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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
FORM 10-Q
QUARTERLY REPORT UNDER SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
FOR QUARTER ENDED MARCH 31, 1998 COMMISSION FILE NUMBER 0-5426
THE WISER OIL COMPANY
A DELAWARE CORPORATION
I.R.S. EMPLOYER IDENTIFICATION NO. 55-0522128
8115 PRESTON ROAD, SUITE 400
DALLAS, TEXAS 75225
TELEPHONE (214) 265-0080
Former name, former address and former fiscal year, if changed since last
report. NONE
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, and (2) has been subject to such filing requirements
for the past 90 days.
x
----- ----
Yes No
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the close of the period covered by this report.
Class Outstanding at March 31, 1998
---------- -----------------------------
$3 par value 8,951,965
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<PAGE>
THE WISER OIL COMPANY
PART I
FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
The consolidated condensed financial statements included herein have
been prepared by the Company, without audit, pursuant to the rules and
regulations of the Securities and Exchange Commission. The financial
statements reflect all adjustments which are, in the opinion of management,
necessary to fairly present such information. Although the Company believes
that the disclosures are adequate to make the information presented not
misleading, certain information and footnote disclosures, including
significant accounting policies, normally included in financial statements
prepared in accordance with generally accepted accounting principles have
been condensed or omitted pursuant to such rules and regulations. It is
suggested that these condensed financial statements be read in conjunction
with the financial statements and the notes thereto included in the
Company's latest annual report on Form 10-K.
2
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THE WISER OIL COMPANY
CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
<TABLE>
<CAPTION>
MARCH 31, DECEMBER 31,
(000's) except share data 1998 1997
------------------ -----------------
<S> <C> <C>
Assets
Current Assets:
Cash and cash equivalents $ 5,013 $ 13,255
Accounts receivable 12,683 13,765
Inventories 985 1,007
Income taxes receivable 1,672 725
Prepaid expenses 1,134 438
------------------- ------------------
Total Current Assets 21,487 29,190
------------------- ------------------
Property, Plant and Equipment, at cost:
Oil and gas properties (successful efforts method) 358,986 346,655
Other properties 5,560 5,399
------------------- ------------------
364,546 352,054
Accumulated depreciation, depletion and amortization (138,107) (131,346)
------------------- ------------------
Net Property, Plant and Equipment 226,439 220,708
Other Assets 4,531 4,658
------------------- ------------------
$ 252,457 $ 254,556
=================== ==================
Liabilities and Stockholders' Equity
Current Liabilities:
Accounts payable $ 17,442 $ 18,396
Accrued liabilities 1,601 2,985
------------------- ------------------
Total current liabilities 19,043 21,381
------------------- ------------------
Long Term Debt 128,809 124,304
Deferred Benefit Cost 1,280 1,169
Deferred Income Taxes 9,830 10,278
Stockholders' Equity:
Common stock - $3 par value
20,000,000 shares authorized; 9,128,169 shares issued
at March 31, 1998 and December 31, 1997, respectively;
8,951,965 shares outstanding at March 31, 1998
and December 31, 1997, respectively 27,385 27,385
Paid-in capital 3,223 3,223
Retained earnings 64,806 68,630
Accumulated other comprehensive income - deferred
foreign exchange adjustment 810 915
Treasury stock; 176,204 shares, at cost (2,729) (2,729)
------------------- ------------------
Total stockholders' equity 93,495 97,424
------------------- ------------------
$ 252,457 $ 254,556
=================== ==================
</TABLE>
The notes to financial statements included in the Company's Annual Report
on Form 10-K for the year ended December 31, 1997 are an integral part of
these financial statements.
3
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THE WISER OIL COMPANY
CONSOLIDATED STATEMENTS OF INCOME AND RETAINED EARNINGS
(UNAUDITED)
<TABLE>
<CAPTION>
FOR THE THREE MONTHS
--------------------
ENDED MARCH 31,
---------------
(000's except per share data) 1998 1997
-------------- ---------------
<S> <C> <C>
Revenues:
Oil and gas sales $ 17,074 $ 23,062
Dividends and interest 145 121
Marketable security sales gains - 1,813
Other 196 579
-------------- ---------------
17,415 25,575
-------------- ---------------
Costs and Expenses:
Production and operating 6,162 6,802
Purchased natural gas 388 513
Depreciation, depletion and amortization 6,841 5,767
Exploration 3,353 621
General and administrative 2,426 2,378
Interest expense 3,146 1,264
-------------- ---------------
22,316 17,345
-------------- ---------------
Income (Loss) Before Income Taxes (4,901) 8,230
Income Tax Expense (Benefit) (1,345) 2,089
-------------- ---------------
NET INCOME (LOSS) (3,556) 6,141
Retained Earnings, beginning of period 68,630 66,385
Dividends Paid (268) (268)
-------------- ---------------
Retained Earnings, end of period $ 64,806 $ 72,258
============== ===============
Weighted Average Outstanding Shares 8,952 8,949
============== ===============
Earnings (Loss) Per Share:
Basic $ (0.40) $ 0.69
============== ===============
Diluted $ (0.40) $ 0.69
============== ===============
Cash Dividends Per Share $ 0.03 $ 0.03
============== ===============
</TABLE>
The notes to financial statements included in the Company's Annual Report
on Form 10-K for the year ended December 31, 1997 are an integral part of
these financial statements.
