<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-Q
X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
- --- SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 1995
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 1-8715
CRYSTAL OIL COMPANY
--------------------------------------------------------
(Exact name of registrant as specified in its charter)
LOUISIANA 72-0163810
------------------------------- -------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
229 MILAM STREET, SHREVEPORT, LOUISIANA 71101
---------------------------------------- ------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (318) 222-7791
----------------------
NONE
--------------------------------------------------------------------------
(Former name, former address and former fiscal year,
if changed since last report)
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
--- ---
Common Stock outstanding on November 7, 1995 2,654,042
--------------------------
<PAGE>
CRYSTAL OIL COMPANY
INDEX
<TABLE>
<CAPTION>
Page No.
--------
<S> <C>
Part I
Item 1. Financial Statements
Consolidated Condensed Balance Sheets -
September 30, 1995 (Unaudited) and December 31, 1994 3
Consolidated Condensed Statements of Operations -
Three and Nine Months Ended
September 30, 1995 and 1994 (Unaudited) 4
Consolidated Condensed Statements of Cash Flows -
Nine Months Ended
September 30, 1995 and 1994 (Unaudited) 5
Notes to Consolidated Condensed Financial Statements
(Unaudited) 7
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 12
Part II
Item 6. Exhibits and Reports on Form 8-K 17
Signatures 20
</TABLE>
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<PAGE>
CRYSTAL OIL COMPANY
CONSOLIDATED CONDENSED BALANCE SHEETS
($ in Thousands)
<TABLE>
<CAPTION>
September 30 December 31
ASSETS 1995 1994
------------ -----------
(Unaudited) (1)
<S> <C> <C>
CURRENT ASSETS
Cash and cash equivalents $ 12,341 $ 75,541
Marketable securities 55,366 -
Accounts receivable - net 564 5,278
Prepaid expenses and other current assets 512 376
---------- ----------
TOTAL CURRENT ASSETS 68,783 81,195
PROPERTY, PLANT AND EQUIPMENT - net 80,821 3,982
OTHER ASSETS
Restricted funds 1,845 6,563
Others 530 200
---------- ----------
2,375 6,763
---------- ----------
TOTAL ASSETS $ 151,979 $ 91,940
========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Note payable to bank $ 60,000 $ -
Current portion of long-term obligations 48 60
Accounts payable 2,049 4,612
Accrued expenses 597 800
---------- ----------
TOTAL CURRENT LIABILITIES 62,694 5,472
LONG-TERM OBLIGATIONS 146 181
---------- ----------
TOTAL LIABILITIES 62,840 5,653
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY
Senior preferred stock 148 148
Common stock 26 26
Additional paid-in capital 75,918 74,045
Retained earnings - Since January 1, 1987 13,047 12,068
---------- ----------
TOTAL STOCKHOLDERS' EQUITY 89,139 86,287
---------- ----------
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $ 151,979 $ 91,940
========== ==========
</TABLE>
(1) The balance sheet at December 31, 1994, has been taken from the audited
financial statements at that date, and condensed.
See accompanying notes to consolidated condensed financial statements.
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<PAGE>
CRYSTAL OIL COMPANY
CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
($ in Thousands Except Shares and Per Share Amounts)
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
September 30 September 30
------------------------ ------------------------
1995 1994 1995 1994
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
NET REVENUES
Crude oil and natural gas $ - $ 7,501 $ - $ 21,967
Gas storage 2,927 - 3,278 -
Investment income 1,049 183 3,723 519
Other (67) 446 405 627
----------- ----------- ----------- -----------
3,909 8,130 7,406 23,113
COSTS AND EXPENSES
Operating expense and taxes 449 3,009 720 8,688
General and administrative
expense 739 1,231 2,922 3,873
Interest and debt expense 1,062 675 1,239 2,144
Exploration cost - 185 - 2,358
Depreciation, depletion and
impairment 688 2,846 919 8,081
----------- ----------- ----------- -----------
2,938 7,946 5,800 25,144
----------- ----------- ----------- -----------
INCOME (LOSS) BEFORE PROVISION
IN LIEU OF INCOME TAXES 971 184 1,606 (2,031)
PROVISION IN LIEU OF INCOME
TAXES (BENEFIT) 381 74 627 (793)
----------- ----------- ----------- -----------
NET INCOME (LOSS) $ 590 $ 110 $ 979 $ (1,238)
=========== =========== =========== ===========
WEIGHTED AVERAGE NUMBER OF
COMMON AND COMMON EQUIVALENT
SHARES OUTSTANDING 2,709,228 2,633,126 2,703,673 2,536,948
=========== =========== =========== ===========
NET INCOME (LOSS) PER COMMON
AND COMMON EQUIVALENT SHARE $ .22 $ .04 $ .36 $ (.49)
=========== =========== =========== ===========
</TABLE>
See accompanying notes to consolidated condensed financial statements.
