SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
-----------------
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D) of the
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): December 13, 1996
ALAMCO, INC.
(Exact Name of Registrant as Specified in Charter)
Delaware 1-8490 55-0615701
(State or Other Jurisdiction (Commission (IRS Employer
of Incorporation) File Number) Identification
No.)
200 West Main Street, Clarksburg, West Virginia 26301
(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code: (304) 623-6671
Item 5. Other Events
Alamco, Inc. announced a restatement of its results of operations for the
nine months ended September 30, 1996 and the four years ended December 31, 1992,
1993, 1994 and 1995 to reflect non-cash adjustments in the Company's accounting
for nonqualified stock options as a result of the employee tax reimbursement
feature included in the option arrangements. Under accounting for what are now
treated as variable stock options, periodic differences between the market
price of the Company's Common Stock and the exercise prices of outstanding
nonqualified stock options are recognized as non-cash compensation expense.
Accordingly, the restatement does not have any effect on the Company's cash flow
and results in a slight increase in stockholders' equity from the net deferred
tax benefits associated with this change.
Under applicable accounting standards, as set forth in EITF 87-6B,
nonqualified stock option plans or agreements containing a tax reimbursement
feature, among others, must reflect in net income on a periodic basis differ-
ences between the market price of the Company's Common Stock and the exercise
prices of outstanding options. Changes in market price of the Company's Common
Stock may result in charges or credits to net income depending on whether the
market price has increased or decreased since the preceding fiscal quarter.
The Company adopted nonstatutory stock option plans in 1982 and 1992 and
has granted nonqualified options to senior management and other key employees
pursuant to such plans and separate stock option agreements at exercise prices
equal to the fair market value of the Company's Common Stock at the respective
dates of grant. A total of 299,474 nonqualified options were outstanding at
September 30, 1996. No nonqualified stock options have been granted since
September 30, 1996. All outstanding nonqualified options contain a tax reim-
bursement feature, which requires the Company to reimburse an individual option
holder for income taxes arising upon exercise of stock options up to the amount
of the Company's tax benefit. The Company's incentive stock options and the
outside directors stock option plans are not subject to such adjustment.
Since 1982 the Company has treated stock options granted under its
incentive stock option plans and its nonqualified stock option plans and
agreements, all of which contain an employee tax reimbursement feature, in a
consistent manner. If the nonqualified plans and agreements had not contained
this tax reimbursement feature, the Company's historic accounting for stock
options would have continued and no accounting adjustment would now be
required. However, as a result of recent exercises of nonqualified stock
options, the Company reviewed its accounting for stock options and concluded
that its past accounting treatment was not in conformity with currently
applicable accounting requirements. According to John L. Schwager, President of
Alamco, Inc., the Company does not intend to grant new options containing a tax
reimbursement feature. He stated that the Board is considering whether to
eliminate the tax reimbursement feature from existing plans and agreements,
subject to the consent of holders of outstanding stock options.
During the eight year period 1987 to 1994, the aggregate differences
between market prices and option exercise prices were not substantial, and the
aggregate non-cash compensation expense charged or credited to income was only
$387,000, net. However, since the beginning of 1995 the Company's stock price
has risen significantly from approximately $6.00 per share to $11.75 at the end
of the third quarter 1996. Accordingly, the net aggregate amount charged to
income was $416,000 for 1995 and an additional $917,000 in the first nine months
of 1996. Net income and earnings per share for the nine months ended September
30, 1996 were $1,563,000 ($0.32 per share) as adjusted, compared to $2,481,000
($0.51 per share) as originally reported. Net income and earnings per share for
the year ended December 31, 1995 were $1,279,000 ($0.27 per share) as adjusted,
compared to $1,695,000 ($0.36 per share) as originally reported. The accounting
change is not expected to have an adverse impact on fourth quarter 1996 unless
the market price of the Company's Common Stock increases significantly over the
level reached at the end of the third quarter 1996.
