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, 1997
( ) 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 May 30, 1997 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
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,
------------------ ------------------
1997 1996 1997 1996
-------- -------- -------- --------
REVENUES:
Pipeline operations $ 33 $ 38 $ 87 $ 76
Oil and gas royalties - net of
excise taxes 79 27 114 52
Farm produce sales 4 1 7 1
Pasture and ranch lease rentals 30 30 60 60
-------- -------- -------- --------
Total revenues $ 146 $ 96 $ 268 $ 189
-------- -------- -------- --------
COSTS AND EXPENSES:
Operating expenses $ 28 $ 20 $ 45 $ 43
Administrative and general expenses 47 45 103 87
Depreciation 25 17 43 34
Other (income) - net (6) (9) (11) (15)
Taxes other than income taxes 10 10 19 18
-------- -------- -------- --------
Total costs and expenses $ 104 $ 83 $ 199 $ 167
-------- -------- -------- --------
INCOME BEFORE PROVISION FOR INCOME
TAXES $ 42 $ 13 $ 69 $ 22
Provision for income taxes (Note 2) 15 2 23 3
-------- -------- -------- --------
NET INCOME $ 27 $ 11 $ 46 $ 19
======== ======== ======== ========
NET INCOME PER SHARE (1,451,000
weighted average shares outstanding) $ .02 $ - $ .03 $ .01
======== ======== ======== ========
DIVIDENDS PER SHARE .04 .04 .04 .04
======== ======== ======== ========
The notes to the condensed consolidated financial statements
are an integral part of this statement.
SEVEN J STOCK FARM, INC. AND SUBSIDIARY
CONDENSED CONSOLIDATED BALANCE SHEET
APRIL 30, 1997
(IN THOUSANDS EXCEPT FOR SHARES AND PER SHARE DATA)
(UNAUDITED)
APRIL 30,
ASSETS 1997
---------
CURRENT ASSETS:
Cash and cash equivalents $ 167
Accounts receivable 126
Inventories - growing crops - at market 1
Refundable income taxes 27
Other 3
---------
Total current assets $ 324
PROPERTY AND EQUIPMENT - net 1,414
OTHER ASSETS 38
---------
TOTAL $ 1,776
=========
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable $ 30
Dividend payable 58
Accrued taxes - other than taxes on income 11
Deferred income taxes 41
---------
Total current liabilities $ 140
---------
OTHER LIABILITIES AND CREDITS:
Deferred income taxes $ 79
Unearned lease income 9
---------
Total other liabilities and credits $ 88
---------
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 97
---------
Total shareholders' equity $ 1,548
---------
TOTAL $ 1,776
=========
The notes to the condensed consolidated financial statements
are an integral part of this statement.
SEVEN J STOCK FARM, INC. AND SUBSIDIARY
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE SIX MONTHS ENDED APRIL 30, 1997 AND 1996
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS
(IN THOUSANDS)
(UNAUDITED)
FOR THE SIX
MONTHS ENDED
APRIL 30,
------------------
1997 1996
-------- --------
CASH FLOW FROM OPERATING ACTIVITIES:
Net income $ 46 $ 19
Adjustments to reconcile net income
to net cash provided by operating
activities:
Depreciation 43 34
Deferred income taxes 10 1
Changes in assets and liabilities:
(Increase) decrease in assets:
Accounts receivable 100 (12)
Inventories 34 (16)
Other current assets 49 (17)
Increase (decrease) in liabilities:
Accounts payable and other (89) (65)
Accrued income taxes - (14)
Accrued taxes - other than taxes
on income 11 (10)
-------- --------
Net cash provided by (used in) operating
activities $ 204 $ (80)
-------- --------
(CONTINUED)
SEVEN J STOCK FARM, INC. AND SUBSIDIARY
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE SIX MONTHS ENDED APRIL 30, 1997 AND 1996
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS
(IN THOUSANDS)
(UNAUDITED)
(CONTINUED)
FOR THE SIX
MONTHS ENDED
APRIL 30,
------------------
1997 1996
-------- --------
CASH FLOW FROM INVESTING ACTIVITIES:
Expenditures for property and equipment $ (104) $ (85)
Loan to individual (30) -
-------- --------
Net cash used in investing activities $ (134) $ (85)
-------- --------
NET INCREASE (DECREASE) IN CASH AND CASH
EQUIVALENTS $ 70 $ (165)
CASH AND CASH EQUIVALENTS - beginning of period 97 487
-------- --------
CASH AND CASH EQUIVALENTS - end of period $ 167 $ 322
======== ========
SUPPLEMENTAL CASH FLOW DATA:
Cash paid during the period for:
Interest $ - $ -
======== ========
Income taxes $ (26) $ 31
======== ========
The notes to the condensed consolidated financial statements
are an integral part of this statement.