4
<PAGE>
THE WISER OIL COMPANY
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
FOR THE THREE MONTHS ENDED MARCH 31,
-------------------------------------
(000's) 1998 1997
Cash Flows From Operating Activities: ---- ----
<S> <C> <C>
Net income (loss) $ (3,556) $ 6,141
Adjustments to reconcile net income to operating cash flows:
Depreciation, depletion and amortization 6,841 5,767
Deferred income taxes (448) 1,350
Marketable securities & property sale gains (22) (2,283)
Amortization of debt issuance costs 146 -
Foreign currency translation (105) 11
Exploration expense 3,353 621
Other Changes -
Accounts receivable 1,082 631
Inventories 22 (223)
Prepaid expenses (696) (982)
Other assets - (148)
Accounts payable (954) (3,637)
Income taxes receivable (947) 523
Accrued liabilities (1,384) (164)
Deferred benefits cost 111 123
------------- -------------
Operating Cash Flows 3,443 7,730
------------- -------------
Cash Flows From Investing Activities:
Capital and exploration expenditures (17,184) (13,101)
Proceeds from sales of property, plant and equipment 1,281 1,558
Proceeds from marketable security sales - 1,929
------------- -------------
Investing Cash Flows (15,903) (9,614)
------------- -------------
Cash Flows From Financing Activities:
Long term debt issued 4,486 22,163
Payments on long term debt - (23,909)
Common stock issued - 144
Dividends paid (268) (268)
------------- -------------
Financing Cash Flows 4,218 (1,870)
------------- -------------
Net Increase In Cash (8,242) (3,754)
Cash and Cash Equivalents, beginning of year 13,255 5,870
------------- -------------
Cash and Cash Equivalents, end of period $ 5,013 $ 2,116
============= =============
</TABLE>
The notes to financial statements included in the Company's Annual Report on
Form 10-K for the year ended December 31, 1997 are an integral part of these
financial statements.
5
<PAGE>
THE WISER OIL COMPANY
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
COMPARISON OF QUARTERS ENDED MARCH 31, 1998 AND MARCH 31, 1997
Revenues for the first quarter of 1998 decreased $8.2 million or 32% from
the first quarter of 1997, due primarily to lower oil and gas prices and the
absence of marketable security sale gains in the first quarter of 1998. Oil
sales for the first quarter of 1998 were $3.8 million lower than the first
quarter of 1997 as the average price received for oil sales in the first quarter
of 1998 was $14.08 per barrel, down $5.52 per barrel or 28% from the first
quarter of 1997. Net oil production for the first quarter of 1998 was 683,000
barrels, down slightly from 687,000 barrels in the first quarter of 1997. Gas
sales for the first quarter of 1998 were $1.6 million lower than the first
quarter of 1997 as the average price received for gas sales was $1.96 per mcf, a
decrease of $0.67 per mcf or 25% from the first quarter of 1997. Net gas
production for the first quarter of 1998 was 3,428 MMCF, up 257 MMCF or 8% from
the first quarter of 1997 due primarily to production from the Welder Ranch
field in South Texas which was acquired in June 1997. During the first quarter
of 1998, there were no adjustments to oil and gas sales from the Company's
hedging activities compared to a reduction of $1.0 million in oil and gas sales
in the first quarter of 1997. The Company liquidated its remaining portfolio of
marketable securities during 1997. Accordingly, there were no sales of
marketable securities in the first quarter of 1998 compared to a pretax gain of
$1.8 million from the sale of marketable securities in the first quarter of
1997.
