<PAGE>
[LETTERHEAD OF MILLING BENSON WOODWARD L.L.P.]
March 29, 2000
Securities and Exchange Commission
450 Fifth Street, N.W.
Judiciary Plaza
Washington, D.C. 20549-1004
Via Edgar Electronic Filing System
Re: File Number 0-9219
------------------
Gentlemen:
Pursuant to regulations of the Securities and Exchange Commission,
submitted herewith for filing on behalf of Avoca, Incorporated (the "Company")
is the Company's Report on Form 10-KSB for the period ended December 31, 1999.
This filing is being effected by direct transmission to the
Commission's EDGAR System.
Sincerely,
/s/ Guy C. Lyman, Jr.
Guy C. Lyman, Jr.
Attorney at Law
Milling Benson Woodward L.L.P.
(504) 569-7160
GCL/kj217308
Enclosures
<PAGE>
UNITED STATES
Securities and Exchange Commission
Washington, D.C. 20549
FORM 10-KSB
X / Annual report pursuant to Section 13 or 15(d) of the Securities Exchange
- --- Act of 1934 for the fiscal year ended December 31, 1999
or
/ Transition report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934 for the transition period from to
Commission file number 0-9219
------
AVOCA, INCORPORATED
- --------------------------------------------------------------------------------
(Name of small business issuer in its charter)
Louisiana 72-0590868
- -------------------------------------------------- -------------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
228 St. Charles Avenue, Suite 838, New Orleans, LA 70130
- -------------------------------------------------- -------------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number (504) 552-4720
--------------------
Securities registered under Section 12(b) of the Act:
Title of each class Name of each exchange on
which registered
None None
- --------------------------------------------------- ------------------------
Securities registered under Section 12(g) of the Exchange Act:
Common Stock - No Par Value
---------------------------
(Title of Class)
Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter
period that registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days. Yes X No
--- ---
Check if there is no disclosure of delinquent filers in response to Item 405 of
Regulation S-B contained in this form, and no disclosure will 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-KSB or any
amendment to this Form 10-KSB.
---
State issuer's revenues for its most recent fiscal year. $1,444,810
----------
The aggregate market value of common stock held on March 1, 2000 by
non-affiliates of the registrant was $9,903,953. Such value has been computed on
the basis of the average bid and asked prices of the stock and by excluding,
from the 830,500 shares outstanding on that date, all stock beneficially owned
by officers and directors of the registrant and by beneficial owners of more
than five percent of its stock, even though all such persons may not be
affiliates as defined in SEC Rule 12b-2.
The Company has only one class of common stock, of which 830,500 shares were
outstanding on March 1, 2000.
Parts I and II incorporate by reference information from the Annual Report to
Shareholders for the year ended December 31, 1999. Part III incorporates by
reference information from the Company's Proxy Statement dated February 18,
2000.
Transitional Small Business Disclosure Format (check one): Yes No X
--- ---
An exhibit index is located on page 16
<PAGE>
AVOCA, INCORPORATED
Index to 10-KSB Annual Report
PAGE
PART I
Item 1: Description of Business 3-9
Item 2: Description of Property 9-10
Item 3: Legal Proceedings 10
Item 4: Submission of Matters to a Vote of Security Holders 11
PART II
Item 5: Market for Common Equity
and Related Stockholder Matters 11
Item 6: Management's Discussion and Analysis or Plan of
Operation 11
Item 7: Financial Statements 11
Item 8: Changes In and Disagreements With Accountants on
Accounting and Financial Disclosure 11-12
PART III
Item 9: Directors, Executive Officers, Promoters and
Control Persons; Compliance With Section 16(a)
of the Exchange Act 12
Item 10: Executive Compensation 12
Item 11: Security Ownership of Certain Beneficial Owners
and Management 12-13
Item 12: Certain Relationships and Related Transactions 13
Item 13: Exhibits and Reports on Form 8-K 13-14
Page 2 of 16 Pages
<PAGE>
PART I
Item 1 Description of Business
- ------ -----------------------
Avoca, Incorporated ("the Company") is a Louisiana corporation formed
in 1931. It owns and manages approximately 16,000 acres comprising virtually all
of Avoca Island, which is located about 90 miles west of New Orleans in St. Mary
Parish, Louisiana, adjacent to and immediately southeast of Morgan City. The
island, approximately two-thirds of which is under shallow water, is rural and
virtually undeveloped except for exploration and development of its oil and gas
resources.
Avoca, Incorporated is a passive royalty company that derives most of
its income from royalties, bonuses and delay rentals under oil and gas leases
covering its Avoca Island acreage. The following table and accompanying lease
map furnish information respecting mineral leases in effect for the year ended
December 31, 1999.
Page 3 of 16 Pages
<PAGE>
<TABLE>
<CAPTION>
MINERAL INCOME
Year Ended December 31, 1999
Initial Income Recognized in 1999
Date of Rental Lease Bonus Net
Lessee Operator Lease Acreage Expiration Per Acre or Delay Rental Royalties
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Texaco, Inc. Texaco, Inc. 5/17/63 41.900 Termination $ 75 $ -- $ 72
of production
Alliance Operating Delta Operating 8/14/87 276.733 Termination $ 200 -- 132,877
Company Corporation of production
Burlington Resources Burlington Resources 8/12/96 420.000 Expired on $ 110 **21,000 --
Oil & Gas Company Oil & Gas Company 12/12/99
Burlington Resources Burlington Resources 12/12/97 525.000 Termination $ 150 105,000 --
Oil & Gas Company Oil & Gas Company of production
or 12/12/00 if
nonproducing
The Meridian Resource The Meridian Resource 5/27/98 406.720 Termination $ 200 81,345 244,239
& Exploration, Inc.* & Exploration, Inc.* of production
or 5/27/01 if
nonproducing
CNG Producing Company CNG Producing Company 8/19/99 1,637.550 Termination $ 200 327,510 -
of production
or 8/19/02 if
nonproducing
The Meridian Resource The Meridian Resource 11/18/99 880.000 Termination $ 200 176,000 -
& Exploration Co. & Exploration Co. of production
or 11/18/02 if
nonproducing
The Meridian Resource The Meridian Resource 11/18/99 80.000 Termination $ 300 24,000 -
& Exploration Co. & Exploration Co. of production
or 11/18/02 if
nonproducing
The Meridian Resource The Meridian Resource 11/23/99 131.680 Termination $ 350 46,088 -
& Exploration Co. & Exploration Co. of production
or 11/23/02 if
nonproducing
-------- --------
$780,943 $377,188
======== ========
*---formerly Texas Meridian Resources Exploration, Inc.