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 1996 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, 1997 and the
results of its operations and its cash flows for the periods ended April 30,
1997 and 1996. Such adjustments consisted only of normal recurring items.
The results of operations for the periods ending April 30, 1997 and 1996 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 1997 was
33.3%, 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 13.6%. The Company's effective tax rate for the year ended
October 31, 1996 was 29.4%.
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, 1997
increased $11,000 or 14.5% as compared to the six months ended April 30, 1996.
The Company entered into an agreement effective December 1, 1996 to jointly
operate their gas gathering system with a related party's gas gathering
system. A joint central compression and dehydration facility has been built.
The income, costs and expenses are shared equally.
Net Oil & Gas Royalties - Revenue for the six months ended April 30, 1997
increased $62,000 or 119.2% as compared to the six months ended
April 30, 1996. The increase is primarily due to a new well drilled on
the Company's land.
Operating Expenses - Expenses for the six months ended April 30, 1997
increased slightly as compared to the six months ended April 30, 1996.
An increase in pipeline operating expense was offset by a decrease in ranch
maintenance expense. The increase in pipeline operating expenses is
attributable to expenses of the new jointly owned compression and dehydration
facility.
Administrative and General Expenses - Expenses for the six months ended
April 30, 1997 increased $16,000 or 18.4% as compared to the six months ended
April 30, 1996. Ranch administrative expense increased as the result of an
increase in allocated salaries from related parties.
Depreciation - Depreciation for the six months ended April 30, 1997
increased $9,000 or 26.5% as compared to the six months ended April 30, 1996.
The increase is attributable to additions in property and equipment.
Other (income) - net - Other income decreased $4,000 or 26.7% for the six
months ended April 30, 1997 as compared to the six months ended April 30,
1996. Interest income decreased due to a reduction in amounts invested in
short-term certificates of deposit.
Provision for Income Taxes - Provision for income taxes for the six months
ended April 30, 1997 increased $20,000 as compared to the six months ended
April 30, 1996. This is due to the increase in income before provision for
income taxes.
Liquidity and Capital Resources
The Company generated $204,000 of cash flows from operating activities for
the six months ended April 30, 1997 as compared to using $80,000 of net cash
flow from operating activities for the six months ended April 30, 1996. The
Company has expended $81,000 representing its 50% share of the construction
cost of a jointly owned compression and dehydration facility. The Company
anticipates that adequate working capital will continue to be provided from
future operations. On March 18, 1997, the Company's Board of Directors
declared a $.04 per share dividend to be paid during the Company's third
quarter.
PART II. OTHER INFORMATION
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
(A) Annual meeting of shareholders was held March 18, 1997.
(B) Seven J Stock Farm, Inc. did not solicit proxies and the following
directors were elected:
1. John R. Parten
2. R. F. Pratka
3. Richard Mills
4. Patrick J. Moran
(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, 1997.
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 11, 1997 SEVEN J STOCK FARM, INC.
(Registrant)
R. F. Pratka
------------------------------------------
R. F. Pratka, Vice-President and Treasurer
(Principal Financial Officer)
<TABLE> <S> <C>
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<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM SEVEN J
STOCK FARM, INC. CONSOLIDATED BALANCE SHEET AT APRIL 30, 1997 AND
CONSOLIDATED STATEMENT OF INCOME FOR THE SIX MONTHS ENDED APRIL 30, 1997,
AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
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<PP&E> 3222
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