U. S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
FORM 10-QSB
(Mark One)
(X) QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the quarterly period ended July 31, 1995
( ) TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT
For the transition period from to
Commission file number 0-1394
SEVEN J STOCK FARM, INC.
(Name of small business issuer as specified in its charter)
Texas 74-1110910
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(State of incorporation) (I.R.S. Employer Identification No.)
808 Travis Street, Suite 1453, Houston, TX 77002
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(Address of principal executive offices)
(713) 228-8900
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(Issuer's telephone number)
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 the registrant was required to file such reports), and (2) has
been subject to such filing requirements for the past 90 days. Yes (X) No ( )
As of September 5, 1995 there were 1,451,000 shares of Seven J Stock Farm,
Inc. common stock $1.00 par value outstanding.
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SEVEN J STOCK FARM, INC. AND SUBSIDIARY
FORM 10-QSB - JULY 31, 1995
INDEX
PAGE
NO.
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PART I FINANCIAL INFORMATION:
Item 1. Financial statements:
Condensed consolidated statements of income -
three months and nine months ended
July 31, 1995 and 1994 (unaudited) 3
Condensed consolidated balance sheet -
July 31, 1995 (unaudited) 4
Condensed consolidated statements of cash flows -
nine months ended July 31, 1995 and 1994
(unaudited) 5 - 6
Notes to the condensed consolidated financial
statements 7
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 8
PART II OTHER INFORMATION:
Item 4. Submission of Matters to a Vote of Security Holders 9
Item 6. Exhibits and Reports on Form 8-K 9
SIGNATURES 10
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SEVEN J STOCK FARM, INC. AND SUBSIDIARY
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(IN THOUSANDS EXCEPT FOR SHARES AND PER SHARE DATA)
(UNAUDITED)
FOR THE THREE FOR THE NINE
MONTHS ENDED MONTHS ENDED
JULY 31, JULY 31,
----------------- -----------------
1995 1994 1995 1994
------- ------- ------- -------
REVENUES:
Pipeline operations $ 45 $ 39 $ 135 $ 127
Oil and gas royalties - net of
excise taxes 26 34 84 89
Farm produce sales 1 11 2 26
Pasture and ranch lease rentals 29 30 89 91
------ ------ ------ ------
Total revenues $ 101 $ 114 $ 310 $ 333
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COSTS AND EXPENSES:
Operating expenses $ 22 $ 16 $ 52 $ 49
Administrative and general
expenses 29 26 108 86
Depreciation 16 22 48 47
Other (income) - net (6) (5) (17) (16)
Other costs and expenses 8 8 36 35
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Total costs and expenses $ 69 $ 67 $ 227 $ 201
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INCOME BEFORE PROVISION FOR INCOME
TAXES $ 32 $ 47 $ 83 $ 132
Provision for income taxes (Note 2) 6 11 14 25
------ ------ ------ ------
NET INCOME $ 26 $ 36 $ 69 $ 107
====== ====== ====== ======
NET INCOME PER SHARE (1,451,000
weighted - average shares
outstanding) $ .02 $ .02 $ .05 $ .07
====== ====== ====== ======
DIVIDENDS PER SHARE None None None None
The notes to the condensed consolidated financial statements
are an integral part of this statement.
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SEVEN J STOCK FARM, INC. AND SUBSIDIARY
CONDENSED CONSOLIDATED BALANCE SHEET
JULY 31, 1995
(IN THOUSANDS EXCEPT FOR SHARES AND PER SHARE DATA)
(UNAUDITED)
JULY 31,
ASSETS 1995
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CURRENT ASSETS:
Cash and cash equivalents $ 114
Certificates of deposit 225
Accounts receivable 76
Inventories - growing crops - at market 43
Other 22
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Total current assets $ 480
PROPERTY AND EQUIPMENT - net 1,112
OTHER ASSETS 8
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TOTAL $ 1,600
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LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable $ 68
Accrued taxes - other than taxes on income 18
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Total current liabilities $ 86
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OTHER LIABILITIES AND CREDITS:
Deferred income taxes $ 57
Unearned lease income 9
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Total other liabilities and credits $ 66
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SHAREHOLDERS' EQUITY:
Common stock, par value $1.00 per share,
authorized 1,500,000 shares; issued and
outstanding 1,451,000 shares $ 1,451
Deficit (3)
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Total shareholders' equity $ 1,448
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TOTAL $ 1,600
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The notes to the condensed consolidated financial statements
are an integral part of this statement.
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SEVEN J STOCK FARM, INC. AND SUBSIDIARY
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE NINE MONTHS ENDED JULY 31, 1995 AND 1994
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS
(IN THOUSANDS)
(UNAUDITED)
FOR THE NINE
MONTHS ENDED
JULY 31,
---------------------------
1995 1994
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CASH FLOW FROM OPERATING ACTIVITIES:
Net income $ 69 $ 107
Adjustments to reconcile net income
to net cash provided by operating
activities:
Depreciation 48 47
Deferred income taxes (2) 2
Changes in assets and liabilities:
(Increase) decrease in assets:
Accounts receivable 4 (233)
Inventories (2) (20)
Other current assets 6 (18)
Increase (decrease) in liabilities:
Accounts payable and other (37) 236
Accrued income taxes - (19)
Accrued taxes - other than taxes
on income (9) (11)
Unearned lease income - (17)
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Net cash provided by operating
activities $ 77 $ 74
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(CONTINUED)
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SEVEN J STOCK FARM, INC. AND SUBSIDIARY
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE NINE MONTHS ENDED JULY 31, 1995 AND 1994
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS
(IN THOUSANDS)
(UNAUDITED)
(CONTINUED)
FOR THE NINE
MONTHS ENDED
JULY 31,
---------------------------
1995 1994
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CASH FLOW FROM INVESTING ACTIVITIES:
Proceeds from redemption of
certificates of deposit $ 75 $ 150
Purchase of certificates of deposit (225) (25)
Expenditures for property and equipment (114) (239)
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Net cash used in investing activities $ (264) $ (114)
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NET INCREASE (DECREASE) IN CASH AND CASH
EQUIVALENTS $ (187) $ (40)
CASH AND CASH EQUIVALENTS - beginning of period 301 86
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CASH AND CASH EQUIVALENTS - end of period $ 114 $ 46
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SUPPLEMENTAL CASH FLOW DATA:
Cash paid during the period for:
Interest $ - $ -
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Income taxes $ 20 $ 66
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The notes to the condensed consolidated financial statements
are an integral part of this statement.