A summary of the effects of the restatement of the Company's results of
operations for the nine months ended September 30, 1996 and 1995, and the four
years ended December 31, 1995, 1994, 1993 and 1992, respectively, is set forth
below:
<TABLE>
<S><C>
Alamco, Inc.
Summary of Effects of Restatement of Results of Operations
for Changes in Accounting for Stock Options
(In thousands, except share data)
Nine Months Ended
09/30/96 09/30/95
As Reported Restated As Reported Restated
Revenues:
Gas and oil sales $15,137 $15,137 $ 8,727 $ 8,727
Agreements with gas purchasers 0 0 0 0
Well tending income 641 641 811 811
Other revenue 728 728 601 601
Total revenues 16,506 16,506 10,139 10,139
Expenses:
Operating 6,087 6,087 4,862 4,862
Exploration 110 110 0 0
General and administrative 2,709 2,394 2,312 2,210
Option plan compensation 0 1,818 0 726
Depreciation, depletion and amortization 3,412 3,412 3,110 3,110
Interest 674 674 816 816
Total expenses 12,992 14,495 11,100 11,724
Income from operations 3,514 2,011 (961) (1,585)
Other nonoperating income 200 200 145 145
Income before income tax 3,714 2,211 (816) (1,440)
Provision for income taxes 1,233 648 (287) (531)
Extraordinary income, net of tax 0 0 0 0
Net income $ 2,481 $ 1,563 ($529) ($909)
Net income per share $ 0.51 $ 0.32 ($0.11) ($0.19)
Weighted average number of shares outstanding 4,894,037 4,894,037 4,673,868 4,673,868
</TABLE>
<TABLE>
<S><C>
Alamco, Inc.
Summary of Effects of Restatement of Results of Operations
for Changes in Accounting for Stock Options
(In thousands, except share data)
Years Ended
1995 1994 1993 1992
As As As As
Reported Restated Reported Restated Reported Restated Reported Restated
Revenues:
Gas and oil sales $12,636 $12,636 $11,993 $11,993 $ 9,504 $ 9,504 $ 8,855 $ 8,855
Agreements with gas purchasers 4,164 4,164 0 0 0 0 0 0
Well tending income 943 943 1,232 1,232 2,172 2,172 2,308 2,308
Other revenue 796 796 446 446 224 224 187 187
Total revenues 18,539 18,539 13,671 13,671 11,900 11,900 11,350 11,350
Expenses:
Operating 6,713 6,713 5,461 5,461 4,262 4,262 4,041 4,041
Exploration 641 641 0 0 0 0 0 0
General and administrative 3,146 3,044 2,908 2,902 2,373 2,341 2,376 2,374
Option plan compensation 0 784 0 (41) 0 360 0 346
Depreciation, depletion and 4,271 4,271 3,523 3,523 2,806 2,806 3,007 3,007
amortization
Interest 1,188 1,188 154 154 385 385 745 745
Total expenses 15,959 16,641 12,046 11,999 9,826 10,154 10,169 10,513
Income from operations 2,580 1,898 1,625 1,672 2,074 1,746 1,181 837
Other nonoperating income 192 192 155 155 321 321 200 200
Income before income tax 2,772 2,090 1,780 1,827 2,395 2,067 1,381 1,037
Provision for income taxes 1,077 811 134 152 843 715 442 308
Extraordinary income, net of tax 0 0 0 0 0 0 1,058 1,058
Net income $1,695 $1,279 $1,646 $1,675 $1,552 $1,352 $1,997 $1,787
Net income per share $0.36 $0.27 $0.35 $0.36 $0.45 $0.39 $0.78 $0.70
Weighted average number of shares
outstanding 4,679,703 4,679,703 4,645,154 4,645,154 3,438,594 3,438,594 2,555,654 2,555,654
</TABLE>
Item 7. Exhibits
(c) Exhibits
99.1 Press Release dated December 13, 1996, issued by
Alamco, Inc.
