thousands, except per share: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-affiliatesof(based on theregistrant. 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 PartPortions of
Form 10K -------- ---------------- Definitivethe Registrant’s definitive Proxy StatementParts Iprepared in connection with the 2004 Annual Meeting of Stockholders are incorporated by reference into Part III, Items 10, 11, 12, 13 andIII14 of this Annual Report on Form 10-K. 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 holdingsinvolved inthat generate oil and gasroyalty holdings,royalties, timbermanagementsales andagriculture.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 itowns.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 theCompany'sCompany’s land. The Company is not involved in exploration and production. The Company has a small workinginterestsinterest infour wells,one field, which occurred as a back-in under the original mineralleases.lease, but has no control over the operations. The Company does not anticipate taking a working interest in any futureproduction. Industry Segments In addition to anproduction of oil andgas segment, thegas. The Companyhas also created "Agriculture Properties" and "Timber Properties". Includeddoes not consider itself to be involved in oil and gasproperties 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 minerallease payments and payments for seismic work. Note 6rights deeded to theFinancial 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 gasrevenues, exclusive of revenues paid Walker Louisiana Properties.revenues. In2002,2003, sales to Cox & Perkins accounted for71.1%41% of revenues, sales to Kerr-McGee accounted for 13% of revenues and sales to Riceland Petroleum accounted for14.3%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 this1total 5,7666,431 acres represents theCompany'sCompany’s one-sixth undivided ownership in34,59635,088 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 theCompany'sCompany’s acreage is managed by theCompany'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
12/31/03Year Ended
12/31/02Year Ended
12/31/01Net 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
Year Ended Year Ended Year Ended 12/31/00 12/31/01 12/31/02 -------------------- --------------------- --------------------Net gas produced (MCF) 338,352 130,662 102,802 Average gas sales price (Per MCF)(1) $3.56 $5.75 $3.02 Net Oil Produced (Bbl) 10,258 9,732 27,451 Average Oil Sales price (Per Bbl)(1) $27.55 $25.26 $26.36 Average sales priceBefore deduction of oilproduction andgas per MCF $3.72 $5.68 $3.87 equivalent (1)(2) Average production cost of oil and gas per MCF equivalent (2) Royalty Interests .16 .22 .35 Working Interests .81 1.58 2.27severance taxes.(1) Before deduction of production and severance taxes. (2) Oil production is convertedItem 3.LEGAL PROCEEDINGS
There are no material pending legal proceedings to
MCF equivalents atwhich therate 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. 2Calcasieu 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 TheCompany is aco-defendant in a lawsuit filedparty. There are no proceedings known to be contemplated byowners 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 Companyis forfeiting one-halfwas notified by the United States Department ofits ownership of the minerals on the 80 acresJustice during 2003 that it was not going tothe 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 aswell 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 didnotcome 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 COMMONSTOCKEQUITY AND RELATEDSECURITY HOLDERSTOCKHOLDER MATTERSAs of February 18,
2003,2004, the common stock of Calcasieu Real Estate and Oil Co., Inc. was owned by685 stockholders.approximately 671 stockholders and the stock price was $7.35. During the three yearsprecedingprior to December 8, 2003, there was no established public trading market for thedate hereof,common stock and therehashad been only limited and sporadic trading in theCompany's Common Stock,common stock, principally among its shareholders.InOn December 8, 2003, theyear 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 tradingrange. 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 3Dividends 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 restrictionson thepayingAmerican 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
12/31/99Ended
12/31/00Ended
12/31/01Ended
12/31/02Ended
12/31/03Revenues
$ 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
Ended Ended Ended Ended Ended 12/31/98 12/31/99 12/31/00 12/31/01 12/31/02 -------- -------- -------- -------- --------Revenues $897,027 $2,646,491 $2,497,118 $1,618,587 $1,462,205 Income before income taxes 585,182 2,279,814 2,144,821 1,284,106 1,074,468(1) Earnings per common share (1) .20 .78 .73 .45 .38 Total assets $4,759,327 $5,212,540 $6,035,717 $6,407,663 $6,623,665 Cash Dividends declared per common stock .09 .08 .25 .25 .25presented are based on the weighted average outstanding shares of 1,948,307 in 2003, 1,955,044 in 2002, 1,955,044 in 2001, 1,956,000 in 2000 and 1,979,000 in 1999.(1) Earnings per common share presentedThere are
based onno factors that materially affect theweighted average outstanding sharescomparability of1,955,044the information shown above, other than fluctuations in2002, 1,955,044 in 2001, 1,956,000 in 2000, 1,979,000 in 1999volumes and1,995,000 in 1998.prices of commodities sold.Item 7.
