<PAGE> 1
FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 1996
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from to
--------------- ---------------
Commission file number 0-14334
XPLOR CORPORATION
------------------------------------------------------
(Exact name of registrant as specified in its charter)
Delaware 13-3299127
--------------------------------------------- -------------------
(State or other jurisdiction of incorporation (I.R.S. Employer
or organization) Identification No.)
16800 GREENSPOINT PARK DR, SUITE 300 SOUTH, HOUSTON, TEXAS 77060
----------------------------------------------------------------
(Address of principal executive offices)
(281) 872-2780
----------------------------------------------------
(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 requirements for the past 90 days.
Yes X No
--- ---
Indicate the number of shares outstanding of each of the issuer's classes
of common stock, as of the latest practicable date.
Class Outstanding at November 1, 1996
----- -------------------------------
Common Stock $.01 par value 2,037,171 shares
Page 1 of 12 pages
<PAGE> 2
XPLOR CORPORATION AND SUBSIDIARY
INDEX
PAGE
PART I. - FINANCIAL INFORMATION
Item 1. - Financial Statements (Unaudited)
(a) Consolidated Balance Sheets as of
September 30, 1996, and December 31,
1995 3
(b) Consolidated Statements of Operations for
the three-month periods ended September
30, 1996, and September 30, 1995
4
(c) Consolidated Statements of Operations for
the nine-month periods ended September
30, 1996, and September 30, 1995
5
(d) Consolidated Statements of Cash Flows for
the nine-month periods ended September
30, 1996, and September 30, 1995
6
(e) Notes to Consolidated Financial State-
ments 7
Item 2. - Management's Discussion and Analysis of Financial
Condition and Results of Operation 8-10
PART II. - OTHER INFORMATION 11
Item 1. - Legal Proceedings 11
Item 6. - Exhibits and Reports on Form 8-K 11
Signatures 12
Page 2 of 12 pages
<PAGE> 3
XPLOR CORPORATION AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
<TABLE>
<CAPTION>
September 30 December 31
1996 1995
--------- --------
(In thousands)
<S> <C> <C>
ASSETS
CURRENT ASSETS
Cash and cash equivalents $ 2,760 $ 2,864
Accounts receivable and other 167 282
-------- --------
TOTAL CURRENT ASSETS 2,927 3,146
OIL AND GAS PROPERTIES AND EQUIPMENT (successful
efforts method), at cost 18,843 18,843
Less-accumulated depreciation, depletion,
amortization and impairment (16,521) (16,401)
-------- --------
2,322 2,442
INVESTMENT IN EQUITY SECURITIES 55 55
OTHER ASSETS 182 224
-------- --------
TOTAL ASSETS $ 5,486 $ 5,867
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable $ 305 $ 389
Accrued liabilities
Suspended revenues and settlements 167 197
Other 8 108
-------- --------
TOTAL CURRENT LIABILITIES 480 694
DEFERRED INCOME TAXES 287 317
-------- --------
TOTAL LIABILITIES 767 1,011
STOCKHOLDERS' EQUITY
Preferred Stock, par value $.01 per share--
authorized 1,000,000 shares; none issued
Common Stock, par value $.01 per share--
authorized 15,000,000 shares; 2,595,673
shares issued and outstanding 26 26
Additional paid-in capital 20,678 20,678
Accumulated deficit (13,224)) (13,087)
-------- --------
7,480 7,617
Less cost of Common Stock in treasury--558,502
shares at September 30,1996 and December 31,
1995 (2,761) (2,761)
-------- --------
TOTAL STOCKHOLDERS' EQUITY 4,719 4,856
-------- --------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 5,486 $ 5,867
======== ========
</TABLE>
SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Page 3 of 12 pages
<PAGE> 4
XPLOR CORPORATION AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
<TABLE>
<CAPTION>
Three Months Three Months
Ended Ended
September 30, 1996 September 30, 1995
------------------ ------------------
(In thousands, except per share data)
<S> <C> <C>
REVENUES
Oil and gas sales $ 130 $ 102
Pipeline sales and fees 3 3
Oil field operation fees 20 27
Management fees 3 6
Interest income and other 49 9
----------- -----------
Total Revenues 205 147
----------- -----------
EXPENSES
Cost of oil and gas sales 43 39
Provision for asset impairment -- 239
Depreciation, depletion and amortization 47 35
General and administrative 140 114
----------- -----------
Total Expenses 230 427
----------- -----------
Loss before income taxes (25) (280)
PROVISION FOR INCOME TAXES -- --
----------- -----------
Net loss $ (25) $ (280)
=========== ===========
Net loss per common share and common
share equivalents $ (.01) $ (.14)
=========== ===========
WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING 2,106,460 2,058,278
=========== ===========
</TABLE>
SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Page 4 of 12 pages
<PAGE> 5
XPLOR CORPORATION AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
<TABLE>
<CAPTION>
Nine Months Nine Months
Ended Ended
September 30, 1996 September 30, 1995
------------------ ------------------
(In thousands, except per share data)
<S> <C> <C>
REVENUES
Oil and gas sales $ 336 $ 296
Pipeline sales and fees 5 9
Oil field operation fees 67 83
Management fees 7 20
Gain on sale of oil and gas properties -- 12
Interest income and other 99 22
----------- -----------
Total Revenues 514 442
----------- -----------
EXPENSES
Cost of oil and gas sales 133 163
Pipeline Operating Costs -- 1
Exploration costs -- 42
