U. S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
FORM 10-QSB
(X) QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the quarterly period ended January 31, 2000
( ) 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.)
16945 Northchase Dr., Suite 1800 Houston, TX 77060
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(Address of principal executive offices)
(281) 875-9100
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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 March 11, 2000 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
FOR THE THREE MONTHS ENDED JANUARY 31, 2000 AND 1999
(IN THOUSANDS EXCEPT FOR SHARES AND PER SHARE DATA)
(UNAUDITED)
FOR THE THREE
MONTHS ENDED
JANUARY 31,
-----------------------
2000 1999
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REVENUES:
Pipeline operations $ 76 $ 70
Oil and gas royalties - net of excise taxes 35 31
Pasture and ranch lease rentals 30 30
Farm produce sales 60 35
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Total revenues $ 201 $ 166
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COSTS AND EXPENSES:
Operating expenses $ 83 $ 60
Administrative and general expenses 85 58
Depreciation 30 26
Equity in loss of 50% owned affiliate 10 35
Other costs and expenses 10 11
Interest expense 1 2
Other (income) expense - net (9) (9)
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Total costs and expenses $ 210 $ 183
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INCOME (LOSS) BEFORE PROVISION FOR INCOME TAXES $ (9) $ (17)
Provision for income taxes (Note 2) 1 5
---------- ----------
NET INCOME (LOSS) $ (10) $ (22)
========== ==========
NET INCOME (LOSS) PER SHARE (1,451,000 weighted -
average shares outstanding) $ (.01) $ (.02)
========== ==========
DIVIDENDS PER SHARE None None
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
JANUARY 31, 2000
(IN THOUSANDS EXCEPT FOR SHARES AND PER SHARE DATA)
(UNAUDITED)
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 17
Accounts receivable 43
Accounts and notes receivable - other 117
Deferred income taxes 40
Refundable income tax 16
Other current assets 7
------------
Total current assets $ 240
INVESTMENTS AND ADVANCES TO 50% OWNED AFFILIATE -
PROPERTY AND EQUIPMENT - net 1,741
OTHER ASSETS 1
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TOTAL $ 1,982
============
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable $ 264
Notes payable 12
Accrued expenses - other 34
Current maturities of long-term debt 48
------------
Total current liabilities $ 358
------------
OTHER LIABILITIES AND CREDITS:
Long-term debt $ 90
Deferred income taxes 73
Other liabilities 94
------------
Total other liabilities and credits $ 257
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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
Retained earnings (deficit) (84)
------------
Total shareholders' equity $ 1,367
------------
TOTAL $ 1,982
============
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 THREE MONTHS ENDED JANUARY 31, 2000 AND 1999
(DECREASE) IN CASH AND CASH EQUIVALENTS
(UNAUDITED)
FOR THE THREE
MONTHS ENDED
JANUARY 31,
-----------------------
2000 1999
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(in thousands)
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) $ (10) $ (22)
Adjustments to reconcile net income(loss) to net
cash provided by (used in) operating activities:
Depreciation 30 26
Equity in loss of 50% owned affiliate 10 35
Changes in assets and liabilities:
(Increase) decrease in assets:
Accounts receivable 95 8
Accounts & notes receivable - other (111) 5
Refundable income taxes - (4)
Other current assets 1 -
Increase (decrease) in liabilities:
Accounts payable 52 (23)
Notes payable (68) -
Accrued income taxes - (31)
Accrued taxes - other than taxes on income - (19)
Accrued expenses - other (12) 12
Deferred income taxes - 1
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Net cash provided by (used in) operating
activities $ (13) $ (12)
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CASH FLOWS (USED IN) INVESTING ACTIVITIES:
Capital expenditures $ (9) $ (16)
Investment and advances to 50% owned affiliate (10) (105)
--------- ----------
Net cash (used in) investing activities $ (19) $ (121)
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CASH FLOWS (USED IN) FINANCING ACTIVITIES:
Long-term borrowings (repayments) $ (11) $ 125
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NET (DECREASE) IN CASH AND CASH EQUIVALENTS $ (43) $ (8)
CASH AND CASH EQUIVALENTS - beginning of period 60 17
--------- ----------
CASH AND CASH EQUIVALENTS - end of period $ 17 $ 9
========= ==========
(CONTINUED)
SEVEN J STOCK FARM, INC. AND SUBSIDIARY
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE THREE MONTHS ENDED JANUARY 31, 2000 AND 1999
(DECREASE) IN CASH AND CASH EQUIVALENTS
(UNAUDITED)
(CONTINUED)
FOR THE THREE
MONTHS ENDED
JANUARY 31,
-----------------------
2000 1999
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(in thousands)
SUPPLEMENTAL CASH FLOW DATA:
Cash paid during the period for:
Interest $ 3 $ 1
=========== ==========
Income taxes $ - $ 36
=========== ==========
NON CASH PURCHASE OF PROPERTY AND EQUIPMENT $ - $ -
=========== ==========
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 1999 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 January 31, 2000 and
the results of its operations and its cash flows for the periods ended
January 31, 2000 and 1999. Such adjustments consisted only of normal
recurring items. The results of operations for the periods ending
January 31, 2000 and 1999 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 for the prior period have been reclassified.