**---payment made to extend terms of lease from 8/12/99 - 12/12/99.
</TABLE>
Page 4 of 16 Pages
<PAGE>
[Map of Avoca Island appears here,
showing property of Avoca, Incorporated,
mineral leases and well locations]
Page 5 of 16 Pages
<PAGE>
Item 1 Description of Business (continued)
- ------ -----------------------
At December 31, 1999, 4,285 acres of the Company's land were covered
by oil and gas leases. Approximately 624 acres were held by production pursuant
to leases (in favor of Alliance Operating Company, Burlington Resources Oil and
Gas Company, The Meridian Resource Exploration, Inc. and Texaco, Inc.) providing
for royalties ranging from 21% to 30%. The remaining 3,661 acres are covered by
leases in favor of Burlington Resources Oil and Gas Company, The Meridian
Resource & Exploration, Inc. and CNG Producing Company. The Burlington lease
stipulates a 22% royalty. One lease, granted to The Meridian Resource &
Exploration, Inc. in 1998, stipulates a 25% royalty from the surface to 12,500
feet and 23% for all lower depths. The remaining three leases granted to The
Meridian Resource & Exploration, Inc. in 1999 stipulate a 25% royalty. The lease
granted to CNG Producing Company also stipulates a 25% royalty.
On average over the last three years, the Delta Operating Corporation
(formerly Alliance Operating Company) Avoca No. 1 well in the Ramos Field has
been the Company's largest producing well. Royalties from the Avoca No. 1, in
which Avoca, Incorporated has a net revenue interest of approximately 19%, were
responsible for approximately 35% of the Company's royalty income during 1999,
99% in 1998 and 74% in 1997. Production from the well was 275,816 thousand cubic
feet (mcf) of gas and 3,950 barrels of condensate in 1999 as compared with
311,345 mcf of gas and 4,206 barrels of condensate in 1998, and 245,165 mcf and
3,604 barrels in 1997.
During 1999, The Meridian Resources & Exploration Co. ("Meridian") C.
M. Thibodaux No. 1 and No. 3 wells, which are located in the Ramos Field, across
Bayou Chene just north of the eastern end of Avoca Island, succeeded the Avoca
No. 1 well as principal sources of the Company's royalty income. The C. M.
Thibodaux No. 1 well was placed on production June 15, 1999 from the Operc 5
sand, went off production June 25 due to a blowout of the C. M. Thibodaux No. 2
well and
Page 6 of 16 Pages
<PAGE>
returned to production August 24 after the plugging of the No. 2 well. TheC. M.
Thibodaux No. 3 well went on production in early November from the Operc B sand.
Royalties from these wells, in which Avoca, Incorporated has a net revenue
interest of 2.87%, were responsible for approximately 65% of the Company's
royalty income during 1999. Total 1999 production from the C. M. Thibodaux No. 1
and No. 3 wells was 1,337,524 mcf of gas, 149,060 barrels of condensate and
5,117,661 gallons of natural gas liquids (NGL).
The Intercoastal Shipyard No. 2 well, operated by Black Gold
Production Company under the Capital Energy, Inc. lease dated January 2, 1996,
ceased production on April 8, 1997 and has been plugged and abandoned. The well,
also located in the Ramos Field contributed $54,327 of royalty income in 1997.
The Company's share of production from the Bateman lake Field tract
leased to Texaco, Inc. has been negligible in recent years.
In addition to information regarding prices, the following table
shows the Company's share of gas produced (in terms of thousand cubic feet), oil
delivered (in terms of barrels) and natural gas liquids (in terms of gallons)
from the Ramos Field during the last three years.
<TABLE>
<CAPTION>
Volume Average Sales Price
--------------------------------------------- ------------------------------------
Year Gas Oil NGL Per mcf Per bbl Per gal
<S> <C> <C> <C> <C> <C> <C>
1997 56,537 mcf 941 bbls $2.83 $20.84
1998 60,587 mcf 818 bbls $2.28 $12.62
1999 89,891 mcf 7,056 bbls 146,822 gal $2.41 $18.06 $.35
</TABLE>
Page 7 of 16 Pages
<PAGE>
As shown on the table on page 5 of this report, the Company granted
four mineral leases in 1999 as compared with two mineral leases each for the
years 1998 and 1997. Although no drilling operations were conducted on Avoca
Island during the three year period ended December 31, 1999, three producing
wells (the above-discussed C. M. Thibodaux No. 1 and No. 3 and the Conrad
Industries No. 1) were drilled near the island.
Further information respecting oil and gas operations on the Company's
property appears under the captions "Report to the Shareholders" and
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" on pages 3 and 14 of the Company's 1999 Annual Report to
Shareholders, attached as an exhibit hereto and incorporated herein by
reference. The Company's principal activities with respect to oil and gas
consist of the granting of leases and the collection of bonuses, delay rentals
and landowner royalties thereunder. Accordingly, only limited information,
furnished primarily by the Company's lessees, has been included with respect to
oil and gas operations affecting the Company's lands. Complete information
respecting these and related matters, such as proved reserves, is unavailable to
the Company and cannot be obtained without unreasonable effort or expense.
Wild game, bird hunting and non-commercial fishing rights on Avoca
Island are leased to the Avoca Duck Club. A seven-year cattle lease, signed in
1998 on 600 acres, has helped minimize expenditures toward land clearing and
fence maintenance.
The Company has no employees but retains the services of three
individuals as independent contractors. One acts as consultant to the Board of
Directors and assists with the Company's day to day business affairs. The other
two individuals maintain the Company's financial records and watch over the
Company's lands, respectively.
Page 8 of 16 Pages
<PAGE>
Additional information regarding the Company's business is included
under Item 2 of this report, incorporated herein by reference.
