UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB
X Quarterly Report Pursuant to Section 13 or 15(d) of the Securities
---
Exchange Act of 1934 for the Quarterly Period Ended December 31, 1995
Transition Report Pursuant to Section 13 or 15(d) of the Securities
---
Exchange Act of 1934
Commission File Number 1-5103
BARNWELL INDUSTRIES, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 72-0496921
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
1100 Alakea Street, Suite 2900, Honolulu, Hawaii 96813
(Address of principal executive offices) (Zip code)
(808) 531-8400
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirement for the past 90 days.
Yes X No
----- -----
As of February 8, 1996 there were 1,322,052 shares of common stock, par value
$0.50, outstanding.
<PAGE>
BARNWELL INDUSTRIES, INC.
-------------------------
AND SUBSIDIARIES
----------------
INDEX
-----
PART I. FINANCIAL INFORMATION:
Item 1. Financial Statements
Condensed Consolidated Balance Sheets
December 31, 1995 and September 30, 1995 (Unaudited)
Consolidated Statements of Operations and Retained Earnings
three months ended December 31, 1995 and 1994 (Unaudited)
Condensed Consolidated Statements of Cash Flows
three months ended December 31, 1995 and 1994 (Unaudited)
Notes to Condensed Consolidated Financial Statements (Unaudited)
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations
PART II. OTHER INFORMATION:
Item 6. Exhibits and reports on Form 8-K
Signature
<PAGE>
<TABLE>
<CAPTION>
BARNWELL INDUSTRIES, INC.
-------------------------
AND SUBSIDIARIES
----------------
CONDENSED CONSOLIDATED BALANCE SHEETS
-------------------------------------
(Unaudited, see Note A below)
December 31, September 30,
1995 1995
------------ -------------
<S> <C> <C>
ASSETS
- ------
CURRENT ASSETS:
Cash $ 3,113,000 $ 2,976,000
Accounts receivable 2,472,000 2,485,000
Other current assets 864,000 663,000
------------ ------------
TOTAL CURRENT ASSETS 6,449,000 6,124,000
INVESTMENT IN LAND 762,000 648,000
OTHER ASSETS 1,065,000 1,011,000
NET PROPERTY AND EQUIPMENT 21,410,000 20,997,000
------------ ------------
TOTAL ASSETS $ 29,686,000 $ 28,780,000
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
- ------------------------------------
CURRENT LIABILITIES:
Accounts payable $ 1,954,000 $ 1,065,000
Accrued expenses 632,000 523,000
Other current liabilities 1,059,000 893,000
------------ ------------
TOTAL CURRENT LIABILITIES 3,645,000 2,481,000
------------ ------------
LONG-TERM DEBT 11,100,000 11,100,000
------------ ------------
DEFERRED INCOME TAXES 4,528,000 4,837,000
------------ ------------
STOCKHOLDERS' EQUITY:
Common stock, par value $.50 a share:
Authorized, 4,000,000 shares
Issued, 1,642,797 shares 821,000 821,000
Additional paid-in capital 3,103,000 3,103,000
Retained earnings 13,191,000 12,891,000
Foreign currency translation adjustments and other (1,997,000) (1,748,000)
Treasury stock, at cost, 320,745 shares (4,705,000) (4,705,000)
------------ ------------
TOTAL STOCKHOLDERS' EQUITY 10,413,000 10,362,000
------------ ------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 29,686,000 $ 28,780,000
============ ============
<FN>
Note A: The condensed consolidated balance sheet at September 30, 1995 has been
derived from the audited financial statements at that date.
See Notes to Condensed Consolidated Financial Statements
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
BARNWELL INDUSTRIES, INC.
-------------------------
AND SUBSIDIARIES
----------------
CONSOLIDATED STATEMENTS OF OPERATIONS AND RETAINED EARNINGS
-----------------------------------------------------------
(Unaudited)
Three months ended
December 31,
-------------------------------
1995 1994
---- ----
<S> <C> <C>
Revenues:
Oil and natural gas $ 2,470,000 $ 2,910,000
Contract drilling 740,000 1,320,000
Interest income and other 210,000 160,000
------------- -------------
3,420,000 4,390,000
------------- -------------
Costs and expenses:
Oil and natural gas operating 920,000 855,000
Contract drilling operating 528,000 1,015,000
General and administrative 801,000 1,071,000
Depreciation, depletion and amortization 867,000 750,000
Interest expense 212,000 152,000
Minority interest in losses (10,000) (138,000)
------------- -------------
3,318,000 3,705,000
------------- -------------
Earnings before income taxes 102,000 685,000
Income tax (benefit) provision (198,000) 485,000
------------- -------------
NET EARNINGS 300,000 200,000
Retained earnings - beginning of period 12,891,000 12,439,000
Cash dividends declared - (99,000)
------------- -------------
Retained earnings - end of period $ 13,191,000 $ 12,540,000
============= =============
NET EARNINGS PER COMMON SHARE $0.23 $0.15
===== =====
Cash dividends declared per share $ - $0.075
===== ======
<FN>
See Notes to Condensed Consolidated Financial Statements
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
BARNWELL INDUSTRIES, INC.
