2001
---------- ----------
Deferred tax assets $ 1,181 $ 341
Deferred tax liabilities (13,939) (10,293)
Deferred tax liabilities on unrealized
appreciation of securities available
for sale (10,612) (16,941)
---------- ----------
Net deferred tax liability $ (23,370) $ (26,893)
========== ==========
2002:
| 2003 | 2002 | |||||||
Deferred tax assets | $ | 720 | $ | 1,181 | ||||
Deferred tax liabilities | (15,337 | ) | (13,939 | ) | ||||
Deferred tax liabilities on unrealized appreciation of securities available for sale | (37,918 | ) | (10,612 | ) | ||||
Net deferred tax liability | $ | (52,535 | ) | $ | (23,370 | ) | ||
A reconciliation between income taxes, computed by applying statutory tax rates to income before income taxes and income taxes provided at December 31, 2003, 2002 2001 and 20002001 is as follows:
2002 2001 2000
---------- ---------- ----------
Tax at statutory rates $ 363,609 $ 436,596 $ 729,239
Tax effect of the following:
Statutory depletion (52,480) (52,305) (82,145)
Dividend exclusion (6,567) (6,573) (2,714)
State income tax 26,756 34,465 60,375
Investment tax credit (1,000) (167) -
Other 2,552 (516) 4,037
---------- ---------- ----------
$ 332,870 $ 411,500 $ 708,792
========== ========== ==========
22
| 2003 | 2002 | 2001 | ||||||||||
Tax at statutory rates | $ | 537,655 | $ | 363,609 | $ | 436,596 | ||||||
Tax effect of the following: | ||||||||||||
Statutory depletion | (86,281 | ) | (52,480 | ) | (52,305 | ) | ||||||
Dividend exclusion | (1,673 | ) | (6,567 | ) | (6,573 | ) | ||||||
State income tax | 39,240 | 26,756 | 34,465 | |||||||||
Investment tax credit | (1,000 | ) | (1,000 | ) | (167 | ) | ||||||
Other | 391 | 2,552 | (516 | ) | ||||||||
| $ | 488,332 | $ | 332,870 | $ | 411,500 | |||||||
NOTES TO FINANCIAL STATEMENTS
Deferred income taxes result from timing differences in the recognition of revenue and expenses for tax and financial statement purposes. The effect of these timing differences at December 31, 20022003 and 20012002 is as follows:
2002 2001
---------- ----------
Conversion of investment from tax cash
basis to accrual basis for financial
reporting $ (12,546) $ (9,940)
Excess of depreciation and depletion
expensed for tax purposes (under)
amount expensed for financial
statement purposes (212) (12)
Unrealized gain on marketable securities (10,612) (16,941)
---------- ----------
$ (23,370) $ (26,893)
========== ==========
| 2003 | 2002 | |||||||
Conversion of investment from tax cash basis to accrual basis for financial reporting | $ | (14,205 | ) | $ | (12,546 | ) | ||
Excess of depreciation and depletion expensed for tax purposes (under) amount expensed for financial statement purposes | (412 | ) | (212 | ) | ||||
Unrealized gain on marketable securities | (37,918 | ) | (10,612 | ) | ||||
| $ | (52,535 | ) | $ | (23,370 | ) | |||
Note 5. Line of Credit
As of December 31, 2002,2003, the Company had available an unsecured line of credit in the amount of $750,000.$1,000,000. The balance on this line of credit was $-0- at December 31, 20022003 and 2001.
2002.
Note 6. Company Operations
The Company'sCompany’s operations are classified into threeone principal operating segmentssegment which are allis located in the United States: oil and gas properties, agricultural properties, and timber properties. The Company'sCompany’s reportable business segments are strategic business units that offer income from different products. They are managed separately due to the unique aspects of each area.