MANAGEMENT'SMANAGEMENT’S DISCUSSIONAND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Business You should read theThe following discussion
and analysisof ourfinancial condition andresults of operations and financial condition should be read together with"Selected Financial Data"the other financial information andourthe financial statements and related notesappearingincluded 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 thatinvolveare 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 andassumptions. 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:
changes in the prices of oil, gas, and forest and agricultural products;our ability to attract customers to perform exploration and development for oil and gasproperties decreased 6.3% dueon our land, or the potential failure of our customers toa combinationdiscover or extract additional oil and gas deposits;technological developments;the potential failure by customers to achieve expected production from existing and future oil and gas development projects, or potential delays in the development, construction or start-up offactors. Income from wells on Walker Louisiana Properties decreased due to depletion and lower gas prices. On Calcasieu's acreage the wells at North English Bayou which have produced most ofplanned projects;competition in the oil and gas industries and the competitiveness of alternate energy sources or product substitutes;potential liability for remedial actions under existing or future environmental regulations and litigation, or significant investment or product changes under existing or future environmental regulations; andthe effects of changed accounting rules under generally accepted accounting principles promulgated by rule-setting bodies.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 pluggedEstimatesThe 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 ina 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 in2002. An injection well has been completed which could extendthelife of this well for threeprior year, we estimate the amount tofour years. Lease and seismic income has decreased steadily overbe received based on the lastfour 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 aretwo 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. 4Agriculture 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 longerbe 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 taxeswas down $136,038in2002 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. TheCompany 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 andprovidepaid in January. Additional sources of liquidity are theCompany 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 thatcomesmight come on themarketmarket.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 wellwas 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 tomeetincrease 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 theneedsCompany’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 isincludedincorporated herein by reference.5Executive
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 ofthe Company since 1979; Chairman of the Board at the First National Bank of Lake Charles from 1968our executive officers and any other person pursuant to1998; President of Bank One, Southwest Louisiana, from 1998which any executive officer was appointed toApril, 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 isincludedincorporated 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 isincludedincorporated 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 ofthe report: 1. All Financial Statements. See Table of Contents to Financial Statements and schedulethis Annual Report on Form 10-K are indexed at page9. 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 68-A reflecting its listing on the American Stock Exchange, effective December 8, 2003.
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, 200311, 2004Pursuant 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 711, 2004 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 StatementsTo 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. 8REPORT OF MANAGEMENT CALCASIEU REAL ESTATE & OIL CO., INC. Management ofDirectorsCalcasieu 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 and2001,2002, and the related statements of income, changes instockholders'stockholders’ equity, and cash flows for the years ended December 31, 2003, 20022001and2000.2001. These financial statements are the responsibility of theCompany'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 and2001,2002, and the results of its operations and its cash flows for the years ended December 31, 2003, 20022001and2000,2001, 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 & BurchLake Charles, Louisiana
March
5, 2003 101, 2004 CALCASIEU REAL ESTATE & OIL CO., INC.
BALANCE SHEETS
December 31,
20022003 and2001 ASSETS20022001 ---------- --------- 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.
11CALCASIEU REAL ESTATE & OIL CO., INC.
STATEMENTS OF INCOME
Years Ended December 31, 2003, 2002
2001and2000 200220012000 ---- ---- ---- 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.