-------------------------
AND SUBSIDIARIES
----------------
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
-----------------------------------------------
(Unaudited)
Three months ended
December 31,
-------------------
1995 1994
----- ----
<S> <C> <C>
Cash Flows from Operating Activities:
Net earnings $ 300,000 $ 200,000
Adjustments to reconcile net earnings to net
cash provided by (used in) operating activities:
Depreciation, depletion, and amortization 867,000 750,000
Deferred income taxes (243,000) 67,000
Minority interest in losses (10,000) (138,000)
----------- -----------
914,000 879,000
All other 1,000,000 (943,000)
----------- -----------
Net cash provided by (used in) operating
activities 1,914,000 (64,000)
----------- -----------
Cash Flows from Investing Activities:
Capital expenditures - oil and natural gas (1,563,000) (958,000)
Additions to investment in land (124,000) -
Capital expenditures - contract drilling and other (41,000) (79,000)
Increase in long-term receivables and other assets (43,000) (2,000)
----------- -----------
Net cash used in investing activities (1,771,000) (1,039,000)
----------- -----------
Net Cash Provided by Financing Activity:
Contributions from minority interest owner 20,000 -
----------- -----------
Net cash provided by financing activity 20,000 -
----------- -----------
Effect of exchange rate changes on cash (26,000) (92,000)
----------- -----------
Net increase (decrease) in cash 137,000 (1,195,000)
Cash at beginning of period 2,976,000 4,198,000
----------- -----------
Cash at end of period $ 3,113,000 $ 3,003,000
=========== ===========
Supplemental disclosures of cash flow information:
Cash paid during the period for:
Interest $ 186,000 $ 178,000
=========== ===========
Income taxes $ 77,000 $ 1,351,000
=========== ===========
<FN>
See Notes to Condensed Consolidated Financial Statements
</TABLE>
<PAGE>
BARNWELL INDUSTRIES, INC.
-------------------------
AND SUBSIDIARIES
----------------
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
----------------------------------------------------
(Unaudited)
1. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
-------------------------------------------
The Condensed Consolidated Balance Sheet as of December 31, 1995, and the
Consolidated Statements of Operations and Retained Earnings and the Condensed
Consolidated Statements of Cash Flows for the three months ended
December 31, 1995 and 1994 have been prepared by Barnwell Industries, Inc.
(referred to herein together with its subsidiaries as "Barnwell" or the
"Company") without audit. In the opinion of management, all adjustments (which
include only normal recurring adjustments) necessary to present fairly the
financial position, results of operations and changes in cash flows at
December 31, 1995 and for all periods presented have been made. The Condensed
Consolidated Balance Sheet as of September 30, 1995 has been derived from
audited financial statements.
Certain information and footnote disclosures normally included in financial
statements prepared in accordance with generally accepted accounting principles
have been condensed or omitted. It is suggested that these condensed
consolidated financial statements be read in conjunction with the financial
statements and notes thereto included in the Company's September 30, 1995 annual
report to stockholders. The results of operations for the period ended
December 31, 1995 are not necessarily indicative of the operating results for
the full year.
2. EARNINGS PER COMMON SHARE
-------------------------
Primary earnings per share are based on the weighted average number of
outstanding common shares during the period. The primary weighted average
number of outstanding shares was 1,322,052 for the quarters ended
December 31, 1995 and 1994. Fully diluted earnings per share are not presented
because dilution is less than 3%.