NOTES TO FINANCIAL STATEMENTS
Following is a summary of segmented information for 2003, 2002 2001 and 2000:
2002 2001 2000
----------- ----------- -----------
REVENUES
Oil and gas properties $ 1,118,748 $ 1,146,622 $ 1,772,148
Agricultural properties 150,626 176,387 178,897
Timber properties 160,468 249,591 460,963
All other segments 24,656 45,987 85,110
----------- ----------- -----------
$ 1,454,498 $ 1,618,587 $ 2,497,118
=========== =========== ===========
23
| 2003 | 2002 | 2001 | |||||||
REVENUES | |||||||||
Oil and gas properties | $ | 1,795,445 | $ | 1,118,748 | $ | 1,146,622 | |||
All other segments | 315,696 | 335,750 | 471,965 | ||||||
| $ | 2,111,141 | $ | 1,454,498 | $ | 1,618,587 | ||||
COSTS AND EXPENSES | |||||||||
Oil and gas properties | $ | 455,034 | $ | 291,909 | $ | 269,032 | |||
All other segments | 131,139 | 146,673 | 153,954 | ||||||
| $ | 586,173 | $ | 438,582 | $ | 422,986 | ||||
INCOME FROM OPERATIONS | |||||||||
Oil and gas properties | $ | 1,340,411 | $ | 826,839 | $ | 877,590 | |||
All other segments | 184,557 | 189,077 | 318,011 | ||||||
| 1,524,968 | 1,015,916 | 1,195,601 | |||||||
OTHER INCOME (EXPENSE) | 56,369 | 53,522 | 88,505 | ||||||
INCOME BEFORE INCOME TAXES | $ | 1,581,337 | $ | 1,069,438 | $ | 1,284,106 | |||
IDENTIFIABLE ASSETS | |||||||||
Oil and gas properties | $ | 126,971 | $ | 112,526 | $ | 74,531 | |||
All other segments | 6,997,533 | 6,540,176 | 6,156,712 | ||||||
TOTAL ASSETS | $ | 7,124,504 | $ | 6,652,702 | $ | 6,231,243 | |||
CAPITAL EXPENDITURES | |||||||||
Oil and gas properties | $ | — | $ | — | $ | — | |||
All other segments | 43,614 | 191,766 | 250,473 | ||||||
| $ | 43,614 | $ | 191,766 | $ | 250,473 | ||||
DEPRECIATION, DEPLETION AND AMORTIZATION | |||||||||
Oil and gas properties | $ | — | $ | — | $ | — | |||
All other segments | 34,403 | 38,886 | 29,566 | ||||||
| $ | 34,403 | $ | 38,886 | $ | 29,566 | ||||
NOTES TO FINANCIAL STATEMENTS
2002 2001 2000
----------- ----------- -----------
COSTS AND EXPENSES
Oil and gas properties $ 102,654 $ 62,636 $ 78,176
Agricultural properties 14,697 13,288 15,126
Timber properties 74,057 54,286 93,962
All other segments 1,388 2,078 1,362
----------- ----------- -----------
$ 192,796 $ 132,288 $ 188,626
=========== =========== ===========
INCOME FROM OPERATIONS
Oil and gas properties $ 1,016,094 $ 1,083,986 $ 1,693,972
Agricultural properties 135,929 163,099 163,771
Timber properties 86,411 195,305 367,000
All other segments 23,268 43,909 83,749
----------- ----------- -----------
1,261,702 1,486,299 2,308,492
OTHER INCOME (EXPENSE) (192,264) (202,193) (163,671)
----------- ----------- -----------
INCOME BEFORE INCOME TAXES $ 1,069,438 $ 1,284,106 $ 2,144,821
=========== =========== ===========
IDENTIFIABLE ASSETS
Oil and gas properties $ 667,148 $ 642,952 $ 683,952
Agricultural properties 2,635,398 2,525,291 2,522,280
Timber properties 1,174,812 1,210,651 964,852
All other segments 141,963 90,677 90,024
----------- ----------- -----------
4,619,321 4,469,571 4,261,108
GENERAL AND CORPORATE ASSETS 2,033,381 1,761,672 1,699,731
----------- ----------- -----------
TOTAL ASSETS $ 6,652,702 $ 6,231,243 $ 5,960,839
=========== =========== ===========
CAPITAL EXPENDITURES
Oil and gas properties $ - $ - $ 633
Agricultural properties 165,859 4,022 10,479
Timber properties 18,908 245,798 19,294
All other segments 6,999 653 5,443
----------- ----------- -----------
$ 191,766 $ 250,473 $ 35,849
=========== =========== ===========
24
NOTES TO FINANCIAL STATEMENTS
2002 2001 2000
------- ------- -------
DEPRECIATION, DEPLETION AND
AMORTIZATION
Agricultural properties $ 4,182 $ 5,113 $ 4,525
Timber properties 33,316 21,375 32,604
All other segments 1,388 3,078 2,153
------- ------- -------
$38,886 $29,566 $39,282
======= ======= =======
There are no intersegment sales reported in the accompanying income statements. The accounting policies of the segments are the same as those described in the summary of significant accounting policies. The Company evaluates performance based on profit or loss from operations before income taxes excluding nonrecurring gains and losses on securities held available for sale. Income before income tax represents net sales less operating expenses and other income and expenses of a general corporate nature. Identifiable assets by segment are those assets that are used in the Company'sCompany’s operations within that industry. General corporate assets
consist principally of cash and cash items, accounts receivable, and
marketable equity and debt securities.
