SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For Quarter Ending March 31, 1997 Commission File #0-5704
MAYNARD OIL COMPANY
(Exact name of registrant as specified in its charter)
Delaware 75-1362284
(State or other jurisdic- (IRS Employer
tion of incorporation) Identification No.)
8080 N. Central Expressway, Suite 660, Dallas, Texas 75206
Registrant's telephone number, including area code: (214) 891-8880
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.
Yes X No
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of May 8, 1997.
4,889,450 shares of common stock, par value $0.10
MAYNARD OIL COMPANY AND SUBSIDIARIES
Index to Consolidated Financial Statements and Schedules
Page
Part I. Financial Information
Consolidated Balance Sheets
March 31, 1997 and December 31, 1996
Consolidated Statements of Operations
Three Months ended March 31, 1997 and 1996
Consolidated Statements of Shareholders' Equity
Three Months ended March 31, 1997
Consolidated Statements of Cash Flows
Three Months ended March 31, 1997 and 1996
Notes to Consolidated Financial Statements
Management's Discussion and Analysis of Financial
Condition and Results of Operations
Signatures
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MAYNARD OIL COMPANY AND SUBSIDIARIES
Consolidated Balance Sheets
<CAPTION>
March 31, December 31,
1997 1996
(Unaudited) (Audited)
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 21,982,466 $ 21,817,447
Accounts receivable, trade 3,471,472 4,274,439
Other current assets 532,271 585,021
Total current assets 25,986,209 26,676,907
Property and equipment, at cost:
Oil and gas properties, successful
efforts method 103,945,472 103,223,604
Other property and equipment 527,110 540,736
104,472,582 103,764,340
Less accumulated depreciation and
amortization (50,869,627) (49,183,946)
Net property and equipment 53,602,955 54,580,394
$ 79,589,164 $ 81,257,301
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Current installments of long-term debt $ 5,000,000 $ 5,000,000
Accounts payable 3,201,204 3,592,404
Accrued expenses 1,926,158 1,710,681
Income taxes payable 940,235 3,431,476
Total current liabilities 11,067,597 13,734,561
Deferred income taxes 2,354,000 2,219,000
Long-term debt 15,000,000 16,250,000
Shareholders' equity:
Preferred stock of $.50 par value.
Authorized 1,000,000 shares; none
issued -- --
Common stock of $.10 par value.
Authorized 20,000,000 shares;
4,889,450 shares issued
and outstanding 488,945 488,945
Additional paid-in capital 18,831,138 18,831,138
Retained earnings 31,847,484 29,733,657
Total shareholders' equity 51,167,567 49,053,740
Contingencies and commitments $ 79,589,164 $ 81,257,301
See accompanying Notes to Consolidated Financial Statements.
</TABLE>
<TABLE>
MAYNARD OIL COMPANY AND SUBSIDIARIES
Consolidated Statement of Operations
<CAPTION>
Three Months ended March 31,
1997 1996
<S> <C> <C>
Revenues:
Oil and gas sales $7,769,413 $7,266,765
Interest and other 272,431 64,316
Gain on sale of assets 2,032 661
8,043,876 7,331,742
Costs and expenses:
Operating expenses 2,452,077 2,471,241
Exploration, dry holes
and abandonments 74,248 100,748
General and administrative 317,198 256,487
Depreciation and amortization 1,700,000 2,425,774
Interest 351,526 454,038
4,895,049 5,708,288
Income before income taxes 3,148,827 1,623,454
Income tax expense 1,035,000 480,000
Net income $2,113,827 $1,143,454
Weighted average number of common shares
outstanding 4,889,450 4,889,951
Net income per common share $ .43 $ .23
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<TABLE>
MAYNARD OIL COMPANY AND SUBSIDIARIES
Consolidated Statements of Shareholders' Equity
Three Months Ended March 31, 1997
(Unaudited)
<CAPTION>
Additional
Common Stock Paid-in
Capital Retained
Shares Amount Amount Earnings Total
<S> <C> <C> <C> <C> <C>
Balance at December 31, 1996 4,889,450 $488,945 $18,831,138 $29,733,657 $49,053,740
Net income -- -- -- 2,113,827 2,113,827
Balance at March 31, 1997 4,889,450 $488,945 $18,831,138 $31,847,484 $51,167,567
See accompanying Notes to Consolidated Financial Statements.
</TABLE>
<TABLE>
MAYNARD OIL COMPANY AND SUBSIDIARIES
Consolidated Statements of Cash Flows
<CAPTION>
Three Months Ended March 31,
1997 1996
<S> <C> <C>
Cash flows from operating activities:
Net income $2,113,827 $1,143,454
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization 1,700,000 2,425,774
Deferred income taxes 135,000 80,000
Exploration, dry holes and abandonments -- 95,627
Current year costs of dry holes and
abandonments -- (5,918)
(Gain) on sale of assets (2,032) (661)
(Increase) decrease in current assets:
Accounts receivable 802,967 (856,088)
Prepaid expenses and other current assets 52,750 25,815
Increase (decrease) in current liabilities:
Accounts payable (391,200) (27,486)
Accrued expenses 215,477 232,939
Income taxes payable (2,491,241) 42,000
Net cash provided by operating
activities 2,135,548 3,155,456
Cash flows from investing activities:
Proceeds from disposition of assets 2,032 10,031
Additions to property and equipment (722,561) (507,613)
Net cash used by investing
activities (720,529) (497,582)
Cash flows from financing activities:
Principal payments on long-term debt (1,250,000) (1,062,500)
Purchase of common stock -- (763)
Net cash used by financing
activities (1,250,000) (1,063,263)
Net increase in cash and cash equivalents 165,019 1,594,611
Cash and cash equivalents at beginning of year 21,817,447 6,138,903
Cash and cash equivalents at end of period $21,982,466 $ 7,733,514
See Accompanying Notes to Consolidated Financial Statements.