Production and operating expense for the first quarter of 1998 decreased
$0.6 million or 9% primarily as a result of the sale of properties in Michigan
in the first quarter of 1997. On a BOE basis (excluding 165 MMCF and 168 MMCF
of gas purchased for resale during the first quarter of 1998 and 1997,
respectively), production and operating expense during the first quarter of 1998
decreased to $4.73 per BOE or 12 % from $5.35 per BOE during the first quarter
of 1997. Depreciation, depletion and amortization, ("DD&A") for the first
quarter of 1998, increased $1.1 million or 19% over the first quarter of 1997
due primarily to higher DD&A from the Maljamar field in New Mexico. Exploration
expense for the first quarter of 1998 was $3.4 million, up $2.7 million from the
first quarter of 1997 due primarily to higher dry hole and seismic expense in
the U.S. General and administrative expense in the first quarter of 1998 was
$2.4 million, up 2% from the first quarter of 1997. Interest expense during the
first quarter of 1998 was $3.1 million or 149% higher than the first quarter of
1997 due to the increase in long term debt associated with the issuance of $125
million of Senior Subordinated Notes in May 1997. The effective income tax rate
during the first quarter of 1998 was 27% compared to 25% in the first quarter of
1997.
The Company realized a net loss of $3.6 million and net loss per share of
$0.40 per share in the first quarter of 1998 compared to net income of $6.1
million and earnings per share of $0.69 during the first quarter of 1997. The
Company's Canadian operations incurred a net loss of $0.7 million during the
first quarter of 1998 compared to a net loss of $0.9 million during the first
quarter of 1997.
Operating cash flows during the first quarter of 1998, were $3.4 million,
down $3.9 million from the first quarter of 1997 primarily as a result of
decreased oil and gas sales. Capital and exploration expenditures during the
first quarter of 1998 were $17.2 million, up $4.5 million from the first quarter
of 1997 primarily attributable to development of the Portage field in Canada.
6
<PAGE>
THE WISER OIL COMPANY
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
COMPARISON OF QUARTERS ENDED MARCH 31, 1998 AND MARCH 31, 1997
Continued
On May 11, 1998, the Company borrowed $7.5 million under the Credit
Agreement to refinance certain short term obligations and for general corporate
purposes. Accordingly, $4.5 million of short term obligations were classified
as long term debt at March 31, 1998.
YEAR 2000 ISSUE
The Company has assessed and continues to assess the impact of the "year
2000" issue on its reporting systems and operations. The "year 2000" issue
exists because many computer systems and applications currently use two-digit
date fields to designate a year. As the century date occurs, two-digit date
systems will recognize the year 2000 as 1900 or not at all. This inability to
recognize the year 2000 may cause systems to process critical financial and
operational information incorrectly. The Company anticipates that all its
significant computer systems and software will be year 2000 compliant during
1998. Management does not estimate future expenditures related to the year 2000
exposure to be material.
NOTES TO FINANCIAL STATEMENTS
NOTE 1. COMPREHENSIVE INCOME
Effective January 1, 1998, the Company adopted Statement of Financial
Accounting Standards No. 130 "Reporting Comprehensive Income" ("SFAS 130") which
establishes standards for reporting and display of comprehensive income and its
components in a full set of general purpose financial statements. Comprehensive
income includes net income and other comprehensive income, which includes, but
is not limited to, unrealized gains for marketable securities and future
contracts, foreign currency translation adjustments and minimum pension
liability adjustments. The impact of adopting SFAS No. 130 on the periods ended
March 31, 1998 and March 31, 1997 is as follows:
March 31, March 31,
1998 1997
--------- ---------
Net Income (Loss)
$ (3,556) $ 6,141
Other comprehensive income (loss), net of tax:
Foreign currency translation adjustments (105) 11
Unrealized gains on marketable securities - (866)
--------- ---------
Comprehensive income (loss) $ (3,661) $ 5,286
--------- ---------
NOTE 2. SUMMARY OF GUARANTIES OF 9 1/2% SENIOR SUBORDINATED NOTES
In May 1997, the Company issued $125 million aggregate principal amount of
its 9 1/2% Senior Subordinated Notes due 2007 pursuant to an offering exempt
from registration under the Securities Act of 1933. The notes are unsecured
obligations of the Company, subordinated in right of payment to all existing and
any future senior indebtedness of the Company. The notes rank pari passu with
any future senior subordinated indebtedness and senior to any future junior
subordinated indebtedness of the Company. The notes are fully and
unconditionally guaranteed, jointly and severally, on an unsecured, senior
subordinated basis by certain wholly owned subsidiaries of the Company (the
"Subsidiary Guarantors"). At the time of the initial issuance of the notes,
Wiser Oil Delaware, Inc., The Wiser Marketing Company, Wiser Delaware LLC,
T.W.O.C., Inc. and The Wiser Oil Company of Canada were the Subsidiary
Guarantors (the "Initial Subsidiary Guarantors"). Except for one wholly owned
subsidiary that is inconsequential to the Company on a consolidated basis,
the Initial Subsidiary Guarantors comprise all of the Company's direct and
indirect subsidiaries.