The following summarizes major customer information at December 31, 2003, 2002 2001 and 20002001 from oil and gas revenues:
Sales to Purchaser as a
Percentage of Total Revenues
----------------------------
Purchaser 2002 2001 2000
--------- -------- -------- --------
Cox and Perkins 71% 2% 0%
Riceland Petroleum Company 13% 27% 4%
Neumin Production 2% 30% 65%
Woodlawn 6% 15% 6%
| Sales to Purchaser as a Percentage of Total Revenues | |||||||||
Purchaser | 2003 | 2002 | 2001 | ||||||
Cox and Perkins | 41 | % | 41 | % | 1 | % | |||
Riceland Petroleum Company | 9 | % | 8 | % | 14 | % | |||
Neumin Production | 4 | % | 3 | % | 24 | % | |||
Kerr-McGee | 13 | % | 1 | % | 1 | % | |||
Note 7. Related Party Transactions
During 2002, 2001 and 2000, some board members entered into leases with the
Company for water fowl hunting. Lease income from these leases amounted to
$1,600 for the year 2002, $1,200 for the year 2001, and $3,200 for the year
ended December 31, 2000.
25
NOTES TO FINANCIAL STATEMENTS
In 1990, the Company purchased interests in properties managed by Walker Louisiana Properties (WLP), such properties being subject to a management agreement.
Note 8. Supplementary Income Statement Information
Taxes, other than income taxes, of $195,687, $138,451 $98,116 and $109,569,$98,116, were charged to expense during 2003, 2002 and 2001, and 2000, respectively.
Note 9. Operating Leases
The Company leases agricultural land to a third party. This agreement, with
an original expiration date of September 30, 2002, was extended during year
2000 to September 30, 2004. The annual lease rental is $40,000. The lease
requires payment of normal maintenance and insurance. The lease also
requires the lessee to construct specific improvements to the property at
an expenditure of at least $60,000 as additional consideration during the
original term of the contract. In the event the lessee fails to spend
$60,000 on the above mentioned improvements prior to September 30, 2002,
the amounts unspent will be due and payable to the Company on September 30,
2002. As a condition of extending the lease contract for an additional two
year period, the lessee is required to spend $40,000 each year for
additional improvements to the properties, in addition to the annual lease
payments.
Total future minimum rental income under operating leases as of December
31, 2002 for the next five years is as follows:
Years Ending December 31,
-------------------------
2003 $ 40,000
2004 40,000
2005 -
2006 -
2007 -
Note 10. Concentration of Credit Risk
The Company maintains its cash balances in one financial institution. The amount on deposit in the financial institution is insured by the Federal Deposit Insurance Corporation up to $100,000.
26
NOTES TO FINANCIAL STATEMENTS
Note 11.10. Disclosures About Fair Value of Financial Instruments
The following methods and assumptions were used to estimate the fair value of each class of financial instruments for which it was practical to estimate that value:
Cash and cash equivalents:
For these short-term instruments, the carrying amount is a reasonable estimate of fair value.