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<PAGE>
CRYSTAL OIL COMPANY
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
($ in Thousands)
(Unaudited)
<TABLE>
<CAPTION>
Nine Months Ended
September 30
-------------------------
1995 1994
---------- ---------
<S> <C> <C>
Cash flows from operating activities:
Net income (loss) $ 979 $ (1,238)
Adjustments to reconcile net income (loss)
to net cash provided by operating activities:
Amortization of discount on notes and
deferred financing cost - 1,419
Net accretion on investments in debt securities (1,091) -
Depreciation, depletion and impairment 919 8,081
Exploration expenses - 2,358
Provision in lieu of income taxes (benefit) 527 (793)
Gain on sale of property, plant
and equipment (860) (6)
Decrease in accounts receivable 4,569 1,031
Decrease (increase) in prepaid expense and
other current assets (6) 178
Decrease in other assets 39 161
Increase (decrease) in accounts payable
and accrued expenses (3,092) 626
---------- ---------
Net cash provided by operating activities 1,984 11,817
---------- ---------
Cash flows from investing activities:
Proceeds from sale of property, plant
and equipment 2,793 176
Capital expenditures (907) (11,159)
Acquisition of First Reserve Gas Company,
net of cash received (78,443) -
Purchases of marketable securities (102,435) -
Maturity of marketable securities 48,160 -
Reduction of restricted funds 4,718 -
Investment in Russian joint venture (352) (680)
---------- ---------
Net cash used in investing activities (126,466) (11,663)
---------- ---------
Cash flows from financing activities:
Reduction of long-term obligations (47) (4,213)
Increase in note payable to bank 60,000 -
Payment of financing costs (17) (65)
Proceeds from issuance of common stock 1,346 -
Redemption of preferred stock - (571)
---------- ---------
Net cash provided by (used in) financing
activities 61,282 (4,849)
---------- ---------
Net decrease in cash and cash equivalents (63,200) (4,695)
Cash and cash equivalents at beginning of period 75,541 18,389
---------- ---------
Cash and cash equivalents at end of period $ 12,341 $ 13,694
========== ===========
</TABLE>
See accompanying notes to consolidated condensed financial statements.
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<PAGE>
CRYSTAL OIL COMPANY
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
(Continued)
($ in Thousands)
(Unaudited)
Supplemental disclosures of cash flow information:
<TABLE>
<CAPTION>
Nine Months Ended
September 30
-----------------
1995 1994
------ ------
<S> <C> <C>
Cash paid during the period for:
Interest, net of amounts capitalized $1,087 $716
====== ======
Income taxes $ 425 $ -
====== ======
See accompanying notes to consolidated condensed financial statements.
</TABLE>
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<PAGE>
CRYSTAL OIL COMPANY
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(Unaudited)
Note 1. CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
The consolidated condensed balance sheet of Crystal Oil Company and its
subsidiaries (the "Company") as of September 30, 1995, and the consolidated
condensed statements of operations for the three and nine months and cash
flows for the nine months ended September 30, 1995 and 1994, have been
prepared by the Company without audit. In the opinion of management, all
adjustments (which include only normal recurring adjustments) necessary to
present fairly the financial position, results of operations, and cash flows
at September 30, 1995, and for all periods presented have been made.
There have been no changes in the accounting policies from those set
forth in Note A of the Notes to Consolidated Financial Statements included in
the Company's 1994 Annual Report on Form 10-K except as noted in Note 2 below.
Note 2. INVESTMENTS IN DEBT SECURITIES
Under the guidelines of Statement of Financial Accounting Standards No.