The reclassifications have no effect on net income.
NOTE 2 - PROVISION FOR INCOME TAXES
The reported income tax rate on income excluding equity in loss of 50%
owned affiliate in the first three months of fiscal year 2000 was 21.3%
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 27.8%. The Company's effective tax rate for the year ended
October 31, 1999 was 17.1%.
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 three months ended January 31, 2000
increased $6,000 or 8.6% as compared to the three months ended January 31,
1999. This is primarily the result of an increase in gas volume transmitted.
Net Oil and Gas Royalties - Revenue for the three months ended January 31,
2000 increased $ 4,000 or 12.9% as compared to the three months ended
January 31, 1999. The increase is due to the increase in oil and gas prices.
Farm Produce Sales - Revenue for the three months ended January 31, 2000
increased $25,000 or 71.4% as compared to the three months ended January 31,
1999. This was the result of a government farm production payment.
Operating expenses for the three months ended January 31, 2000 increased
$23,000 as compared to the three months ended January 31, 1999. $10,000 of
the increase was applicable to increased farm operating expenses and $13,000
was applicable to pipeline operations.
Administrative and General Expenses - Expenses for the three months ended
January 31, 2000 increased $27,000 or 46.6%. This increase is primarily the
result of increased salaries allocation.
Equity in loss of 50% owned affiliate - The Company recorded a loss of
$10,000 attributable to its 50% investment and advances in Trinity Valley Pecan
Co. ("Trinity"), The cumulative losses equal the company's total outlay in
Trinity, including projected repayment of loan guarantees.
Liquidity and Capital Resources
The Company had negative cash flow of $43,000 in operating activities for
the three months ended January 31, 2000 as compared to a negative cash flow
of $8,000 from operating activities for the three months ended January 31, 1999.
On February 17, 2000, the Company guaranteed a loan of Trinity in the amount of
$300,000. In addition to collateral consisting of 1,554 acres of land, the
loan was also guaranteed by the J.R. Parten Ranch Trust which owns 50% of
Trinity. The Company anticipates that adequate working capital will continue
to be provided from future operations, subject to repayment of loan guarantees
of Trinity.
PART II. OTHER INFORMATION
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 January 31, 2000.
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.
SEVEN J STOCK FARM, INC.
(Registrant)
March 15, 2000 R. F. PRATKA
------------------------------------------
R. F. Pratka, Vice-President and Treasurer
(Principal Financial Officer)
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM SEVEN J
STOCK FARM, INC. CONSOLIDATED BALANCE SHEET AT JANUARY 31, 2000 AND
CONSOLIDATED STATEMENT OF INCOME FOR THE THREE MONTHS ENDED JANUARY 31,
2000, AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL
STATEMENTS.
</LEGEND>
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<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> OCT-31-2000
<PERIOD-START> NOV-01-1999
<PERIOD-END> JAN-31-2000
<CASH> 17
<SECURITIES> 0
<RECEIVABLES> 160
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 240
<PP&E> 3832
<DEPRECIATION> 2091
<TOTAL-ASSETS> 1982
<CURRENT-LIABILITIES> 358
<BONDS> 0
0
0
<COMMON> 1451
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 1982
<SALES> 125
<TOTAL-REVENUES> 201
<CGS> 0
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<OTHER-EXPENSES> 209
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<INCOME-PRETAX> (9)
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<CHANGES> 0
<NET-INCOME> (10)
<EPS-BASIC> (.01)
<EPS-DILUTED> (.01)
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