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, 1998 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 7, 1998.
4,889,369 shares of common stock, par value $0.10
MAYNARD OIL COMPANY AND SUBSIDIARY
Index to Consolidated Financial Statements and Schedules
Page
Part I. Financial Information
Consolidated Balance Sheets
March 31, 1998 and December 31,1997
Consolidated Statements of Operations
Three Months ended March 31, 1998 and 1997
Consolidated Statements of Shareholders' Equity
Three Months ended March 31, 1998
Consolidated Statements of Cash Flows
Three Months ended March 31, 1998 and 1997
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 SUBSIDIARY
Consolidated Balance Sheets
<CAPTION>
March 31,
December 31,
1998 1997
(Unaudited) (Audited)
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 24,870,110 $ 24,584,288
Accounts receivable, trade 2,864,380 3,267,255
Other current assets 595,673 546,238
Total current assets 28,330,163 28,397,781
Property and equipment, at cost:
Oil and gas properties, successful
efforts method 104,445,132 104,031,352
Other property and equipment 534,829 548,668
104,979,961 104,580,020
Less accumulated depreciation and
amortization (56,462,171) (54,692,225)
Net property and equipment 48,517,790 49,887,795
$ 76,847,953 $ 78,285,576
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Current installments of long-term debt $ 5,000,000 $ 5,000,000
Accounts payable 3,601,758 4,271,662
Accrued expenses 1,652,312 1,402,021
Income taxes payable 220,798 220,798
Total current liabilities 10,474,868 10,894,481
Deferred income taxes 2,657,000 2,632,000
Long-term debt 10,000,000 11,250,000
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;
4,889,369 and 4,889,450 shares
issued and outstanding 488,937 488,945
Additional paid-in capital 18,831,138 18,831,138
Retained earnings 34,396,010 34,189,012
Total shareholders' equity 53,716,085 53,509,095
Contingencies and commitments $ 76,847,953 $ 78,285,576
See accompanying Notes to Consolidated Financial Statements.
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MAYNARD OIL COMPANY AND SUBSIDIARY
Consolidated Statement of Operations
<CAPTION>
Three Months ended March 31,
1998 1997
<S> <C> <C>
Revenues:
Oil and gas sales and royalties $4,689,874 $7,769,413
Interest and other 337,966 272,431
Gain on disposition of assets 2,420 2,032
5,030,260 8,043,876
Costs and expenses:
Operating expenses 2,316,884 2,452,077
Exploration, dry holes
and abandonments 15,951 74,248
General and administrative 319,913 317,198
Depreciation and amortization 1,791,958 1,700,000
Interest and other 272,719 351,526
4,717,425 4,895,049
Income before income taxes 312,835 3,148,827
Income tax expense 105,000 1,035,000
Net income $ 207,835 $2,113,827
Weighted average number of common
shares outstanding 4,889,442 4,889,450
Net income per common share $ .04 $ .43
</TABLE>
<TABLE>
MAYNARD OIL COMPANY AND SUBSIDIARY
Consolidated Statements of Shareholders' Equity
Three Months Ended March 31, 1998
(Unaudited)
<CAPTION>
Additional
Common Stock Paid-in
Capital Retained
Shares Amount Amount Earnings Total
<S> <C> <C> <C> <C> <C>
Balance at December 31,1997 4,889,450 $488,945 $18,831,138 $34,189,012 $53,509,095
Net income -- -- -- 207,835 207,835
Purchase and retirement
of common stock (81) (8) -- (837) (845)
Balance at March 31, 1998 4,889,369 $488,937 $18,831,138 $34,396,010 $53,716,085
See accompanying Notes to Consolidated Financial Statements.