Securities available-for-sale:
Debt and equity securities were valued at fair value, which equals quoted market price.
The estimated fair value of the Company'sCompany’s financial instruments at December 31, 20022003 and 20012002 are as follows. Amounts are presented in thousands.
2002 2001
---------------------- ---------------------
Carrying Fair Carrying Fair
Financial Assets Value Value Value Value
--------- --------- --------- ---------
Cash and cash equivalents $ 583 $ 583 $ 1,419 $ 1,419
Securities available for
sale 1,361 1,361 378 378
--------- --------- --------- ---------
$ 1,944 $ 1,944 $ 1,797 $ 1,797
========= ========= ========= =========
Note 12. Commitments and Contingencies
The Company is a co-defendant in a lawsuit filed by previous owners of
property that is now partially owned by the Company. In this suit, the
Plaintiffs assert that the sale of a strip of property in 1914 created two
servitudes, one of which, the co-defendants claim ownership, expired by
liberative prescription in 1940. The Company has indicated that it will
defend the suit vigorously, and it is anticipated that a motion for summary
judgment in favor of the defendants will be filed in the near future.
27
NOTES TO FINANCIAL STATEMENTS
The Company has been notified by the National Pollution Funds Center that
the Company, as well as the other various owners of the land managed by
Walker Louisiana Properties, together with certain past owners, are jointly
and severally liable for $588,843, the cost of an environmental clean-up.
The Company is contesting the claim since the damage occurred prior to the
Company's ownership and the Company is an innocent land owner.
28
| 2003 | 2002 | |||||||||||
| Carrying Value | Fair Value | Carrying Value | Fair Value | |||||||||
Financial Assets | ||||||||||||
Cash and cash equivalents | $ | 527 | $ | 527 | $ | 583 | $ | 583 | ||||
Securities available for sale | 1,923 | 1,923 | 1,361 | 1,361 | ||||||||
| $ | 2,450 | $ | 2,450 | $ | 1,944 | $ | 1,944 | |||||
CALCASIEU REAL ESTATE & OIL CO., INC.
PROPERTY, PLANT AND EQUIPMENT
Years Ended December 31, 2003, 2002 2001 and 1999
Balance, Adjustments Balance,
Beginning and End of
2002 of Period Additions Retirements Period
---- ----------- ---------- ----------- -----------
Oil and gas properties-proved $ 456,751 $ - $ - $ 456,751
Other property:
Buildings and equipment 86,825 6,999 10,106 83,718
Timber 779,912 18,908 - 798,820
Land 3,738,992 165,859 - 3,904,851
----------- ---------- ----------- -----------
$ 5,062,480 $ 191,766 $ 10,106 $ 5,244,140
=========== ========== =========== ===========
2001
----
Oil and gas properties-proved $ 456,751 $ - $ - $ 456,751
Other property:
Buildings and equipment 89,776 4,675 7,626 86,825
Timber 673,426 122,206 15,720 779,912
Land 3,615,900 123,592 500 3,738,992
----------- ---------- ----------- -----------
$ 4,835,853 $ 250,473 $ 23,846 $ 5,062,480
=========== ========== =========== ===========
2000
----
Oil and gas properties-proved $ 458,185 $ - $ 1,435 $ 456,751
Other property:
Buildings and equipment 90,885 15,922 17,031 89,776
Timber 715,064 19,295 60,933 673,426
Land 3,615,791 632 522 3,615,900
----------- ---------- ----------- -----------
$ 4,879,925 $ 35,849 $ 79,921 $ 4,835,853
=========== ========== =========== ===========
29
| Balance, Beginning of Period | Additions | Adjustments and Retirements | Balance, End of Period | |||||||||
| 2003 | ||||||||||||
Oil and gas properties-proved | $ | 456,751 | $ | — | $ | 456,751 | $ | — | ||||
Other property: | ||||||||||||
Buildings and equipment | 83,718 | — | 3,814 | 79,904 | ||||||||