115, "Accounting for Certain Investments in Debt and Equity Securities",
management determines the appropriate classification of its investments in
marketable debt securities at the time of the purchase and reevaluates such
determination at each balance sheet date. At September 30, 1995, marketable
debt securities have been categorized as available for sale and as a result
are stated at fair value. Unrealized gains and losses are reported as an
adjustment to shareholders' equity.
At September 30, 1995, the Company's investments in debt securities were
classified in the Company's balance sheet as cash equivalents, marketable
securities and restricted funds. These investments are all highly liquid
debt instruments with a maturity of less than three months at the time of
purchase for investments classified as cash equivalents and a maturity of
less than one year but greater than three months at the time of purchase for
investments classified as marketable securities and restricted funds.
-7-
<PAGE>
The following is a summary of the estimated fair value of available for
sale securities by balance sheet classification at September 30, 1995:
<TABLE>
<CAPTION>
($ in thousands)
----------------
<S> <C>
Cash equivalents
Corporate investment grade debt securities $ 10,646
=========
Marketable securities
U.S. Treasury note $ 138
Corporate investment grade debt securities 55,228
---------
$ 55,366
=========
Restricted funds
U.S. Treasury note $ 1,845
=========
</TABLE>
The estimated fair value of each investment approximates the amortized
cost, and therefore, there are no unrealized gains or losses as of September
30, 1995.
Note 3. PROVISION IN LIEU OF INCOME TAXES
As a result of the Company's quasi-reorganization accounting treatment,
the benefits of utilizing the net operating loss carryforwards and income tax
credits accumulated prior to the Company's reorganization are credited to
additional paid-in capital and are reported as a provision in lieu of income
taxes in the statement of operations for financial reporting purposes.
Note 4. COMMITMENTS AND CONTINGENCIES
The Company currently has outstanding approximately $6.2 million in
standby letters of credit that relate to certain tax benefits transferred
pursuant to safe harbor lease transactions. The Company's obligations with
respect to these letters of credit are secured by approximately $1.8 million
in marketable securities, which have been classified as non-current assets on
the consolidated balance sheet of the Company at September 30, 1995.
The Company was recently advised by a major oil company of the existence
of a potential environmental cleanup of a mining site that was disposed of by
a subsidiary of the Company to such oil company over 15 years ago. The
mining assets of this subsidiary were owned by the Company's subsidiary for
only a few years during the 1970s and were sold by the subsidiary to such oil
company in 1980. The Company is currently investigating this matter and is
unable to predict the impact, if any, that it may have on its liquidity or
future results of operations.
In 1991, the Company was named, among others, as a potentially
responsible party for environmental cleanup and received an informational
request concerning a refinery located in Indiana, which was constructed in
1946 and was owned by a now dissolved subsidiary of the Company for a period
of approximately four years during the 1970's. The future
environmental-related costs, if any, concerning this matter are presently
indeterminable.
-8-
<PAGE>
In July 1979, a suit styled "ABG Oil Company et al vs. The Charter
Company, Charter Oak Company, and Crystal Exploration and Production
Company", was filed in the Circuit Court of the Eleventh Judicial Circuit in
and for Dade County, Florida. The Plaintiff alleges breach of contract,
breach of fiduciary duty, mismanagement and fraud in connection with the
operation of Caloosa 1974 Limited Partnership and claims compensatory damages
of $10 million, punitive damages in an undetermined amount, interest and
costs of litigation. In recent years, the suit has been generally inactive
and the Company believes that the likelihood of a recovery, if any, by
Plaintiff in a material amount is remote.
Note 5. EARNINGS PER SHARE
Earnings (loss) per common share were computed by dividing net income
(loss) by the weighted average number of shares of Common Stock and Common
Stock equivalents outstanding during the periods presented. The Senior
Preferred Stock, all classes of the Company's warrants and employee stock
options have been considered to be the equivalent of Common Stock for all
periods presented. The Non-Interest Bearing Convertible Notes due 1997 were
considered a common stock equivalent in the three and nine months ended
September 30, 1994, but were not assumed to be converted and all the Common
Stock equivalents were not assumed to be converted in the nine months ended
September 30, 1994, because the result thereof would be anti-dilutive. The
Senior Preferred Stock and all employee stock options were assumed converted
in the three and nine months ended September 30, 1995. No warrants were
assumed converted during the periods presented because the effective exercise
prices were greater than the average market price of the Common Stock.