</TABLE>
<TABLE>
MAYNARD OIL COMPANY AND SUBSIDIARY
Consolidated Statements of Cash Flows
<CAPTION>
Three Months Ended March 31,
1998 1997
<S> <C> <C>
Cash flows from operating activities:
Net income $ 207,835 $2,113,827
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization 1,791,958 1,700,000
Deferred income taxes 25,000 135,000
Exploration, dry holes and abandonments 6,300 --
Current year costs of dry holes and
abandonments (6,300) --
(Gain) on disposition of assets (2,420) (2,032)
(Increase) decrease in current assets:
Accounts receivable 402,875 802,967
Prepaid expenses and other current assets
(49,435) 52,750
Increase (decrease) in current liabilities:
Accounts payable (669,904) (391,200)
Accrued expenses 250,291 215,477
Income taxes payable -- (2,491,241)
Net cash provided by operating
activities 1,956,200 2,135,548
Cash flows from investing activities:
Proceeds from disposition of assets 11,962 2,032
Additions to property and equipment (431,495) (722,561)
Net cash used by investing
activities (419,533) (720,529)
Cash flows from financing activities:
Principal payments on long-term debt (1,250,000) (1,250,000)
Purchase of common stock (845) --
Net cash used by financing
activities (1,250,845) (1,250,000)
Net increase in cash and cash equivalents 285,822 165,019
Cash and cash equivalents at beginning of year 24,584,288 21,817,447
Cash and cash equivalents at end of period $24,870,110 $21,982,466
See Accompanying Notes to Consolidated Financial Statements.
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MAYNARD OIL COMPANY AND SUBSIDIARY
Notes to Consolidated Financial Statements
March 31, 1998
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, 1998 and December 31,1997, the results of operations for
the three months ended March 31, 1998 and 1997 and changes in cash and cash
equivalents for the three months ended March 31, 1998 and 1997.
The accounting policies followed by the Company are set forth in Note 1 to
the Company's financial statements in the 1997 Annual Report to
Shareholders.
2. Net income for the three months ended March 31, 1998 is not necessarily
indicative of the results of the operations of Maynard Oil Company and
Subsidiary for the year ending December 31, 1998, 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 4,889,442 and 4,889,450
shares at March 31, 1998 and 1997, respectively.
4. The provision for income taxes consists of the following (thousands of
dollars):
Three Months Ended
March 31
1998 1997
Federal:
Current $ 80 $ 900
Deferred 25 135
$ 105 $1,035
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
Quarter Ended March 31, 1998 Compared to Quarter Ended March 31, 1997
The Company reported net income of $207,835, or four cents per share, on
revenues of $5,030,260 for the quarter ended March 31, 1998 compared with net
income of $2,113,827, or forty-three cents per share, on revenues of $8,043,876
for the same quarter a year ago. Results for the first quarter of 1998 were
adversely affected by product pricing, which accounts for all of the reduction
in net income between the two periods. The price of oil and gas dropped almost
37% and 35% respectively, between the first quarters of 1997 and 1998. Since
the Company's oil and gas prices averaged only $14.39 per barrel and $2.24 per
thousand cubic feet (mcf) during the current quarter versus $22.72 per barrel
and $3.43 per mcf during the same quarter a year ago, it is not surprising that
revenues and earnings suffered. Company management does not foresee a quick
pricing recovery. In the meantime, however, they will continue to monitor all
controllable budgeted categories with the goal of maintaining daily operations
within the Company's cash flow parameters.
Liquidity and Capital Resources
The Company ended the first quarter of 1998 with working capital of
approximately $17,855,000 and a current ratio of 2.7 to 1, compared to working
capital of approximately $14,918,000 and a current ratio of 2.3 to 1 a year
ago. The increase in working capital between the current quarter and the same
period a year ago, $2,937,000, is attributable to cash generated from normal
operating activities. At March 31, 1998 the Company's total debt was
$15,000,000. The Company believes that it has sufficient cash on hand, 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, 1998
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<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> MAR-31-1998
<CASH> 24,870
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<RECEIVABLES> 2,934
<ALLOWANCES> 70
<INVENTORY> 313
<CURRENT-ASSETS> 28,330
<PP&E> 104,980
<DEPRECIATION> 56,462
<TOTAL-ASSETS> 76,848
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<TOTAL-LIABILITY-AND-EQUITY> 76,848
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<TOTAL-COSTS> 4,717
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