3. INCOME TAXES
------------
The components of the provision for income taxes for the three months ended
December 31, 1995 and 1994 are as follows:
Three months ended
December 31,
------------------------
1995 1994
---------- ----------
Current - U.S. $ 5,000 $ 30,000
Current - Foreign 40,000 388,000
---------- ----------
Total - Current 45,000 418,000
---------- ----------
Deferred - U.S. (5,000) (30,000)
Deferred - Foreign (238,000) 97,000
---------- ----------
Total - Deferred (243,000) 67,000
---------- ----------
$ (198,000) $ 485,000
========== ==========
In November 1995, officials of the U.S. and Canada formally ratified a new
agreement amending the Canada-U.S. Tax Treaty that reduces the Canadian Branch
tax, effective January 1, 1996, from 10% to 6% and, effective January 1, 1997,
to 5%. This change resulted in the recognition of a deferred income tax benefit
of $290,000 in the three months ended December 31, 1995.
<PAGE>
Item 2.MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
-----------------------------------------------------------------------
OF OPERATIONS
-------------
LIQUIDITY AND CAPITAL RESOURCES
- -------------------------------
Net cash flows provided by operating activities for the three months ended
December 31, 1995 totaled $1,914,000, as compared to $64,000 of net cash flows
used in operating activities for the first three months of the prior year.
Essentially all (97%) of the increase in cash flows from operating activities
was due to changes in the Company's non-cash working capital accounts. In the
current period, there was a $903,000 increase in accounts payable, primarily
representing oil and natural gas capital expenditures not yet paid at
December 31, 1995. Additionally, in the prior year period there was a $943,000
use of cash due primarily to the payment of accrued income taxes.
Barnwell's consolidated cash and working capital at December 31, 1995 was
$3,113,000 and $2,804,000, respectively. Available credit under the Company's
revolving credit facility amounted to approximately $2,600,000 at
December 31, 1995.
During the quarter ended December 31, 1995, the Company invested $1,563,000
in oil and natural gas properties, compared to the $958,000 of oil and natural
gas investments during the prior year period. For the three months ended
December 31, 1995, the Company participated in the drilling of six wells in
Alberta, Canada and North Dakota as follows:
Productive Productive
Oil Wells Gas Wells Dry Holes Total Wells
----------- ----------- ----------- -----------
Exp. Dev. Exp. Dev. Exp. Dev. Exp. Dev.
---- ---- ---- ---- ---- ----- ---- ----
Gross - 2.00 1.00 1.00 - 2.00 1.00 5.00
Net - 0.45 0.29 0.09 - 0.27 0.29 0.81
Additionally, the Company participated in two natural gas well
recompletions (net .15 well) and one oil well recompletion (net .25 well). "Net
well" refers to Barnwell's aggregate participating interest in a given number of
gross wells. For example, a 50% interest in a well represents one gross well,
but 0.50 net well. The gross figure includes Barnwell's interest, as well as
the portion owned by others.
The Company also invested $124,000 towards the rezoning of the North Kona,
Hawaii, property held by Kaupulehu Developments, a 50.1% owned joint venture,
and invested $41,000 in contract drilling assets. The Company expects total
fiscal 1996 capital expenditures to be approximately 33% higher than capital
expenditures in fiscal 1995. Capital expenditures are expected to be funded by
both cash flows from operations and existing cash balances.
<PAGE>
RESULTS OF OPERATIONS
- ---------------------
Oil and Natural Gas
- -------------------
SELECTED OPERATING STATISTICS
--------------------------------------------
Net Production
--------------------------------------------
Three months ended Increase
December 31, (Decrease)
----------------------- ------------------
1995 1994 Units %
---------- ---------- -------- ------
Liquids (Bbls)* 21,000 23,000 (2,000) (9)%
Oil (Bbls)* 51,000 49,000 2,000 4 %
Natural gas (MCF)** 1,278,000 1,261,000 17,000 1 %
Average Price Per Unit
--------------------------------------------
Three months ended Increase
December 31, (Decrease)
----------------------- -------------------
1995 1994 $ %
---------- ---------- -------- ------
Liquids (Bbls)* $10.87 $10.54 0.33 3%
Oil (Bbls)* $15.08 $15.02 0.06 -
Natural gas (MCF)** $ 0.94 $ 1.25 (0.31) (25%)
*Bbls = stock tank barrel equivalent to 42 U.S. gallons
**MCF = 1,000 cubic feet
Oil and natural gas revenues decreased $440,000 (15%) for the three months
ended December 31, 1995, as compared to the same period in 1994, due primarily
to a 25% decrease in natural gas prices. Additionally, the Province of Alberta
changed its royalty tax credit program effective January 1, 1995, which reduced
revenues and net earnings by approximately $80,000 for the three months ended
December 31, 1995, as compared to the three months ended December 31, 1994. Oil
production increased 4%, while oil prices were essentially unchanged. Natural
gas liquids volumes decreased 9% while natural gas liquids prices increased 3%.