Earnings per common share, assuming full dilution, was determined on the same
basis as primary earnings per common share for each of the three and nine
months ended September 30, 1995 and 1994.
Note 6. ASSET DISPOSITIONS
The Company recognized a net gain of approximately $477 thousand during
the first quarter of 1995 from its ownership interest in four crude oil and
natural gas drilling partnerships as a result of the sale of all of the
partnerships' crude oil and natural gas properties and related assets to
Apache Corporation. Pursuant to the partnership agreements, the disposition
transactions resulted in the liquidation of the partnerships and the Company
received proceeds in the aggregate amount of $832 thousand in April 1995. In
addition, the Company received $1.3 million in April 1995 ($800 thousand of
which related to crude oil and natural gas properties) relating to the final
post-closing adjustment procedure for its disposition transaction effected
with Apache Corporation on December 30, 1994. The Company accounted for the
anticipated effect of the final settlement in the Company's financial
statements as of December 31, 1994.
During the first half of 1995, the Company completed the sale of its
interest in an exploratory project, a producing property in South Texas,
various non-producing properties and surplus equipment and inventory for an
aggregate consideration of approximately $1.1 million. The sale of the
exploratory project and producing and non-producing properties resulted in a
net gain of approximately $383 thousand for the nine month period ended
September 30, 1995. No gain or loss was realized on the surplus equipment
and inventory sale.
-9-
<PAGE>
Other income for the nine months ended September 30, 1995, included
charges of $490 thousand incurred primarily in the second quarter of 1995
relating to severance and other costs associated with the reduction of the
Company's staff. The charges were made as an offset to the gains on sales of
crude oil and natural gas properties recorded in the first quarter of 1995
and as an extension of the restructuring plan contemplated in connection with
the sale of crude oil and natural gas assets in the fourth quarter of 1994.
Note 7. ACQUISITION
On June 19, 1995, the Company acquired First Reserve Gas Company
("FRGC"), a natural gas storage company with facilities in Hattiesburg,
Mississippi, for approximately $78 million, subject to certain adjustments.
The acquisition was funded with approximately $18 million of the Company's
available cash and borrowings under a $60 million bridge loan due on November
17, 1995 (see Note 8). FRGC's storage facility consists of three salt-dome
caverns with a total capacity of 5.5 billion cubic feet ("Bcf") of natural
gas, of which approximately 3.5 Bcf consists of working gas and approximately
2.0 Bcf consists of base gas. FRGC's facility interconnects with Transco,
Koch Gateway, Tennessee Gas and AIM pipelines.
The acquisition has been accounted for in accordance with the "purchase
method" of accounting, and accordingly, the results of operations of FRGC are
included in the Company's consolidated statement of operations from the
acquisition date.
The following supplemental unaudited proforma information reflects
condensed results of operations of the Company as though FRGC had been
acquired at January 1, 1994, and as though the disposition of substantially
all of the Company's crude oil and natural gas properties (which occurred on
December 30, 1994) had occurred as of January 1, 1994. Such information does
not purport to be indicative of the results of operations of the Company that
would actually have occurred had FRGC been acquired as of the beginning of
the respective periods, had substantially all of the Company's crude oil and
natural gas properties been sold as of January 1, 1994, or of the future
results of operations that will be obtained from the acquisition.
<TABLE>
<CAPTION>
Pro Forma
Nine Months Ended
--------------------------------------
September 30, 1995 September 30, 1994
------------------ ------------------
(In thousands except Per Share Amounts)
<S> <C> <C>
Total Revenues $ 12,405 $ 9,468
============= =============
Net Income $ 2,115 $ 867
============= =============
Income per Common and Common
Stock Equivalent Share
Primary $ .78 $ .33
============= =============
Fully diluted $ .78 $ .33
============= =============
</TABLE>
-10-
<PAGE>
Note 8. FINANCING AGREEMENT
On June 16, 1995, the Company entered into a Term Note and Agreement (the
"Term Note") with a commercial bank which provided a $60 million short-term
loan for the acquisition of FRGC. The Term Note has a current maturity date
of November 17, 1995, and is expected to be refinanced during the fourth
quarter with longer term nonrecourse debt or other nonrecourse financing,
including a possible sale of future receivables. The interest rate of the
Term Note is based on the Eurodollar Rate (as defined) plus 1%.