Item 601. Exhibits
Exhibit Prior Filing or Subsequential
No. Description Page No. Herein
------- ----------------------------------- ----------------
99.1 Press Release dated
December 13, 1996,
issued by Alamco, Inc. Filed herewith
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 hereunto duly authorized.
ALAMCO, INC.
(Registrant)
By: /s/ John L. Schwager
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Date: December 19, 1996 John L. Schwager
President, Chief Executive Officer
and Principal Financial Officer
FOR IMMEDIATE RELEASE
Contact: Jane Merandi
Alamco, Inc.
200 West Main Street
Clarksburg, WV 26301
1-800-873-2526, extension 108
http://www.alamco.com
RESTATEMENT OF RESULTS TO REFLECT CHANGES
IN ACCOUNTING FOR STOCK OPTIONS
CLARKSBURG, WV, December 13, 1996 ... Alamco, Inc. announced a restatement
of its results of operations for the nine months ended September 30, 1996 and
the five years ended December 31, 1995 to reflect non-cash adjustments in the
Company's accounting for nonqualified stock options as a result of the employee
tax reimbursement feature included in the option arrangements. Under accounting
for what are now treated to be variable stock options, periodic differences
between the market price of the Company's Common Stock and the exercise prices
of outstanding nonqualified stock options are recognized as non-cash compensa-
tion expense. Accordingly, the restatement does not have any effect on the
Company's cash flow and results in a slight increase in stockholders' equity
from the net deferred tax benefits associated with this change.
John L. Schwager, President of Alamco, Inc., commented: "The Company's
business and cash flow are not affected in any way by the change in accounting
for stock options. Gas prices remain strong and production volumes have
continued to increase. The effect of the change on the Company is accounting,
not economic. The accounting for stock options is complex and subject to many
interpretations. Variations in apparently similar provisions can produce
substantially different accounting treatment of the compensatory element
inherent in all stock option arrangements."
Further, Mr. Schwager stated that since 1982 the Company has treated stock
options granted under its incentive stock option plans and its nonqualified
stock option plans and agreements, all of which contain an employee tax reim-
bursement feature, in a consistent manner. If the nonqualified plans and
agreements had not contained this tax reimbursement feature, the Company's
historic accounting for stock options would have continued and no accounting
adjustment would now be required. However, as a result of recent exercises of
nonqualified stock options, the Company reviewed its accounting for stock
options and concluded that its past accounting treatment was not in conformity
with currently applicable accounting requirements. The Company has not granted
any nonqualified stock options since September 30, 1996 and does not intend to
grant new options containing a tax reimbursement feature. He stated that the
Board is considering whether to eliminate the tax reimbursement feature from
existing plans and agreements, subject to the consent of holders of outstanding
stock options.
During the eight year period 1987 to 1994, the aggregate differences
between market prices and option exercise prices were not substantial, and the
aggregate non-cash compensation expense charged or credited to income was only
$387,000, net. However, since the beginning of 1995 the Company's stock price
has risen significantly from approximately $6.00 per share to $11.75 at the end
of the third quarter 1996. Accordingly, the net aggregate amount charged to
income was $416,000 for 1995 and an additional $917,000 in the first nine months
of 1996. Net income and earnings per share for the nine months ended September
30, 1996 were $1,563,000 ($0.32 per share) as adjusted, compared to $2,481,000
($0.51 per share) as originally reported. Net income and earnings per share for
the year ended December 31, 1995 were $1,272,000 ($0.27 per share) as adjusted,
compared to $1,695,000 ($0.36 per share) as originally reported. The accounting
change is not expected to have an adverse impact on fourth quarter 1996 unless
the market price of the Company's Common Stock increases significantly over the
level reached at the end of the third quarter 1996.
Alamco, headquartered in Clarksburg, West Virginia, is an independent
producer of gas and oil in the Appalachian Basin with operations concentrated in
West Virginia, Tennessee and Kentucky. The Company's stock is traded on the
American Stock Exchange under the symbol AXO. For additional information about
the Company, visit the Company's Web site at http://www.alamco.com.