Sections 13 and 15(d) of the Securities Exchange Act of 1934 require
presentation of the following unaudited summarized financial information of the
Subsidiary Guarantors. The Company has not presented separate financial
statements and other disclosures concerning each Subsidiary Guarantor because
such information is not material to investors. There are no significant
contractual restrictions on distributions from each of the Subsidiary Guarantors
to the Company.
7
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<TABLE>
<CAPTION>
THE WISER OIL COMPANY
SUBSIDIARY GUARANTORS
================================================================
(000's) THE WISER
WISER T.W.O.C MARKETING COMBINED
CANADA(1) INC. COMPANY TOTAL
----------------------------------------------------------------
<S> <C> <C> <C> <C>
Revenues
For the Quarter Ended March 31, 1998 $ 3,780 $ 1 $559 $ 4,340
For the Quarter Ended March 31, 1997 4,081 1,860 676 6,617
INCOME (LOSS) BEFORE INCOME TAXES
For the Quarter Ended March 31, 1998 $ (709) $ (3) $ 66 $ (646)
For the Quarter Ended March 31, 1997 (907) 1,856 67 1,016
NET INCOME (LOSS)
For the Quarter Ended March 31, 1998 $ (518) $ (2) $ 48 $ (472)
For the Quarter Ended March 31, 1997 (840) 1,726 62 948
CURRENT ASSETS
March 31, 1998 $ 4,717 $ 25 $565 $ 5,307
December 31, 1997 4,808 44 165 5,017
TOTAL ASSETS
March 31, 1998 $57,327 $ 40 $565 $57,932
December 31, 1997 52,083 44 492 52,619
CURRENT LIABILITIES
March 31, 1998 $11,603 $ - $377 $11,980
December 31, 1997 6,646 - 250 6,896
NONCURRENT LIABILITIES
March 31, 1998 $ - $ - $ - $ -
December 31, 1997 9,474 - - 9,474
STOCKHOLDER'S EQUITY (DEFICIT)
March 31, 1998 $45,724 $ 40 $188 $45,952
December 31, 1997 35,963 44 242 36,249
</TABLE>
(1) Includes the accounts of Wiser Oil Delaware, Inc., Wiser Delaware LLC and
The Wiser Oil Company of Canada.
See other notes to financial statements included in the Company's Annual Report
on Form 10-K for the year ended December 31, 1997.
8
<PAGE>
THE WISER OIL COMPANY
PART II - OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
--------
The information required by this Item 6 (a) is set forth in the Index
to Exhibits accompanying this quarterly report and is incorporated
herein by reference.
(b) Reports on Form 8-K
-------------------
None.
9
<PAGE>
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.
THE WISER OIL COMPANY
--------------------------
(Registrant)
Date: May 15, 1998 /s/ ANDREW J. SHOUP, JR.
----------------------------
Andrew J. Shoup, Jr.
President and
Chief Executive Officer
Date: May 15, 1998 /s/ LAWRENCE J. FINN
----------------------------
Lawrence J. Finn
Vice President, Finance and
Chief Financial Officer
10
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THE WISER OIL COMPANY
INDEX TO EXHIBITS
Exhibit
Number Exhibit
- ------ -------
27 Financial Data Schedule
11
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM QUARTERLY
REPORT ON 10-Q AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL
STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> MAR-31-1998
<CASH> 5,013
<SECURITIES> 0
<RECEIVABLES> 14,355
<ALLOWANCES> 0
<INVENTORY> 985
<CURRENT-ASSETS> 21,487
<PP&E> 364,546
<DEPRECIATION> 138,107
<TOTAL-ASSETS> 252,457
<CURRENT-LIABILITIES> 19,043
<BONDS> 128,809
0
0
<COMMON> 27,385
<OTHER-SE> 66,110
<TOTAL-LIABILITY-AND-EQUITY> 252,457
<SALES> 17,074
<TOTAL-REVENUES> 17,415
<CGS> 6,550
<TOTAL-COSTS> 22,316
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 3,146
<INCOME-PRETAX> (4,901)
<INCOME-TAX> (1,345)
<INCOME-CONTINUING> (3,556)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (3,556)
<EPS-PRIMARY> (.40)
<EPS-DILUTED> (.40)
</TABLE>
