The Company's liquid assets are invested in a portfolio of marketable securities, including United States government and agency obligations.
Other than as described above, the Company produces no products nor renders any services; however, as more fully explained in Item 2, oil, gas and coal are extracted by lessees from properties owned by the Company, and oil and gas is produced from property in which the Company holds a working interest.
Bethlehem Steel Corporation was the lessee under a coal lease from the Company for a term of 40 years commencing in June, 1969, providing for minimum royalties of $50,000 annually for each of the first three years and $90,000 annually for the next 36 years, together with provisions for royalties of 22-1/2 cents per ton of coal mined and shipped against which the minimum royalties are to be applied. On October 1, 1984, this lease was amended to increase the royalty to the greater of $1.00 per ton or 3% of the F.O.B. mine selling price for all coal paid for by actual royalty or minimum royalty after that date, and Bethlehem assigned the lease to another.
A portion of the leased property was subsequently subleased by the assignee to another party, but Bethlehem continues to guarantee the total royalty payment. A small amount of mining has been done on the lease. The Company believes that the assignee will contine to make the $90,000 annual minimum royalty payments until the lease termination in 2009.
The Company does not posess certain attributes. For example there have been no new products or industry segments requiring the investment of a material amount of assets of the Company, and there have been no public announcements nor has information otherwise become public involving any such new products or industry segments.
Raw materials are not essential to the Company's businesses.
There are no patents, trademarks, licenses, franchises and concessions held by the Company.
No business of any industry activity of the Company is or may be seasonal.
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The Company has no significant practices relating to working capital since it carries no significant amount of inventory and does not provide extended payment terms to customers.
The Company's business do not have any backlog of unfilled orders.
No material portions of the businesses of the Company may be subject to renegotiation of profits or termination of contracts or subcontracts at the election of the Government.
Except as shown on the table below, there are no customers to which sales are made in an amount which equals ten percent or more of the Company's consolidated revenue in 2003.
*The Bethlehem lease referred to previously, was assigned to Wilkem.
Competition
The Energy Business Segment is extremely competitive and cyclical. The Company competes for property acquisitions with natural gas and oil companies that range in size from small, family owned operations to large independents to multinational corporations. The Company also competes for the equipment and labor required to operate and to develop these properties. Many competitors have substantially greater financial and other resources and may be able to sustain wide fluctuations in the economics of this industry more easily than the Company can. Since certain aspects of this Energy Business Segment are regulated, competitors may be able to absorb the burden of any changes in federal, state and local laws and regulations more easily than the Company can. The ability of the Company to acquire and develop additional properties in the future will depend upon its ability to evaluate and select suitable properties, to secure adequate financing, to consummate transactions and to engage strategic partners in this highly competitive environment.
The Company spent no money during any of the last three fiscal years on material company-sponsored research and development activities as determined in accordance with generally accepted accounting principles. In addition, the Company spent no money during such years on material customer-sponsored research activities relating to the development of new products, services or techniques or the improvement of existing products, services or techniques. It is anticipated that compliance with Federal, State and local provisions regulating the discharge of materials into the environment, or otherwise relating to the protection of the environment will have no material effect upon the capital expenditures, earnings and competitive position of the Company. There are no material estimated capital expenditures for environmental control facilities for the remainder of the current fiscal year and the succeeding fiscal year or for any further periods that the Company deems material.
As to future business intended by the Company, it has, during the last five years, investigated several new business opportunities, both in the Energy Business Segment and in other reportable business segments. Management of the Company continues to seek out and investigate such new business opportunities or expansion of existing leasing activities or working interests in oil and gas operations. Such investments could result in a more productive deployment of the Company's assets in an effort to generate more operating, rental, bonus, and royalty income, and the Company is considering acquiring additional mineral properties or additional working interests in selected oil and gas operations. While the Company has not limited itself geographically with respect to future working interest opportunities, the Company has focused primarily on properties in the continental United States that are located on or near areas with historic production.
The total number of persons employed by the Company, as of the end of the fiscal year, was 3.
(d) Financial Information about Geographic Areas. The Company does not engage in operations in foreign countries, nor are portions of sales or revenues derived from customers in foreign countries.
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