Item 2 Description of Property
- ------ -----------------------
The Company owns approximately 16,000 acres comprising virtually all
of Avoca Island. The island, located in St. Mary Parish, Louisiana,
approximately 90 miles west of New Orleans, lies southeast of the greater Morgan
City area, from which it is separated by Bayou Boeuf. There are no bridges or
roads leading to the island. Access is by means of a free ferry which operates
on a regular schedule across Bayou Boeuf (a distance of approximately 500 feet)
and connects the northwest tip of the island with the Morgan City area. Ferry
service is interrupted by periodic mechanical breakdowns and during periods of
high water.
Avoca Island is within the Morgan City Harbor and Terminal District.
Bayou Boeuf and Bayou Chene, which border the island for a distance of
approximately thirteen miles and form its northern, eastern and southern
perimeters, are part of the Gulf section of the Intracoastal Waterway.
Approximately one-third of the island, located along its northern and
eastern perimeters, is dry ground. The remaining two-thirds is under shallow
water. Avoca Island is rural, and its surface is virtually undeveloped.
Over the years, preliminary studies and proposals have been made with
regard to a bridge linking Avoca Island with the mainland, but no definitive
action has resulted from these efforts. With the Company's cooperation, a new
feasibility study concerning industrial development of Avoca Island was
completed in 1998 by the St. Mary Parish government and has been reviewed by the
Company and others.
Page 9 of 16 Pages
<PAGE>
A study conducted with the assistance of LSU's Cooperative Extension
Service in 1991 indicates that aquaculture and tree farming are not economically
feasible and that the island's suitability for farming is limited. The Company
is continuing its search for ways to prudently develop Avoca Island for
agricultural and commercial use. In addition to ongoing surface maintenance
operations and its long standing lease of hunting and fishing rights to the
Avoca Duck Club, the Company recently signed a cattle grazing lease covering
approximately 600 acres on the northern and western parts of the island.
Information respecting development of oil and gas resources on Avoca
Island is provided under Item 1 of this report, incorporated herein by
reference.
Item 3 Legal Proceedings
- ------ -----------------
On December 29, 1999, the Company filed in the 16th Judicial District
Court for the Parish of St. Mary (Docket No. 105195) a lawsuit to evict a former
lessee, Ernest Singleton, from a small parcel of land (less than 10 acres)
located in the northeast part of Avoca Island. The parcel is included in The
Meridian Resource & Exploration, Inc.'s 647.504 acre unit for the C. M.
Thibodaux Nos. 1 and 3 wells.
The defendant, individually and on behalf of numerous other heirs of
John Singleton, has filed a Reconventional Demand and Petition in Nullity
asserting ownership of the parcel (and other lands not claimed by the Company)
on the ground that a 1970 court judgment which recognized the Company's title to
the disputed area is a nullity.
The Company has responded with peremptory exceptions of prescription
and res judicata, which are pending before the court.
Page 10 of 16 Pages
<PAGE>
Item 4 Submission of Matters to
- ------ a Vote of Security Holders
--------------------------
Not Applicable
PART II
Item 5 Market for Common Equity
- ------ and Related Stockholder Matters
-------------------------------
The information called for by this item appears under the caption
"Stock Prices and Related Security Holder Matters" on page 15 of the Company's
1999 Annual Report to Shareholders, attached as an exhibit hereto and
incorporated herein by reference.
Item 6 Management's Discussion and
- ------ Analysis or Plan of Operation
-----------------------------
The information called for by this item appears under the captions
"Report to the Shareholders" and "Management's Discussion and Analysis of
Financial Condition and Results of Operations" on pages 3 and 14, respectively,
of the Company's 1999 Annual Report to Shareholders, attached as an exhibit
hereto and incorporated herein by reference.
Item 7 Financial Statements
- ------ --------------------
The information called for by this item appears on pages 4 through 13
of the Company's 1999 Annual Report to Shareholders, attached as an exhibit
hereto and incorporated herein by reference.
Item 8 Changes In and Disagreements With
- ------ Accountants on Accounting and Financial Disclosure
--------------------------------------------------
With the approval of the Company's Board of Directors and effective
upon the filing of the Company's Form 10-KSB for the year ended December 31,
1998, Ernst & Young LLP decided not to stand for reappointment as the Company's
independent public accountants. There were no
Page 11 of 16 Pages
<PAGE>
disagreements with Ernst & Young LLP and its reports have contained no adverse
opinion, disclaimer of opinion or modification as to uncertainty, audit scope or
accounting principles.
Effective March 16, 1999, Arthur Andersen LLP has been engaged to
succeed Ernst & Young LLP as the Company's independent public accountants for
2000.
PART III
Item 9 Directors, Executive Officers,
- ------ Promoters and Control Persons; Compliance
With Section 16(a) of the Exchange Act
--------------------------------------
The Company has three executive officers, all of whom are directors:
Robert C. Baird, Jr., President, Richard W. Fox, Vice President, and M. Cleland
Powell, III, Secretary-Treasurer. Information concerning such persons and the
Company's other directors is shown under the caption "Number and Election of
Directors" on pages 3 and 4 of the Company's Proxy Statement dated February 18,
2000, incorporated herein by reference. The balance of the information called
for by this item appears under the caption "Section 16(a) Beneficial Ownership
Reporting Compliance" on page 5 of the Company's Proxy Statement dated February
18, 2000, incorporated herein by reference.
Item 10 Executive Compensation
- ------- ----------------------
The information called for by this item appears under the caption
"Information Concerning Management - Executive Compensation" on page 5 of the
Company's Proxy Statement dated February 18, 2000, incorporated herein by
reference.
Item 11 Security Ownership of Certain
- ------- Beneficial Owners and Management
--------------------------------
The information called for by this item appears under the caption
"Voting Securities" on pages 2 and 3, and under the caption "Number and Election
of Directors" on
Page 12 of 16 Pages
<PAGE>
pages 3 and 4, of the Company's Proxy Statement dated February 18, 2000,
incorporated herein by reference.
Item 12 Certain Relationships
- ------- and Related Transactions
------------------------
The information called for by this item appears under the caption
"Information Concerning Management - Certain Relationships" on page 5 of the
Company's Proxy Statement dated February 18, 2000, incorporated herein by
reference.