Provision for asset impairment -- 294
Depreciation, depletion and amortization 123 101
General and administrative 395 392
----------- -----------
Total Expenses 651 993
----------- -----------
Loss before income taxes (137) (551)
PROVISION FOR INCOME TAXES -- --
----------- -----------
Net loss $ (137) $ (551)
=========== ===========
Net loss per common share and common
share equivalents $ (.07) $ (.27)
=========== ===========
WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING 2,091,798 2,058,278
=========== ===========
</TABLE>
SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Page 5 of 12 pages
<PAGE> 6
XPLOR CORPORATION AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
Nine Months Nine Months
Ended Ended
September 30, 1996 September 30, 1995
------------------ ------------------
(In thousands)
<S> <C> <C>
OPERATING ACTIVITIES
Net loss $ (137) $ (551)
Adjustments to reconcile net loss to net cash
used in operating activities:
Provision for asset impairment -- 294
Depreciation, depletion and amortization 123 101
Gain on sale of oil and gas properties -- (12)
Change in operating assets and liabilities:
Decrease in accounts receivable and other 115 71
Increase (decrease) in accounts payable (84) 144
Decrease in accrued liabilities (160) (43)
------- -------
Net cash provided by (used in)
operating activities (143) 4
------- -------
INVESTING ACTIVITIES
Net proceeds from the sale of property -- 24
Additions to oil and gas equipment and interests -- (12)
Capitalized acquisition costs -- (94)
Reduction to lease inventory -- 3
Proceeds from disposition of other assets 39 4
------- -------
Net cash provided by (used in)
investing activities 39 (75)
------- -------
FINANCING ACTIVITIES -- --
------- -------
DECREASE IN CASH & CASH EQUIVALENTS (104) (330)
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 2,864 768
------- -------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 2,760 $ 438
======= =======
</TABLE>
SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Page 6 of 12 pages
<PAGE> 7
XPLOR CORPORATION AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
1. Basis of Preparation of Financial Statements
The consolidated balance sheet as of September 30, 1996, and December 31,
1995, and the consolidated statements of operations and cash flows for the
three months and nine months ended September 30, 1996 and 1995, have been
prepared by the Company without audit. In the opinion of management, all
adjustments (which include only normal recurring adjustments) considered
necessary for a fair presentation have been included. The results of
operations for the nine-month periods ended September 30, 1996 and 1995, are
not necessarily indicative of the operating results for a full year.
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 financial statements be read in conjunction with the financial
statements and notes thereto in the Company's Annual Report on Form 10-K for
the year ended December 31, 1995.
2. Accounting for Income Taxes
The Company accounts for income taxes in accordance with Statement of
Financial Accounting Standards No. 109, "Accounting for Income Taxes" (SFAS
109). Under SFAS 109, a deferred tax liability or asset is created when
temporary differences arise between the financial reporting basis and tax
basis of the Company's liabilities and assets, as measured by the statutory
tax rates in effect when such differences are expected to reverse. In
addition, deferred tax assets may result where the Company reasonably expects
to utilize existing tax net operating losses or tax credit carryforwards. A
valuation allowance must be established against any portion of a deferred tax
asset for which the Company believes it is more likely than not the related
tax benefit will not be realized. Components of the Company's deferred tax
assets and (liabilities) at December 31, 1995, were as follows:
Loss carryforwards $ 339,000
Depreciation, depletion and amortization (656,000)
----------
Net deferred tax liability $ (317,000)
==========
The Company has net operating loss carryforwards available at December 31,
1995, aggregating $884,000 which expire in years 1998 through 2009.
Page 7 of 12 pages
<PAGE> 8
Item 2. XPLOR CORPORATION AND SUBSIDIARY
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
(a) Liquidity
At September 30, 1996, the Company had working capital of $2,447,000
compared with $2,452,000 at December 31, 1995, a decrease of $5,000. This
decrease is primarily attributable to the net decreases in accounts
receivable, payable and accrued liabilities. The ratio of current assets to
current liabilities at September 30, 1996, was 6.09 to 1 as compared with
4.53 to 1 at December 31, 1995.
Net cash used in operating activities during the nine months ending
September 30, 1996, was $143,000, whereas $4,000 was provided by operating
activities for the same nine month period in 1995. During the first three
quarters of 1996, the operating loss of $137,000 was reduced by $123,000 in
depreciation, depletion and amortization. The receipt of certain previously
accrued settlement funds in the first half of 1996 primarily accounted for
the $115,000 decrease in accounts receivable. Decreases of $330,000 in
accounts payable and accrued liabilities were due to payments for properties
acquired in 1995 and lower accruals for legal, accounting, and franchise
taxes in 1996.