12CALCASIEU REAL ESTATE & OIL CO., INC.
STATEMENTS OF CHANGES IN
STOCKHOLDERS'STOCKHOLDERS’ EQUITYYears Ended December 31, 2003, 2002
2001and2000
Accumulated Other Capital Comprehensive Retained Comprehensive Stock Treasury Income Earnings Income Issued Stock ---------- ----------- ----------- ----------- -----------Balance, January 1, 2000 $ - $ 5,059,619 $ 12,086 $ 72,256 $ 212,957 Comprehensive income: Net income 1,436,029 1,436,029 - - - Other comprehensive income: Unrealized gains on securities available for sale: Unrealized holding gains occurring during period net of taxes of $8,240 12,362 - - - - ----------- Other comprehensive income, net of tax 12,362 - 12,362 - - ----------- Total comprehensive income $ 1,448,391 - - - - =========== Purchase of treasury stock - - - 93,872 Refund of prior year unclaimed dividends and other 1,542 - - - Dividends (492,548) - - - ----------- ----------- ----------- ----------- Balance, December 31, 2000 6,004,642 24,448 72,256 306,829 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 - - - - =========== (continued on next page)132001
Comprehensive
IncomeRetained
EarningsAccumulated
Other
Comprehensive
IncomeCapital
Stock
IssuedTreasury
StockBalance, 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’ EQUITYYears Ended December 31, 2003, 2002
2001and20002001(Continued)
Accumulated Other Capital Comprehensive Retained Comprehensive Stock Treasury Income Earnings Income Issued Stock ---------- ----------- ----------- ----------- -----------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) - - - ----------- ----------- --------- ----------- Balance, December 31, 2002 $ 6,642,737 $ 16,563 $ 72,256 $ 306,829 =========== =========== ========= ===========
Comprehensive
IncomeRetained
EarningsAccumulated
Other
Comprehensive
IncomeCapital
Stock
IssuedTreasury
StockBalance, 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.
14CALCASIEU REAL ESTATE & OIL CO., INC.
STATEMENTS OF CASH FLOWS
Years Ended December 31, 2003, 2002
2001and2000
2002 2001 2000 ----------- ----------- -----------CASH FLOWS FROM OPERATING ACTIVITIES Net income $ 736,568 $ 872,606 $ 1,436,029 Noncash (income) expenses included in net income: Depreciation, depletion and amortization 38,886 29,566 39,282 Realized (gains) on sale of available-for-sale securities - (27,654) - Gain on sale of assets (2,572) (4,991) (414) Loss on asset retirement 375 - 883 Deferred income tax 2,807 (4,365) 2,200 Change in assets and liabilities: (Increase) decrease in trade accounts and other receivables (58,625) 35,471 323,735 (Increase) decrease in inventory 917 (6,616) 5,855 (Increase) decrease in prepaid income taxes 110,030 (96,265) (74,878) (Increase) in prepaid expenses (371) - (2,635) Increase (decrease) in trade payables 2,895 (8,879) 3,938 (Decrease) in other liabilities - - (151,282) ----------- ----------- ----------- Net cash provided by operating activities 830,910 788,873 1,582,713 ----------- ----------- ----------- CASH FLOWS FROM INVESTING ACTIVITIES Proceeds from rights of way - 500 500 Proceeds from sale of timber and land 4,655 22,041 54,917 Available-for-sale securities: Purchases (1,692,887) (590,114) (961,489) Sales 700,000 1,300,000 - Purchase of land, property and equipment (197,025) (250,610) (22,087) ----------- ----------- ----------- Net cash provided by (used in) investing activities (1,185,257) 481,817 (928,159) ----------- ----------- ----------- CASH FLOWS FROM FINANCING ACTIVITIES Dividends paid, net of refunds (481,410) (489,669) (394,440) Payments to acquire treasury stock - - (93,872) ----------- ----------- ----------- Net cash (used in) financing activities (481,410) (489,669) (488,312) ----------- ----------- ----------- Net increase (decrease) in cash and cash equivalents (835,757) 781,021 166,242 Cash and cash equivalents: Beginning 1,419,084 638,063 471,821 ----------- ----------- ----------- Ending $ 583,327 $ 1,419,084 $ 638,063 =========== =========== =========== (continued on next page)152001
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
2001and20002001(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.