Timber | 798,820 | 43,614 | — | 842,434 | ||||||||
Land | 3,904,851 | — | 13,241 | 3,891,610 | ||||||||
| $ | 5,244,140 | $ | 43,614 | $ | 473,806 | $ | 4,813,948 | |||||
| 2002 | ||||||||||||
Oil and gas properties-proved | $ | 456,751 | $ | — | $ | — | $ | 456,751 | ||||
Other property: | ||||||||||||
Buildings and equipment | 86,825 | 6,999 | 10,106 | 83,718 | ||||||||
Timber | 779,912 | 18,908 | — | 798,820 | ||||||||
Land | 3,738,992 | 165,859 | — | 3,904,851 | ||||||||
| $ | 5,062,480 | $ | 191,766 | $ | 10,106 | $ | 5,244,140 | |||||
| 2001 | ||||||||||||
Oil and gas properties-proved | $ | 456,751 | $ | — | $ | — | $ | 456,751 | ||||
Other property: | ||||||||||||
Buildings and equipment | 89,776 | 4,675 | 7,626 | 86,825 | ||||||||
Timber | 673,426 | 122,206 | 15,720 | 779,912 | ||||||||
Land | 3,615,900 | 123,592 | 500 | 3,738,992 | ||||||||
| $ | 4,835,853 | $ | 250,473 | $ | 23,846 | $ | 5,062,480 | |||||
CALCASIEU REAL ESTATE & OIL CO., INC.
ACCUMULATED DEPRECIATION, DEPLETION AND AMORTIZATION
Years Ended December 31, 2003, 2002 2001 and 2000
Balance, Adjustments Balance,
Beginning and End of
2002 of Period Additions Retirements Period
---- ----------- ---------- ----------- -----------
Oil and gas properties-proved $ 379,535 $ - $ - $ 379,535
Other property:
Buildings and equipment 69,999 5,570 6,584 68,985
Timber 281,343 33,316 - 314,659
----------- ---------- ----------- -----------
$ 730,877 $ 38,886 $ 6,584 $ 763,179
=========== ========== =========== ===========
2001
----
Oil and gas properties-proved $ 379,535 $ - $ - $ 379,535
Other property:
Buildings and equipment 69,889 7,191 7,081 69,999
Timber 258,968 22,375 - 281,343
----------- ---------- ----------- -----------
$ 708,392 $ 29,566 $ 7,081 $ 730,877
=========== ========== =========== ===========
2000
----
Oil and gas properties-proved $ 377,039 $ 2,496 $ - $ 379,535
Other property:
Buildings and equipment 73,468 4,525 8,104 69,889
Timber 228,876 32,261 2,169 258,968
----------- ---------- ----------- -----------
$ 679,383 $ 39,282 $ 10,273 $ 708,392
=========== ========== =========== ===========
30
CERTIFICATIONS
Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
I, Arthur Hollins, III, certify that:
1. I have received this transition report on Form 10-K of Calcasieu Real
Estate
| Balance, Beginning of Period | Additions | Adjustments and Retirements | Balance, End of Period | |||||||||
| 2003 | ||||||||||||
Oil and gas properties-proved | $ | 379,535 | $ | — | $ | 379,535 | $ | — | ||||
Other property: | ||||||||||||
Buildings and equipment | 68,985 | 5,603 | 7,364 | 67,224 | ||||||||
Timber | 314,659 | 28,800 | — | 343,459 | ||||||||
| $ | 763,179 | $ | 34,403 | $ | 386,899 | $ | 410,683 | |||||
| 2002 | ||||||||||||
Oil and gas properties-proved | $ | 379,535 | $ | — | $ | — | $ | 379,535 | ||||
Other property: | ||||||||||||
Buildings and equipment | 69,999 | 5,570 | 6,584 | 68,985 | ||||||||
Timber | 281,343 | 33,316 | — | 314,659 | ||||||||
| $ | 730,877 | $ | 38,886 | $ | 6,584 | $ | 763,179 | |||||
| 2001 | ||||||||||||
Oil and gas properties-proved | $ | 379,535 | $ | — | $ | — | $ | 379,535 | ||||
Other property: | ||||||||||||
Buildings and equipment | 69,889 | 7,191 | 7,081 | 69,999 | ||||||||
Timber | 258,968 | 22,375 | — | 281,343 | ||||||||
| $ | 708,392 | $ | 29,566 | $ | 7,081 | $ | 730,877 | |||||
CALCASIEU REAL ESTATE & Oil Co.OIL CO., Inc.;
2. Based on my knowledge, this transition report does not contain any
untrue statement of a material fact or omit to state a material fact
necessary to make the statements made,INC.