For the nine months ended September 30, 1996, $35,000 was provided by
investing activities. These funds were received from a collateral bond that
was retired and no longer required by the State of Montana.
No funds were used for or provided by financing activities during the
first three quarters of 1996.
(b) Capital Resources
As of September 30, 1996, the Company did not have any material
commitments for capital expenditures. However, the Company plans to use a
portion of its funds for the acquisition of producing properties and/or
existing energy-related companies when appropriate opportunities on suitable
terms can be identified. Several producing property and company acquisition
possibilities are currently under consideration by management.
(c) Results of Operations
For the quarter ended September 30, 1996, the loss of $25,000
represented a $255,000 reduction of the $280,000 loss for the quarter ended
September 30, 1995. The decrease was primarily
Page 8 of 12 pages
<PAGE> 9
attributable to the net effect of a $239,000 reduction in the provision for
asset impairment and a $40,000 increase in interest income, partially offset
by a $4,000 increase in the cost of oil and gas sales and a $26,000 increase
in general and administrative expenses.
During the third quarter of 1996 oil and gas revenues of $130,000 were
comparable with last year's sales of $102,000. Though production from the
Company's owned and operated wells in West Virginia declined, the average
price increased by $.28 per MCF, resulting in an increase in gross revenues
for these wells. Revenue from the Company's non-operated wells was
comparable with last year's sales. Management believes that average wellhead
prices for oil and natural gas in 1996 will be above the levels of 1995. For
the quarter ended September 30, 1996, the cost of oil and gas sales of 33%
relative to sales decreased by 5% as compared with the same period last year
due to the special well repairs for non-operated wells incurred last year.
The depletion rate of 36%, as a percentage of sales, was comparable with
last year's rate of 34%.
General and administrative expenses increased by $26,000, or 23%, as
compared with last year, primarily due to one-time relocation expenses
associated with the relocation of the corporate office to Houston, Texas and
increases in outside consulting expenses resulting from acquisition prospect
evaluations.
For the first three quarters of 1996, the loss of $137,000 represented
a $414,000 reduction of the $551,000 loss for the first nine months of 1995.
The decrease was primarily attributable to the net effect of a $239,000
reduction in the provision for asset impairments, a $77,000 increase in
interest income, a $30,000 decrease in the cost of oil and gas sales and a
$3,000 increase in general and administrative expenses.
Oil and gas revenues of $336,000 were comparable with last year's sales
of $296,000. Though production from the Company's owned and operated wells
in West Virginia declined, the average price increased by $.29 per MCF,
resulting in an increase in gross revenues for these wells. Revenue from the
Company's non-operated wells was comparable with last year's sales.
For the first three quarters of 1996, the cost of oil and gas sales of
40% relative to sales decreased by 15% as compared with the same period last
year due to the special well repairs for non- operated wells incurred last
year and reductions in lease operating expenses during 1996 on operated
wells. The depletion rate of 37%, as a percentage of sales, was comparable
with last year's rate of 34%.
During the nine months ending September 30, 1995, the Company
recognized a $211,000 expense for the abandonment of a non-operated well in
Texas and a $25,000 write-down for a well the Company operates in Colorado.
The Company also booked a valuation
Page 9 of 12 pages
<PAGE> 10
adjustment of $55,000 for its pipeline in Texas because one of the suppliers
to the Company's pipeline subsidiary shut in wells in the area. Based on an
independent engineering report, the remaining value of the pipeline system
can be recovered from future revenues.
General and administrative expenses decreased by $3,000, or less than
1%, as compared with the first three quarters of last year.
Page 10 of 12 pages
<PAGE> 11
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
The Company is not a party to any material litigation.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits - none.
(b) During the quarter ended September 30, 1996, the Company did not file
any reports on Form 8-K.
Page 11 of 12 pages
<PAGE> 12
S I G N A T U R E S
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 under-
signed thereunto duly authorized.
XPLOR CORPORATION
Dated: November 13, 1996 BY: /s/ James E. Gayle
---------------------------
James E. Gayle
(Chief Executive Officer)
Dated: November 13, 1996 BY: /s/ James E. Gayle
------------------------------
James E. Gayle
(Principal Accounting Officer)
Page 12 of 12 pages
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM CONSOLIDATED
BALANCE SHEET AND CONSOLIDATED STATEMENT OF OPERATIONS FOR THE NINE MONTHS ENDED
SEPTEMBER 30, 1996 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> SEP-30-1996
<CASH> 2,760
<SECURITIES> 0
<RECEIVABLES> 167
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 2,927
<PP&E> 18,843
<DEPRECIATION> 16,521
<TOTAL-ASSETS> 5,486
<CURRENT-LIABILITIES> 480
<BONDS> 0
0
0
<COMMON> 26
<OTHER-SE> 4,693
<TOTAL-LIABILITY-AND-EQUITY> 5,486
<SALES> 336
<TOTAL-REVENUES> 514
<CGS> 133
<TOTAL-COSTS> 133
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (137)
<INCOME-TAX> 0
<INCOME-CONTINUING> (137)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (137)
<EPS-PRIMARY> (.07)
<EPS-DILUTED> 0
</TABLE>