PART IV
Item 13 Exhibits and Reports on Form 8-K
- ------- --------------------------------
(a)1. Financial Statements
The following financial statements of Avoca, Incorporated,
included in its 1999 Annual Report to Shareholders, are incorporated by
reference in Part II, Item 7:
Report of Ernst & Young LLP, Independent Auditors, dated January
13, 1999
Report of Arthur Andersen LLP, Independent Public Accountants,
dated January 7, 2000
Balance sheet - December 31, 1999
Statements of Income - years ended
December 31, 1999 and 1998
Statements of Retained Earnings -
years ended December 31, 1999 and 1998
Statements of Cash Flows - years ended
December 31, 1999 and 1998
Notes to Financial Statements -
December 31, 1999
(a)2. Exhibits required by Item 601 of Regulation S-B:
3.1 Copy of Composite Charter(1)
3.2 Copy of Charter, dated October 21, 1931(1)
Page 13 of 16 Pages
<PAGE>
3.3 Copy of amendment to Charter, dated
September 13, 1972(1)
3.4 Copy of amendment to Charter, dated
May 30, 1975(1)
3.5 Copy of amendment to Charter, dated
September 15, 1981(2)
3.6 Copy of amendment to Charter, dated
March 17, 1987(2)
3.7 Copy of Composite Charter (as of
August 14, 1987)(2)
4.0 Copy of specimen stock certificate(1)
13 Annual Report to Shareholders for the year ended
December 31, 1999. Except for the information expressly
specifically incorporated by reference in this Form
10-KSB, the annual report is provided solely for the
information of the Securities and Exchange Commission
and is not to be deemed filed as part of the Form
10-KSB.
27 Financial Data Schedule
(b) Reports on Form 8-K
Forms 8-K, dealing with a change in the Company's accountants,
were filed on February 4, 1999 and March 23, 1999.
(1) Incorporated by reference from registrant's Form 10 Registration
Statement, filed with the Securities and Exchange Commission on April 29,
1980, Commission file number 0-9219.
(2) Incorporated by reference from registrant's Form 8 Report dated August 14,
1987, Commission file number 0-9219.
Page 14 of 16 Pages
<PAGE>
SIGNATURES
----------
Pursuant to the requirements of Section 13 of the Securities Act
of 1934, the registrant has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized.
Avoca, Incorporated
By: /s/ Robert C. Baird, Jr.
-------------------------------------
Robert C. Baird, Jr.
President and principal executive,
financial and accounting officer
Date: March 21, 2000
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated.
/s/ Robert C. Baird, Jr.
- ------------------------------
Robert C. Baird, Jr., Director
Date: March 21 , 2000
----
/s/ Richard W. Fox
- ------------------------------
Richard W. Fox, Director
Date: March 21 , 2000
----
/s/ Guy C. Lyman, Jr.
- -------------------------------
Guy C. Lyman, Jr., Director
Date: March 21 , 2000
----
/s/ M. Cleland Powell, III
- --------------------------------
M. Cleland Powell, III, Director
Date: March 21 , 2000
----
J. Scott Tucker
- --------------------------------
J. Scott Tucker, Director
Date: March 21 , 2000
----
Page 15 of 16 Pages
<PAGE>
Exhibit Index
Sequentially
Numbered
Exhibit No. Description Page
- ----------- ----------------------------------------------- ------------
3.1 Copy of Composite Charter(1)
3.2 Copy of Charter, dated October 21, 1931(1)
3.3 Copy of amendment to Charter, dated September 13,
1972(1)
3.4 Copy of amendment to Charter, dated May 30, 1975(1)
3.5 Copy of amendment to Charter, dated September 15,
1981(2)
3.6 Copy of amendment to Charter, dated March 17,
1987(2)
3.7 Copy of Composite Charter (as of August 14, 1987)
(2)
4.0 Copy of specimen stock certificate(1)
13 Annual Report to Shareholders for the year ended
December 31, 1999. Except for the information
expressly specifically incorporated by reference
in this Form 10-KSB, the annual report is provided
solely for the information of the Securities and
Exchange Commission and is not to be deemed filed as
part of the Form 10-KSB.
27 Financial Data Schedule
- --------------------
(1) Incorporated by reference from registrant's Form 10 Registration Statement,
filed with the Securities and Exchange Commission on April 29, 1980, Commission
file number 0-9219.
(2) Incorporated by reference from registrant's Form 8 Report dated August 14,
1987, Commission file number 0-9219.
Page 16 of 16 Pages
<PAGE>
EXHIBIT 13
AVOCA Annual Report
INCORPORATED --------------------------------
1999
<PAGE>
Description of Business
Avoca, Incorporated owns and manages approximately 16,000 acres
comprising virtually all of Avoca Island, which is located about 90 miles west
of New Orleans in St. Mary Parish, Louisiana, adjacent to and immediately
southeast of Morgan City. The island is rural and virtually undeveloped except
for exploration and development of its oil and gas resources.
Avoca, Incorporated is largely a passive royalty company which derives
most of its income from royalties, bonuses and delay rentals under oil and gas
leases covering its Avoca Island acreage.
Directors and Officers
Robert C. Baird, Jr., M. Cleland Powell, III, Director
Director and President and Secretary-Treasurer;
Executive Vice President, Senior Vice President,
Whitney National Bank Whitney National Bank
Richard W. Fox, J. Scott Tucker; Director;
Director and Vice President; President and Chief Executive Officer,
President, Fox Financial Hellenic, Inc.
Consulting, Inc. and Manager,
Longford Farm, L.L.C.
Guy C. Lyman, Jr., Director;
Attorney,
Milling Benson Woodward L.L.P.
2 AVOCA, Incorporated
<PAGE>
Report to the Shareholders
Issued Preliminary to the Sixty-eighth
Annual Meeting of Shareholders on March 21, 2000
Dear Shareholders:
In 1999 Avoca, Incorporated realized the financial benefits of higher
oil and gas prices and the renewed interest in exploration and development that
resulted. The Company's net income increased by 145%, from $328,265 in 1998 to
$803,584 in 1999. The increase was attributable to an 83% increase in revenue
from lease bonuses and delay rentals, a 177% increase in royalty income net of
severance taxes and a new revenue item, $113,941 received from lease option
payments.
