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 April 30, 1996
( ) 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
----- ----------
(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 June 10, 1996 there were 1,451,000 shares of Seven J Stock Farm,
Inc. common stock $1.00 par value outstanding.
SEVEN J STOCK FARM, INC. AND SUBSIDIARY
FORM 10-QSB - APRIL 30, 1996
INDEX
PAGE
NO.
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PART I FINANCIAL INFORMATION:
Item 1. Financial statements:
Condensed consolidated statements of income -
three months and six months ended
April 30, 1996 and 1995 (unaudited) 3
Condensed consolidated balance sheet -
April 30, 1996 (unaudited) 4
Condensed consolidated statements of cash flows -
six months ended April 30, 1996 and 1995
(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
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 SIX
MONTHS ENDED MONTHS ENDED
APRIL 30, APRIL 30,
----------------- -----------------
1996 1995 1996 1995
------- ------- ------- -------
REVENUES:
Pipeline operations $ 38 $ 48 $ 76 $ 90
Oil and gas royalties - net of
excise taxes 27 27 52 58
Farm produce sales 1 1 1 1
Pasture and ranch lease rentals 30 24 60 60
------ ------ ------ ------
Total revenues $ 96 $ 100 $ 189 $ 209
------ ------ ------ ------
COSTS AND EXPENSES:
Operating expenses $ 10 $ 9 $ 33 $ 30
Administrative and general
expenses 45 39 87 79
Depreciation 17 16 34 32
Other (income) - net (9) (5) (15) (11)
Other costs and expenses 20 19 28 28
------ ------ ------ ------
Total costs and expenses $ 83 $ 78 $ 167 $ 158
------ ------ ------ ------
INCOME BEFORE PROVISION FOR INCOME
TAXES $ 13 $ 22 $ 22 $ 51
Provision for income taxes (Note 2) 2 3 3 8
------ ------ ------ ------
NET INCOME (LOSS) $ 11 $ 19 $ 19 $ 43
====== ====== ====== ======
NET INCOME PER SHARE (1,451,000
weighted average shares outstanding) $ - $ .01 $ .01 $ .03
====== ====== ====== ======
DIVIDENDS PER SHARE .04 None .04 None
====== ======
The notes to the condensed consolidated financial statements
are an integral part of this statement.
3
SEVEN J STOCK FARM, INC. AND SUBSIDIARY
CONDENSED CONSOLIDATED BALANCE SHEET
APRIL 30, 1996
(IN THOUSANDS EXCEPT FOR SHARES AND PER SHARE DATA)
(UNAUDITED)
APRIL 30,
ASSETS 1996
------------
CURRENT ASSETS:
Cash and cash equivalents $ 322
Accounts receivable 126
Inventories - growing crops - at market 21
Deferred income taxes 19
Other 24
-----------
Total current assets $ 512
PROPERTY AND EQUIPMENT - net 1,218
OTHER ASSETS 8
-----------
TOTAL $ 1,738
===========
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable $ 70
Dividend payable 58
Accrued taxes - other than taxes on income 17
-----------
Total current liabilities $ 145
-----------
OTHER LIABILITIES AND CREDITS:
Deferred income taxes $ 82
Unearned lease income 9
-----------
Total other liabilities and credits $ 91
-----------
SHAREHOLDERS' EQUITY:
Common stock, par value $1.00 per share,
authorized 1,500,000 shares; issued and
outstanding 1,451,000 shares $ 1,451
Retained earnings 51
-----------
Total shareholders' equity $ 1,502
-----------
TOTAL $ 1,738
===========
The notes to the condensed consolidated financial statements
are an integral part of this statement.