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SEVEN J STOCK FARM, INC. AND SUBSIDIARY
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1 - BASIS OF PRESENTATION
The accompanying interim condensed consolidated financial statements are
unaudited and include the accounts of Seven J Stock Farm, Inc. (the "Company")
and its wholly owned subsidiary, Madison Pipe Line Company.
The unaudited interim condensed consolidated financial statements and
related notes have been prepared pursuant to the rules and regulations of the
Securities and Exchange Commission. Accordingly, certain information and
footnote disclosures normally included in financial statements prepared in
accordance with generally accepted accounting principles have been omitted
pursuant to such rules and regulations. The accompanying unaudited interim
condensed consolidated financial statements and related notes should be read
in conjunction with the financial statements and related notes included in the
Company's 1994 Annual Report to Shareholders.
In the opinion of management, the accompanying unaudited condensed
consolidated financial statements contain all adjustments necessary to
present fairly the Company's financial position as of July 31, 1995 and the
results of its operations and its cash flows for the periods ended July 31,
1995 and 1994. Such adjustments consisted only of normal recurring items.
The results of operations for the periods ending July 31, 1995 and 1994 are
not necessarily indicative of the results to be expected for the full year.
Interim results are subject to year-end adjustments and audit by independent
public accountants.
Certain items and amounts have been reclassified. The reclassifications
have no effect on net income.
NOTE 2 - PROVISION FOR INCOME TAXES
The reported tax rate in the first nine months of fiscal year 1995 was
16.9%, which is the Company's current estimate of the effective tax rate for
the entire year. The reported tax rate in the corresponding period of the
previous year was 18.9%. The Company's effective tax rate for the year ended
October 31, 1994 was 15.8%.
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SEVEN J STOCK FARM, INC. AND SUBSIDIARY
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Results of Operations
Pipeline Operations - Revenue for the nine months ended July 31, 1995
increased $8,000 or 6.3% as compared to the nine months ended July 31, 1994.
The increase in revenue is the result of a slight increase in natural gas
transmitted through the system.
Net Oil and Gas Royalties - Revenue for the nine months ended July 31, 1995
decreased $5,000 or 5.6% as compared to the nine months ended July 31, 1994.
The decrease in revenue is due to a decline in oil production.
Farm Produce Sales - Revenue for the nine months ended July 31, 1995
decreased $24,000 or 92.3% as compared to the nine months ended July 31, 1994.
The decrease is due to a decrease in USDA subsidy payments received.
Operating Expenses - Expenses for the nine months ended July 31, 1995
increased $3,000 or 6.1% as compared to the nine months ended July 31, 1994.
This increase is due to additional repairs and maintenance.
Administrative and General Expenses - Expenses for the nine months ended
July 31, 1995 increased $22,000 or 25.6% as compared to the nine months ended
July 31, 1994. This increase is due to an increase in salary expense and
consulting fees. These expenses increased primarily as a result of increased
use of contract office personnel to perform accounting and management
functions.
Provision for Income Taxes - Provision for income taxes for the nine months
ended July 31, 1995 decreased $6,000 or 42.9% compared to the nine months
ended July 31, 1994. This is due to a decrease in income.
Liquidity and Capital Resources
The Company generated $77,000 of net cash flow from operating activities
for the nine months ended July 31, 1995. During the 1994 fiscal year the
Company expended $119,000 for construction of ranch fences, bridges, and
barns and $134,000 to plant 2,500 pecan trees and install an irrigation
system. The Company expended and additional $98,000 on the pecan grove
during the nine months ended July 31, 1995. Management anticipates that
the pecan grove will not be commercially productive until the year 2000.
The Company anticipates that adequate working capital will be provided by
operations. The Company has invested a portion of its cash funds in
certificates of deposit with maturities of one year or less.
-8-
PART II. OTHER INFORMATION
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
(A) Annual meeting of shareholders was held March 15, 1995.
(B) Seven J Stock Farm, Inc. did not solicit proxies and the following
directors were elected as follows:
1. W. A. Anderson, Jr.
2. Charles L. Kuehn, Jr.
3. John R. Parten
4. R. F. Pratka
(C) Shareholders approved the appointment of the firm Mattison and
Riquelmy as the Company's Independent Auditors.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(A) Exhibits - none
(B) Reports on Form 8-K - there were no reports on Form 8-K filed for
the quarter ended July 31, 1995.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Date: September 8, 1995 SEVEN J STOCK FARM, INC.
(Registrant)
R. F. Pratka
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R. F. Pratka, Vice-President and Treasurer
(Principal Financial Officer)
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