The availability of compiled 3-D seismic data of Avoca Island resulted
in increased leasing activity in 1999. Lease bonuses from four new oil, gas and
mineral leases on 2,729.230 acres of Company lands contributed $573,598 to gross
income.
The second largest contribution to 1999 income was the $241,087
increase in royalty income net of severance taxes. The increase resulted from
royalties received on two new wells, The Meridian Resources & Exploration Co.'s
C. M. Thibodaux No. 1 and No. 3 wells in the Ramos Field.
The third major contribution to increased revenue in 1999 was $113,941
received from four new lease options to take down oil, gas and mineral leases on
5,485.75 acres of Company property.
The Company continues to explore opportunities for use of the surface
acreage of Avoca Island in addition to the long-standing hunting and fishing
lease with the Avoca Duck Club. The 600-acre cattle lease executed in 1998
proved beneficial to the Company this year by reducing the cost of surface
maintenance.
On December 22, 1999, Burlington Resources Oil & Gas Company drilled
the Conrad Industries No. 1 well opposite the northern part of Avoca Island to
its total depth of 19,164 feet. The operator has advised the Company that the
objective sand was not found, but two other sands were logged at a higher depth.
The unitization hearing on this well, which will determine Avoca Incorporated's
participation in the unit, has been set for late February, 2000.
The Company's operations and financial condition are further discussed
on page 14 of this report and a complete list of mineral leases is shown inside
the back cover.
Respectfully submitted,
/s/ Robert C. Baird, Jr.
Robert C. Baird, Jr.
President
February 7, 2000
AVOCA, Incorporated 3
<PAGE>
Report of Ernst & Young LLP,
Independent Auditors
The Board of Directors
Avoca, Incorporated
We have audited the accompanying statements of income, retained
earnings, and cash flows of Avoca, Incorporated for the year ended December 31,
1998. These financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these financial
statements based on our audit.
We conducted our audit in accordance with auditing standards generally
accepted in the United States. 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 audit provides a reasonable basis
for our opinion.
In our opinion, the financial statements referred to above present
fairly, in all material respects, the results of Avoca, Incorporated's
operations and its cash flows for the year ended December 31, 1998, in
conformity with accounting principles generally accepted in the United States.
/s/ Ernst & Young LLP
New Orleans, Louisiana
January 13, 1999
4 AVOCA, Incorporated
<PAGE>
Report of Arthur Andersen LLP,
Independent Public Accountants
To the Stockholders of
Avoca, Incorporated
We have audited the accompanying balance sheet of Avoca, Incorporated
(a Louisiana corporation) as of December 31, 1999, and the related statements of
income, retained earnings, and cash flows for the year then ended. These
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audit.
We conducted our audit in accordance with generally accepted auditing
standards. 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 audit provides 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 Avoca, Incorporated
as of December 31, 1999 and the results of its operations and its cash flows for
the year then ended in conformity with generally accepted accounting principles.
/s/ Arthur Andersen LLP
New Orleans, Louisiana
January 7, 2000
AVOCA, Incorporated 5
<PAGE>
BALANCE SHEET
December 31
1999
- --------------------------------------------------------------------------------
ASSETS
CURRENT ASSETS
Cash and cash equivalents $ 761,573
Short-term investments 922,577
Accounts receivable 96,000
Accrued interest receivable 33,979
Recoverable income taxes 19,673
Prepaid expenses 8,502
-----------
TOTAL CURRENT ASSETS 1,842,304
PROPERTY AND EQUIPMENT
Net of accumulated depreciation and depletion of $604,881 73,332
OTHER ASSETS
Long-term investments 1,279,727
Avoca Drainage Bonds, $415,000, in default -
at nominal amount 1
-----------
$3,195,364
===========
6 AVOCA, Incorporated
<PAGE>
December 31
1999
- --------------------------------------------------------------------------------
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable and accrued expenses $ 16,915
Dividends payable 705,925
-----------
TOTAL CURRENT LIABILITIES 722,840
DEFERRED INCOME TAXES 12,381
SHAREHOLDERS' EQUITY
Common stock, no par value -- authorized, issued and
outstanding 830,500 shares 94,483
Retained earnings 2,365,660
-----------
TOTAL SHAREHOLDERS' EQUITY 2,460,143
$3,195,364
===========
See accompanying notes.
AVOCA, Incorporated 7
<PAGE>
STATEMENTS OF INCOME
Year ended December 31
1999 1998
- --------------------------------------------------------------------------------
Revenue:
Royalties $ 398,793 $ 142,733
Less severance taxes 21,605 6,632
---------- ---------
377,188 136,101
Lease bonuses and delay rentals 780,943 426,618
Lease option payments 113,941 --
Pipeline rights-of-way -- 4,045
Interest income 134,791 133,748
Rental income 30,783 28,000
Other 7,164 6,235
---------- ---------
1,444,810 734,747
Expenses:
Attorney fees and expenses 14,597 16,361
Auditing fees 17,800 16,000
Bookkeeping and clerical services 6,000 6,000
Management fees 52,624 55,442
Directors' fees 5,000 5,000
Geological and engineering fees and
expenses 13,885 17,491
Insurance 25,335 22,991
Office and miscellaneous expenses 31,857 30,137
Taxes, other than income taxes 20,564 22,243
Repairs and cleanup expenses 17,913 42,711
---------- ---------
205,575 234,376
---------- ---------
INCOME BEFORE INCOME TAXES 1,239,235 500,371
Income taxes 435,651 172,106
---------- ---------
NET INCOME $ 803,584 $ 328,265
========== =========
Earnings per share (basic and diluted) $ .97 $ .40
========== =========
Dividends per share $ .85 $ .32
========== =========
See accompanying notes.
8 AVOCA, Incorporated
<PAGE>
STATEMENTS OF RETAINED EARNINGS
Year ended December 31
1999 1998
- --------------------------------------------------------------------------------
Retained Earnings:
Balance at beginning of year $2,268,001 $2,205,496
Net income for the year 803,584 328,265
----------- -----------
3,071,585 2,533,761
Cash dividends:
1999 - $ .85 per share 705,925 --
1998 - $ .32 per share -- 265,760
----------- -----------
BALANCE AT END OF YEAR $2,365,660 $2,268,001
=========== ===========
See accompanying notes.