QUARTERLY FINANCIAL DATA
(UNAUDITED)
Amounts in light of the circumstances under
which such statements were made, not misleading with respect to the period
covered by this transition report;
3. Based on my knowledge, the financial statements, and other financial
information included in this transition report, fairly present all material
respects the financial condition, results of operations and cash flows of
the registrant as of, and for, the periods presented in this transition
report;
4. The registrant's other certifying officer and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined
in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:
a. designed such disclosure controls and procedures to ensure the
material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within those
entities, particularly during the period in which this transition
report is be prepared;
b. evaluated the effectiveness of the registrant's disclosure controls
and procedures as of a date within 90 days prior to the filing date of
this transition report (the "Evaluation Date"); and
c. presented in this transition report our conclusions about the
effectiveness of the disclosure controls and procedures based on our
evaluation as of the Evaluation Date;
5. The registrant's other certifying officer and I have disclosed, based on
our most recent evaluation, to the registrant's auditors and the audit
committee of registrant's board of directors (or persons performing the
equivalent functions):
a. all significant deficiencies in the design or operation of internal
controls which could adversely affect the registrant's ability to
record, process, summarize and report financial data and have
identified for the registrant's auditors any material weaknesses in
internal controls; and
b. any fraud, whether or not material, that involves management or
other employees who have a significant role in the registrant's
internal controls; and
6. The registrant's other certifying officer and I have indicated in this
transition report whether or not there were significant changes in internal
controls or in other factors that could significantly affect internal
controls subsequent to the date of our most recent evaluation, including
any corrective actions with regard to significant deficiencies and material
weaknesses.
Dated: March 5, 2003
/s/ ARTHUR HOLLINS, III
-----------------------
Arthur Hollins, III
President and Chief Executive Officer
Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
I, William D. Blake, certify that:
1. I have received this transition report on Form 10-K of Calcasieu Real
Estate & Oil Co., Inc.;
2. Based on my knowledge, this transition report does not contain any
untrue statement of a material fact or omit to state a material fact
necessary to make the statements made, in light of the circumstances under
which such statements were made, not misleading with respect to the period
covered by this transition report;
3. Based on my knowledge, the financial statements, and other financial
information included in this transition report, fairly present all material
respects the financial condition, results of operations and cash flows of
the registrant as of, and for, the periods presented in this transition
report;
4. The registrant's other certifying officer and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined
in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:
a. designed such disclosure controls and procedures to ensure the
material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within those
entities, particularly during the period in which this transition
report is be prepared;
b. evaluated the effectiveness of the registrant's disclosure controls
and procedures as of a date within 90 days prior to the filing date of
this transition report (the "Evaluation Date"); and
c. presented in this transition report our conclusions about the
effectiveness of the disclosure controls and procedures based on our
evaluation as of the Evaluation Date:
5. The registrant's other certifying officer and I have disclosed, based on
our most recent evaluation, to the registrant's auditors and the audit
committee of registrant's board of directors (or persons performing the
equivalent functions):
a. all significant deficiencies in the design or operation of internal
controls which could adversely affect the registrant's ability to
record, process, summarize and report financial data and have
identified for the registrant's auditors any material weaknesses in
internal controls; and
b. any fraud, whether or not material, that involves management or
other employees who have a significant role in the registrant's
internal controls; and
6. The registrant's other certifying officer and I have indicated in this
transition report whether or not there were significant changes in internal
controls or in other factors that could significantly affect internal
controls subsequent to the date of our most recent evaluation, including
any corrective actions with regard to significant deficiencies and material
weaknesses.
Dated: March 5, 2003
/S/ WILLIAM D. BLAKE
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William D. Blake
Vice President and Treasurer