The Company believes that natural gas prices for the remainder of the
current year should increase from the prices received in the three months ended
December 31, 1995, due to colder than normal winter weather and increased demand
for natural gas.
Oil and natural gas operating expenses increased $65,000 (8%) for the three
months ended December 31, 1995, as compared to the same period in 1994, due
primarily to new production from the Barrhead, Pembina and Zama areas, partially
offset by decreased production from the Dunvegan area.
<PAGE>
Contract Drilling
- -----------------
Contract drilling revenues and costs are associated with water well
drilling and water pump installation in Hawaii. Contract drilling revenues and
costs decreased $580,000 (44%) and $487,000 (48%), respectively, for the three
months ended December 31, 1995, as compared to the same period in 1994, due to
lower water well drilling and pump installation activity in the current year
period. As a result of this lower activity, operating profit before
depreciation decreased to $212,000 for the three months ended December 31, 1995,
as compared to $305,000 for the same period in 1994; gross margin as a
percentage of revenues was comparable.
<PAGE>
Interest Income and Other
- -------------------------
Interest income and other increased $50,000 (31%) for the three months
ended December 31, 1995, as compared to the same period in 1994, due to a
$71,000 increase in natural gas processing revenues, partially offset by a
$21,000 decrease in dividend income resulting from the sale of trading
securities in the prior fiscal year.
General and Administrative Expenses
- -----------------------------------
General and administrative expenses decreased $270,000 (25%) for the three
months ended December 31, 1995, as compared to the same period in 1994, as costs
incurred for the rezoning of Kaupulehu Developments' leasehold interest in
conservation zoned property decreased from $238,000 to $124,000. Additionally,
these rezoning costs were capitalized in the current period. A reduction in
personnel costs comprised the remainder of the decrease.
Depreciation, Depletion and Amortization
- ----------------------------------------
Depreciation, depletion and amortization increased $117,000 (16%) for the
three months ended December 31, 1995, as compared to the same period in 1994,
due to an increase in depletion, partially offset by a decrease in depreciation.
Depletion increased primarily due to an 18% increase in the depletion rate.
Depreciation decreased because certain water well drilling assets were fully
depreciated during the prior fiscal year.
Interest Expense
- ----------------
Interest expense increased $60,000 (39%) for the three months ended
December 31, 1995, as compared to the same period in 1994, due primarily to
$50,000 of interest on the $2,000,000 of convertible notes issued in June 1995.
The remaining increase was due to higher average interest rates, partially
offset by a lower loan balance, on the Company's credit facility with the Royal
Bank of Canada.
Income Taxes
- ------------
In November 1995, officials of the U.S. and Canada formally ratified a new
agreement amending the Canada-U.S. Tax Treaty that reduces the Canadian Branch
tax, effective January 1, 1996, from 10% to 6% and, effective January 1, 1997,
to 5%. This change resulted in the recognition of a deferred income tax benefit
of $290,000 in the three months ended December 31, 1995.
<PAGE>
PART II. OTHER INFORMATION
Item 6.Exhibits and reports on Form 8-K
None.
SIGNATURE
---------
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.
BARNWELL INDUSTRIES, INC.
-------------------------
(Registrant)
/s/ Russell M. Gifford
--------------------------
Russell M. Gifford
Vice President and
Chief Financial Officer
Date: February 8, 1996
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from
Barnwell Industries Inc.'s 1996 first quarter 10-QSB and is
qualified in its entirety by reference to such 10-QSB.
</LEGEND>
<CIK> 0000010048
<NAME> BARNWELL INDUSTRIES INC.
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> SEP-30-1996
<PERIOD-END> DEC-31-1995
<CASH> 3113
<SECURITIES> 0
<RECEIVABLES> 2535
<ALLOWANCES> 63
<INVENTORY> 82
<CURRENT-ASSETS> 6449
<PP&E> 49712
<DEPRECIATION> 28302
<TOTAL-ASSETS> 29686
<CURRENT-LIABILITIES> 3645
<BONDS> 11100
0
0
<COMMON> 821
<OTHER-SE> 9592
<TOTAL-LIABILITY-AND-EQUITY> 29686
<SALES> 3210
<TOTAL-REVENUES> 3420
<CGS> 1448
<TOTAL-COSTS> 1448
<OTHER-EXPENSES> 867
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 212
<INCOME-PRETAX> 102
<INCOME-TAX> (198)
<INCOME-CONTINUING> 300
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 300
<EPS-PRIMARY> .23
<EPS-DILUTED> 0
</TABLE>