AVOCA, Incorporated 9
<PAGE>
<TABLE>
<CAPTION>
STATEMENTS OF CASH FLOWS
Year ended December 31
1999 1998
- -------------------------------------------------------------------------------------------------------------------
OPERATING ACTIVITIES
<S> <C> <C>
Net income $ 803,584 $ 328,265
Adjustments to reconcile net income to net
cash provided by (used in) operating activities:
Depreciation expense 3,760 2,735
Deferred taxes (507) (507)
Change in operating assets and liabilities:
Accounts receivable (74,411) 16,074
Accrued interest receivable (5,426) 3,077
Prepaid expenses (1,934) (1,627)
Accounts payable and accrued expenses 750 (1,868)
Income taxes (21,041) 1,574
-------------- -------------
NET CASH PROVIDED BY
OPERATING ACTIVITIES 704,775 347,723
INVESTING ACTIVITIES
Purchase of short-term investments (148,767) (909,085)
Purchase of long-term investments (1,503,873) (931,936)
Maturity of investments 1,662,334 1,935,679
Purchase of equipment (2,512) (4,500)
-------------- --------------
NET CASH PROVIDED BY
INVESTING ACTIVITIES 7,182 90,158
FINANCING ACTIVITIES
Dividends paid (265,760) (622,875)
-------------- --------------
NET CASH USED IN
FINANCING ACTIVITIES (265,760) (622,875)
-------------- --------------
INCREASE (DECREASE) IN
CASH AND CASH EQUIVALENTS 446,197 (184,994)
Cash and cash equivalents at beginning of year 315,376 500,370
------------- -------------
CASH AND CASH EQUIVALENTS
AT END OF YEAR $ 761,573 $ 315,376
============= =============
See accompanying notes.
</TABLE>
10 AVOCA, Incorporated
<PAGE>
NOTES TO FINANCIAL STATEMENTS
December 31, 1999
NOTE A-Significant Accounting Policies
General: Avoca, Incorporated (the Company) owns and leases land, located in St.
Mary Parish, Louisiana, to unaffiliated parties for oil and gas exploration.
Income in the accompanying financial statements is primarily derived from lease
bonuses, delay rentals, seismic permit fees, sale of rights-of-way and royalties
received from oil and gas production related to these leases. Estimates of
proved reserves related to the leases are not available.
Cash Equivalents: Cash equivalents consists of investments with a maturity of
three months or less from date of purchase.
Investments: Short-term investments consist of United States Government Treasury
Notes and United States Government agency securities with an original maturity
of greater than three months but with maturity dates within one year from the
balance sheet date.
Long-term investments consist of a United States Government Treasury
Note and six United States Government agency securities due in 2001.
Management determines the appropriate classification of debt securities
at the time of purchase and reevaluates such designation as of each balance
sheet date. Debt securities are classified as held-to-maturity when the Company
has the positive intent and ability to hold the securities to maturity.
Held-to-maturity securities are stated at amortized cost including accrued
interest. At December 31, 1999 all short-term investments and long-term
investments were classified as held-to-maturity. The fair value of the
investments approximated the carrying value at December 31, 1999.
Property and Equipment: Land is carried at cost less amounts received for the
sale of rights-of-way and similar servitudes. Land improvements and building are
carried at cost and depreciated over their estimated useful life of 30 years.
Equipment is carried at cost and depreciated over estimated useful lives of
three to five years.
Income Taxes: The Company accounts for income taxes in accordance with Statement
of Financial Accounting Standards (SFAS) No. 109 "Accounting for Income Taxes."
Income taxes include deferred taxes resulting primarily from temporary
differences due to differences in bases amounts and depreciation periods of
property and equipment for financial reporting purposes and income tax purposes.
Use of Estimates: The preparation of financial statements in conformity with
generally accepted accounting principles requires management to make estimates
and assumptions that affect the amounts reported in the financial statements and
accompanying notes. Actual results could differ from those estimates.
Fair Value of Financial Instruments: The fair value of the Company's financial
assets and liabilities approximates book value at December 31, 1999.
AVOCA, Incorporated 11
<PAGE>
NOTES TO FINANCIAL
STATEMENTS (Continued)
NOTE B-Income Taxes
<TABLE>
<CAPTION>
The components of income tax expense for the years ended December 31 are as
follows:
1999 1998
- ---------------------------------------------------------------------------------------------
Current:
<S> <C> <C>
Federal $ 382,803 $ 157,314
State 53,355 15,299
--------- ---------
TOTAL CURRENT 436,158 172,613
--------- ---------
Deferred:
Federal (445) (462)
State (62) (45)
--------- ----------
TOTAL DEFERRED (507 (507)
--------- ----------
$ 435,651 $ 172,106
========= =========
</TABLE>
The deferred income tax liability of $12,381 relates to a difference between the
accounting and income tax basis of property and equipment.
The Company paid income taxes of $455,000 and $171,000 in 1999 and 1998,
respectively.
NOTE B-Income Taxes (continued)
The reconciliations between the federal statutory income tax rate and the
Company's effective income tax rate, for the years ended December 31 are as
follows:
<TABLE>
<CAPTION>
1999 1998
Amount Rate Amount Rate
- -----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Tax expense based on federal statutory rate $ 421,340 34.0% $ 170,126 34.0%
Statutory percentage depletion (20,339) (1.6) (7,279) (1.5)
State income taxes (net of federal income tax deduction) 53,311 4.3 15,265 3.1
Other (18,661) (1.5) (6,006) (1.2)
--------- ------ --------- -----
INCOME TAXES $ 435,651 35.2% $ 172,106 34.4%
========= ====== ========= =====
</TABLE>
12 AVOCA, Incorporated
<PAGE>
NOTES TO FINANCIAL
STATEMENTS (Continued)
NOTE C-Major Customers
The net royalties received from two independent oil and gas exploration
companies accounted for virtually all of total net royalties recorded for the
year ended December 31, 1999 compared to one independent oil and gas exploration
company accounting for virtually all of total net royalties recorded for the
year ended December 31, 1998. Lease bonus and delay rental revenue in 1999 and
1998 was the result of leases with three and two companies, respectively. Lease
option payments consisted of payments from two companies for the year ended
December 31, 1999. Pipeline rights-of- way revenue recognized in 1998 resulted
from a rights-of-way agreement with one company.