4
SEVEN J STOCK FARM, INC. AND SUBSIDIARY
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE SIX MONTHS ENDED APRIL 30, 1996 AND 1995
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS
(IN THOUSANDS)
(UNAUDITED)
FOR THE SIX
MONTHS ENDED
APRIL 30,
---------------------------
1996 1995
------------ ------------
CASH FLOW FROM OPERATING ACTIVITIES:
Net income $ 19 $ 43
Adjustments to reconcile net income
to net cash provided by operating
activities:
Depreciation 34 32
Deferred income taxes 1 (2)
Changes in assets and liabilities:
(Increase) decrease in assets:
Accounts receivable (12) 19
Inventories (16) 24
Other current assets (17) -
Increase (decrease) in liabilities:
Accounts payable and other (65) (46)
Accrued income taxes (14) -
Accrued taxes - other than taxes
on income (10) (17)
----------- -----------
Net cash provided by operating
activities $ (80) $ 53
----------- -----------
(CONTINUED)
5
SEVEN J STOCK FARM, INC. AND SUBSIDIARY
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE SIX MONTHS ENDED APRIL 30, 1996 AND 1995
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS
(IN THOUSANDS)
(UNAUDITED)
(CONTINUED)
FOR THE SIX
MONTHS ENDED
APRIL 30,
---------------------------
1996 1995
------------ ------------
CASH FLOW FROM INVESTING ACTIVITIES:
Proceeds from redemption of
certificates of deposit $ - $ 75
Purchase of certificates of deposit - (225)
Expenditures for property and equipment (85) (87)
----------- -----------
Net cash used in investing activities $ (85) $ (237)
----------- -----------
NET INCREASE (DECREASE) IN CASH AND CASH
EQUIVALENTS $ (165) $ (184)
CASH AND CASH EQUIVALENTS - beginning of period 487 301
----------- -----------
CASH AND CASH EQUIVALENTS - end of period $ 322 $ 117
=========== ===========
SUPPLEMENTAL CASH FLOW DATA:
Cash paid during the period for:
Interest $ - $ -
=========== ===========
Income taxes $ 31 $ 10
============ ===========
The notes to the condensed consolidated financial statements
are an integral part of this statement.
6
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 1995 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 April 30, 1996 and the
results of its operations and its cash flows for the periods ended April 30,
1996 and 1995. Such adjustments consisted only of normal recurring items.
The results of operations for the periods ending April 30, 1996 and 1995 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 six months of fiscal year 1996 was
13.7%, 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 15.7%. The Company's effective tax rate for the year ended
October 31, 1995 was 28.6%.
7
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 six months ended April 30, 1996
decreased $14,000 or 15.6% compared to the six months ended April 30, 1995.
The decline is primarily the result of a decrease in natural gas transmitted
through the system.
Net Oil & Gas Royalties - Revenue for the six months ended April 30, 1996
decreased $6,000 or 10.3% compared to the six months ended April 30, 1995.
The decline is due to a decrease in production.
Operating Expenses - Expenses for the six months ended April 30, 1996
increased $3,000 or 10.0% compared to the six months ended April 30, 1995.
Operating expenses increased due to higher maintenance costs of the ranch
lands.
Administrative and General Expenses - Expenses for the six months ended
April 30, 1996 increased $8,000 or 10.1% compared to the six months ended
April 30, 1995. Increases in outside services and increases in the cost of
contract office personnel were the primary causes of the increase in
administrative and general expenses.
Provision for Income Taxes - Provision for income taxes for the six months
ended April 30, 1996 decreased $5,000 or 62.5% compared to the six months ended
April 30, 1995. This is due to a decrease in income.
Liquidity and Capital Resources
The Company used $80,000 in operating activities for the six months ended
April 30, 1996 compared to generating $53,000 of net cash flow from operating
activities for the six months ended April 30, 1995. The Company anticipates
that adequate working capital will be provided from future operations. Cash
required for expenditures for property and equipment will be provided in part
by redemption of short-term certificates of deposit. On March 12, 1996 the
Company's Board of Directors approved a $.04 per share dividend to be paid in
the Company's third quarter.
8
PART II. OTHER INFORMATION
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
(A) Annual meeting of shareholders was held March 12, 1996.
(B) Seven J Stock Farm, Inc. did not solicit proxies and the following
directors were elected:
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 April 30, 1996.
9
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: June 12 , 1996 SEVEN J STOCK FARM, INC.
(Registrant)
R. F. Pratka
------------------------------------------
R. F. Pratka, Vice-President and Treasurer
(Principal Financial Officer)
10
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THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM SEVEN J
STOCK FARM, INC. CONSOLIDATED BALANCE SHEET AT APRIL 30, 1996 AND
CONSOLIDATED STATEMENT OF INCOME FOR THE SIX MONTHS ENDED APRIL 30, 1996,
AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
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