16CALCASIEU 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. 17NOTES TO FINANCIAL STATEMENTSInvestment 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 18NOTES 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. 19NOTES 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 2002and 2001follow:
Gross Gross Amortized Unrealized Unrealized December 31, 2002 Cost Gains Losses Fair Value --------- ---------- ----------- ----------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 =========== ========== ========== =========== December 31, 2001 Available-for-sale securities: Equity securities $ 56,123 $ 7,189 $ - $ 63,312 Preferred equity securities 279,257 35,163 - 314,420 ----------- ---------- ---------- ----------- $ 335,380 $ 42,352 $ - $ 377,732 =========== ========== ========== ===========
Gross
Amortized
CostGross
Unrealized
GainsUnrealized
LossesFair 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 $ - =========== ======== 202002.
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
2001and20002001 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, 20022001and2000.2001.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 gasrevenues in 2002, 2001royalties come from Company owned properties that were developed and2000. 21produced by other partners under lease agreements. 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 and2001: 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
2001and20002001 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 and20012002 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 and2001.2002.Note 6. Company Operations
The
Company'sCompany’s operations are classified intothreeone principal operatingsegmentssegment whichare allis located in the United States: oil and gasproperties, agricultural properties, and timberproperties. TheCompany'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
2001and2000: 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 =========== =========== =========== 232001:
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 =========== =========== =========== 24NOTES 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
2001and20002001 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 RevenuesPurchaser
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. 25NOTES TO FINANCIAL STATEMENTSIn 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
$98,116and$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 RiskThe 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.
26NOTES TO FINANCIAL STATEMENTS
Note
11.10. Disclosures About Fair Value of Financial InstrumentsThe 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 and20012002 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. 27NOTES 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
ValueFair
ValueCarrying
ValueFair
ValueFinancial 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
2001and 1999Balance, 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
PeriodAdditions Adjustments
and
RetirementsBalance,
End of
Period2003 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
2001and2000 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 =========== ========== =========== =========== 30CERTIFICATIONS 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 PeriodAdditions Adjustments
and
RetirementsBalance,
End of
Period2003 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 OfficerCertification 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 ---------------------------- William D. Blake Vice President and Treasurer
First Quarter | Second Quarter | Third Quarter | Fourth Quarter | Total Year | |||||||||||
Total revenues: | |||||||||||||||
2003 | $ | 450 | $ | 363 | $ | 587 | $ | 711 | $ | 2,111 | |||||
2002 | 227 | 453 | 371 | 403 | 1,454 | ||||||||||
Operating income: | |||||||||||||||
2003 | 351 | 275 | 468 | 431 | 1,525 | ||||||||||
2002 | 122 | 371 | 286 | 237 | 1,016 | ||||||||||
Net income: | |||||||||||||||
2003 | 252 | 199 | 333 | 309 | 1,093 | ||||||||||
2002 | 90 | 264 | 210 | 173 | 737 | ||||||||||
Net income per share: | |||||||||||||||
2003 | .13 | .10 | .17 | .16 | .56 | ||||||||||
2002 | .05 | .13 | .11 | .09 | .38 | ||||||||||
Cash dividends per share: | |||||||||||||||
2003 | .05 | .10 | .07 | .07 | .29 | ||||||||||
2002 | .05 | .05 | .05 | .10 | .25 | ||||||||||
Shares outstanding: | |||||||||||||||
2003 | 1,955 | 1,952 | 1,945 | 1,945 | 1,945 | ||||||||||
2002 | 1,955 | 1,955 | 1,955 | 1,955 | 1,955 |
33