</TABLE>
MAYNARD OIL COMPANY AND SUBSIDIARIES
Notes to Consolidated Financial Statements
March 31, 1997
1. In the opinion of management, the accompanying unaudited consolidated
financial statements contain all adjustments, consisting of all
recurring adjustments, necessary to present fairly the Company's
financial position as of March 31, 1997 and December 31, 1996, the
results of operations for the three months ended March 31, 1997 and 1996
and changes in cash and cash equivalents for the three months ended
March 31, 1997 and 1996.
The accounting policies followed by the Company are set forth in
Note 1 to the Company's financial statements in the 1996 Annual
Report to Shareholders.
2. Net income for the three months ended March 31, 1997 is not necessarily
indicative of the results of the operations of Maynard Oil Company and
Subsidiaries for the year ending December 31, 1997, and is subject to
audit adjustments at year-end.
3. Net income per common share is based on the weighted average number of
shares outstanding in each period, which was 4,889,450 and 4,889,951
shares at March 31, 1997 and 1996, respectively.
4. The provision for income taxes consists of the following (thousands of
dollars):
Three Months Ended
March 31
------------------
1997 1996
Federal:
Current $ 900 $ 400
Deferred 135 80
------ -----
$1,035 $ 480
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
Quarter Ended March 31, 1997 Compared to Quarter Ended March 31, 1996
The Company reported net income of $2,113,827, or forty-three cents per
share, on revenues of $8,043,876 for the quarter ended March 31, 1997
compared with net income of $1,143,454, or twenty-three cents per share, on
revenues of $7,331,742 for the same quarter a year ago. Results for the
first quarter of 1997 were favorably impacted by product pricing which more
than offset volumes lost when the Company sold certain nonstrategic
properties in 1996. Oil volumes decreased 43,678 barrels between the first
quarters of 1996 and 1997, and gas volumes declined 315,667 mcf (thousand
cubic feet) over the same period. On the other hand, the price of oil
averaged $22.72 per barrel during the current quarter compared to an average
of $18.51 over the same period in 1996; gas prices also improved over the
periods presented rising from an average of $1.85 a year ago to $3.43 during
the current quarter. As mentioned in the Company s 1996 Annual Report to
Shareholders, the Company does not believe that these higher product prices
can be sustained over an extended period of time.
Interest income more than quadrupled from the first quarter of 1996 as
the Company allowed its cash balance to grow in anticipation of an
acquisition of producing properties.
First quarter 1997 results also improved because costs and expenses
netted less than the amounts incurred in the 1996 quarter. In the category
titled Exploration, dry holes and abandonments , the dollar amount expended
declined 26%. The Company drilled no exploratory dry holes during the first
quarter of 1997, but did spend $74,248 on seismic opportunities.
General and administrative expenses rose 24% between the two quarters
presented, primarily due to last year s property sales. Overhead charges
billed to working interest owners are classified as a reduction of general
and administrative expenses. Certain properties which were sold had overhead
reimbursement charges attached to them; after the effective date of the sale,
the Company can no longer charge out these amounts.
Depreciation and amortization expense declined 30% between the first
quarter of 1996 and the first quarter of 1997 due to lower production
volumes.
Interest expense decreased 23% between the prior year s quarter and the
current quarter because of scheduled debt payments.
Liquidity and Capital Resources
The Company ended the first quarter of 1997 with working capital of
approximately $14,918,000 and a current ratio of 2.3 to 1, compared to
working capital of approximately $1,620,000 and a current ratio of 1.2 to 1 a
year ago. The increase in working capital between the current quarter and a
year ago, $13,298,000, is related to the sale of non-strategic properties in
1996 for cash of approximately $8,800,000 and a buildup in excess cash as it
is generated from normal operating activities. At March 31, 1997 the
Company's total debt was $20,000,000. The Company believes that it has
sufficient cash being generated from operating activities, or additional
borrowing capacity, to fund its planned development, exploratory and
acquisition activities.
PART II
ITEM 6: EXHIBITS AND REPORTS ON FORM 8-K
(a) Financial Data Schedule.
(b) No reports on Form 8-K were filed during the quarter.
SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
MAYNARD OIL COMPANY
By: /s/ Glenn R. Moore
---------------------------
Glenn R. Moore
President
By: /s/ Kenneth W. Hatcher
---------------------------
Kenneth W. Hatcher
Vice President of Finance
Dated: May 8, 1997
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<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> MAR-31-1997
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<PP&E> 104,473
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<SALES> 7,769
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<CGS> 2,452
<TOTAL-COSTS> 4,895
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<INCOME-PRETAX> 3,149
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