NOTE D-Oil and Gas Quantities Produced
The following table reflects the Company's share of the oil and gas volumes
produced from leases held under production during each of the last two years:
Production
------------------------------------------
Oil Gas NGL
(BBLs) (MCFs) (GALs)
------------------------------------------
1999 7,056 89,891 146,822
1998 818 60,587 --
NOTE F-Commitment
The Company has a lease with the Avoca Duck Club (the Club), an unrelated
entity, to allow the members of the Club use of the Company's land for the
purpose of hunting wild game and birds, and for noncommercial fishing. The term
of the lease commenced June 1, 1994 for a period of ten years with the Club
having two ten-year options to extend the lease. Under the terms of the lease,
the Club constructed a new building including a separate apartment for the
exclusive use of the Company's caretaker. This building replaced the building
destroyed by fire in December 1992. During 1994, under the terms of the lease,
the Company contributed $50,000, which represents the approximate cost to
construct the apartment.
If the Company elects to exercise its unrestricted, unconditional and absolutely
discretionary right to terminate the lease before the end of its term, the
Company must reimburse the Club for its undepreciated cost of the building
(excluding the Company's cash contribution), based on straight-line depreciation
over 30 years. Under the lease, the Club's undepreciated cost of the building
will be reduced over time to an ultimate reimbursable amount not less than
$80,000.
AVOCA, Incorporated 13
<PAGE>
Management's Discussion and
Analysis of Financial Condition and
Results of Operations
Liquidity and Capital Resources
The Company's continued liquidity is evidenced by the fact that more than 93% of
its assets, as measured by book value, are cash and cash equivalents, U.S.
Government and U.S. Government agency securities. Current liabilities at year
end were $722,840, including a $705,925 dividend declared in December 1999 but
not paid until January 2000. The Company's business is largely passive and
consequently all capital requirements for exploration, development and
production of the Company's mineral resources are funded by its lessees. Current
financial resources and anticipated net income are expected to be adequate to
meet cash requirements in the year ahead.
1999 As Compared to 1998
The Company enjoyed an improved earnings year in 1999. Revenue for the year
increased by $710,063 or approximately 97%. The majority of the increase,
reflected in the income statement as lease bonuses and delay rentals, comes from
the granting of four new oil, gas and mineral leases which netted the Company
$573,598 in bonuses during the year. Three of the new leases, totaling 1,091.680
acres, were granted to The Meridian Resource & Exploration Co. The fourth lease,
for 1,637.550 acres, was granted to CNG Producing Company.
Also contributing to increased revenue in 1999 was a $241,087 or 177%
increase in royalty income net of severance taxes. The increase is attributable
to production from The Meridian Resources & Exploration Co. C.M. Thibodaux No. 1
and No. 3 wells in the Ramos Field. The No. 1 well was placed on production
June 15, 1999 from the Operc 5 Sand, went off production June 25 due to the
blowout of the C.M. Thibodaux No. 2 well and returned to production August 24
after the successful plugging of the No. 2 well. The C.M. Thibodaux No. 3 well
(a replacement for the No. 2 well) went on production from the Operc B sand in
early November. The Company's net revenue interest in the No. 1 and No. 3 wells
is approximately 2.87%. The wells were responsible for 65% of the Company's 1999
royalty income. Total 1999 production from the C.M. Thibodaux No. 1 & 3 wells
was 1,337,524 Mcf of gas, 149,060 barrels of condensate and 5,117,661 gallons of
natural gas liquids (NGL), as reported on check vouchers.
In 1999 the Delta Operating Corporation (formerly Alliance Operating
Company) Avoca No. 1 well also in the Ramos Field was responsible for
approximately 35% of the Company's royalty income. In 1998 the well was
responsible for virtually all of the royalty income. Total gas and condensate
recoveries from the Avoca No. 1 well (in which the Company has a net revenue
interest of approximately 19%) decreased from 311,345 Mcf of gas and 4,206
barrels of condensate in 1998 to 275,816 Mcf of gas and 3,950 barrels of
condensate in 1999. The well was shut in for several days in August to treat
scale in the producing formation. According to the well's operator, performance
is improving and an additional treatment is scheduled to further improve
performance. The average 1999 sales prices from the Avoca No. 1 well were
approximately $2.42 per Mcf of gas and $15.70 per barrel of condensate as
compared to $2.28 per Mcf of gas and $12.62 per barrel of condensate in 1998.
On December 22, 1999, Burlington Resources Oil & Gas Company drilled
the Conrad Industries No. 1 well opposite the northern part of Avoca Island to
its total depth of 19,164 feet. The Company has been advised by the operator
that they did not find their objective MA3 Sand but did log two other sands at a
higher depth. The unitization hearing on this well, that will determine Avoca
Incorporated's participation in the unit, has been set for late February, 2000.
Four new lease options to take down oil, gas and mineral leases
contributed an additional $113,941 to revenues in 1999 (reflected in the income
statements as lease option payments). Three options totaling 2,592.75 acres were
granted to McRae Exploration & Production, Inc. One option on 1,459.3 acres
lapsed December 20, 1999 without being exercised. The other McRae options expire
on June 26, 2000 and July 3, 2000. The fourth option (on 2,893 acres), which was
granted to Kevin Caliva & Associates, Inc. and assigned to CNG Producing
Company, resulted in a 1,637.55 acre oil, gas and mineral lease dated August 19,
1999. No lease options were granted in 1998.
Interest income on U.S. Government and U.S. Government agency
securities increased slightly to the availability of increased funds for
investment.
Overall expenses were $28,801 or approximately 12% lower in 1999 than
in 1998. The $1,764 decrease in attorney fees and the $3,606 decrease in
geological and engineering fees and expenses resulted primarily from the lack of
need for these services in 1999. The $2,818 decrease in management fees resulted
primarily from the smaller bonus paid to the Company's general manager, which
partially offset fees paid to the Company's new land manager. The $1,720
increase in office and miscellaneous expenses resulted primarily from increased
annual meeting expenses. The $2,344 increase in insurance expense is attributed
to the cost of automobile insurance for the second-hand Jeep for our surface
manager.
The $1,679 decrease in taxes, other than income taxes and the $24,798
reduction in repairs and cleanup expenses are a result of the 600 acre
Continued on next page
14 AVOCA, Incorporated
<PAGE>
Management's Discussion and
Analysis of Financial Condition and
Results of Operations (Continued)
cattle lease on the northern part of the island signed in 1998. Because of the
cattle lease, cleanup expenses have been greatly reduced and the land qualified
for an agricultural assessment, which reduced the property taxes.
In comparison with 1998, income tax expense increased $263,545 as a
result of an increase in taxable income.
Net income was $.97 per share in 1999 as compared to $.40 per share
in 1998. In line with the Company's increased income, dividends increased
from $.32 per share in 1998 to $.85 per share in 1999. Future dividends will be
largely dependent on the amount of oil and gas related income received.
The Company has not suffered any disruptions in its operations due to
the year 2000 issue. Furthermore, the Company has not experienced any
disruptions in its operations due to year 2000 problems experienced by the
organizations with which the Company does business. The Company has not incurred
and does not expect to incur any significant costs related to year 2000 issues.
Further information regarding the Company's financial condition and
results of operations is contained in the President's message on page 4.
STOCK PRICES AND RELATED
SECURITY HOLDER MATTERS
As of January 7, 2000, there were approximately 728 holders of record of the
Company's stock, which is traded in the over-the-counter market.
The following table shows the range of high and low bid quotations for
the Company's stock for each quarterly period during the last two years, as
quoted by the National Quotation Bureau, Incorporated. Such quotations reflect
inter-dealer prices, without retail mark-up, mark-down or commissions and may
not necessarily reflect actual transactions. The table also shows the amount and
frequency of cash dividends declared by the Company during the same period.
Period High Low Declared Record Date Date Paid Amount
1999
First Quarter $14.00 $12.00
Second Quarter 22.00 15.00
Third Quarter 23.00 19.00
Fourth Quarter 21.00 19.00 12-17-99 1-6-00 1-21-00 $.85
1998
First Quarter $19.75 $18.34
Second Quarter 20.00 18.50
Third Quarter 18.63 14.00
Fourth Quarter 15.00 12.50 12-15-98 1-6-99 1-22-99 $.32
AVOCA
INCORPORATED
The Company will furnish without charge a copy of its 1999 Annual Report on Form
10-KSB to be filed with the Securities and Exchange Commission, including the
financial statements and financial statement schedules thereto, to any record or
beneficial owner of its Common Stock as of February 7, 2000. Requests for the
report must be in writing addressed to Avoca, Incorporated, 228 St. Charles
Avenue, Suite 838, New Orleans, Louisiana 70130, Attention: M. Cleland Powell,
III. If made by a person who was not a shareholder of record on February 7,
2000, the request must include a good faith representation that such person was
a beneficial owner of Common Stock on that date. Copies of any exhibits to the
Form 10-KSB will be furnished upon payment of $.20 per page plus postage to
cover the cost of furnishing such copies.
AVOCA, Incorporated 15
<PAGE>
[Map of Avoca Island appears here,
showing property of Avoca, Incorporated,
mineral leases and well locations]
<PAGE>
<TABLE>
<CAPTION>
MINERAL INCOME
Year Ended December 31, 1999
Initial Income Recognized in 1999
Date of Rental Lease Bonus Net
Lessee Operator Lease Acreage Expiration Per Acre or Delay Rental Royalties
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Texaco, Inc. Texaco, Inc. 5/17/63 41.900 Termination $ 75 $ -- $ 72
of production
Alliance Operating Delta Operating 8/14/87 276.733 Termination $ 200 -- 132,877
Company Corporation of production
Burlington Resources Burlington Resources 8/12/96 420.000 Expired on $ 110 **21,000 --
Oil & Gas Company Oil & Gas Company 12/12/99
Burlington Resources Burlington Resources 12/12/97 525.000 Termination $ 150 105,000 --
Oil & Gas Company Oil & Gas Company of production
or 12/12/00 if
nonproducing
The Meridian Resource The Meridian Resource 5/27/98 406.720 Termination $ 200 81,345 244,239
& Exploration, Inc.* & Exploration, Inc.* of production
or 5/27/01 if
nonproducing
CNG Producing Company CNG Producing Company 8/19/99 1,637.550 Termination $ 200 327,510 -
of production
or 8/19/02 if
nonproducing
The Meridian Resource The Meridian Resource 11/18/99 880.000 Termination $ 200 176,000 -
& Exploration Co. & Exploration Co. of production
or 11/18/02 if
nonproducing
The Meridian Resource The Meridian Resource 11/18/99 80.000 Termination $ 300 24,000 -
& Exploration Co. & Exploration Co. of production
or 11/18/02 if
nonproducing
The Meridian Resource The Meridian Resource 11/23/99 131.680 Termination $ 350 46,088 -
& Exploration Co. & Exploration Co. of production
or 11/23/02 if
nonproducing
-------- --------
$780,943 $377,188
======== ========
*---formerly Texas Meridian Resources Exploration, Inc.
**---payment made to extend terms of lease from 8/12/99 - 12/12/99.
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> DEC-31-1999
<CASH> 761,573
<SECURITIES> 2,202,304
<RECEIVABLES> 149,652
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 1,842,304
<PP&E> 678,213
<DEPRECIATION> 604,881
<TOTAL-ASSETS> 3,195,364
<CURRENT-LIABILITIES> 722,840
<BONDS> 0
<COMMON> 94,483
0
0
<OTHER-SE> 2,365,660
<TOTAL-LIABILITY-AND-EQUITY> 3,195,364
<SALES> 398,793
<TOTAL-REVENUES> 1,444,810
<CGS> 0
<TOTAL-COSTS> 21,605
<OTHER-EXPENSES> 205,575
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 1,239,235
<INCOME-TAX> 435,651
<INCOME-CONTINUING> 803,584
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 803,584
<EPS-BASIC> .97
<EPS-DILUTED> .97
</TABLE>