-11-
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
The following should assist in a further understanding of the Company's
financial condition as of September 30, 1995, as well as changes in the
Company's operating results. The notes to the Company's Consolidated
Condensed Financial Statements included in this report, as well as the
Company's Annual Report on Form 10-K for the year ended December 31, 1994,
should be read in conjunction with this discussion.
GENERAL
In the fourth quarter of 1994, the Company disposed of substantially all
of its domestic crude oil and natural gas properties for an aggregate net
cash consideration of approximately $97.0 million, including $1.3 million
received in April 1995 as a post-closing purchase price adjustment. Although
the Company retained various crude oil and natural gas exploratory prospects
and its interest in a crude oil enhancement project being pursued in the
former Soviet Union, the disposition of the Company's producing crude oil and
natural gas properties resulted in an elimination of all its historic
revenues from the sale of crude oil and natural gas.
On June 19, 1995, the Company acquired First Reserve Gas Company
("FRGC"), a natural gas storage company with facilities in Hattiesburg,
Mississippi, for approximately $78 million. FRGC's storage facility consists
of three salt-dome caverns with a total capacity of 5.5 billion cubic feet
("Bcf") of natural gas, of which approximately 3.5 Bcf consists of working
gas and approximately 2.0 Bcf consists of base gas. FRGC's facility
interconnects with Transco, Koch Gateway, Tennessee Gas and AIM pipelines.
The FRGC acquisition was funded with approximately $18 million of the
Company's available cash and borrowings under a $60 million bridge loan with
a maturity date of November 17, 1995. The Company currently intends to
refinance this loan on a long term basis utilizing nonrecourse and other
similar financing.
As of September 30, 1995, the Company had available to it more than $67
million in cash and other liquid assets for future acquisitions. Such
acquisitions will focus on income generating businesses and assets without
limitation on the type of business or industry. Future acquisitions will
likely involve a combination of the use of a portion of the Company's
available cash and debt or other financing. To the extent possible, the
Company will seek to limit the recourse of any financing to the business and
assets acquired. The Company may also seek to finance future acquisitions
with additional equity if desirable.
As a result of the significant changes the Company has undergone since
the disposition of its crude oil and natural gas properties to Apache
Corporation in December 1994, the results of operations for the periods
presented herein may not be comparable.
-12-
<PAGE>
LIQUIDITY CAPITAL RESOURCES
At September 30, 1995, the Company had marketable securities of
approximately $55.4 million and cash and cash equivalents of approximately
$12.3 million compared to $75.5 million in cash and cash equivalents at
December 31, 1994. The reduction in cash and cash equivalents from December
31, 1994, reflects the investment of the Company's net proceeds from the sale
of its crude oil and natural gas properties in 1994 to purchase marketable
securities and to fund a portion of the Company's acquisition of FRGC. The
Company also had $1.8 million in restricted funds at September 30, 1995,
securing certain outstanding letters of credit.
As described above, on June 19, 1995, the Company acquired FRGC. In
connection with this acquisition, the Company borrowed $60 million in the
form of a bridge loan with a current maturity date of November 17, 1995. The
Term Note is expected to be refinanced during the fourth quarter of 1995 with
longer term nonrecourse debt or other nonrecourse financing, including a
possible sale of future receivables. To the extent such financing were not
to become available by the maturity date of the bridge loan, the Company
believes that alternative financing would be available.
The borrowings effected to consummate the acquisition of FRGC resulted in
an increase in the Company's current liabilities from $5.5 million at
December 31, 1994, to $62.7 million at September 30, 1995. At September 30,
1995, the Company's working capital position declined from $75.7 million at
December 31, 1994, to $6.1 million. This decline was primarily related to
the increase in the Company's current liabilities.
Pending the redeployment of the Company's available funds, the Company is
investing its cash primarily in short term United States government
securities and investment grade commercial paper having maturities of up to
one year. The Company believes that these securities do not present any
material risks with respect to its liquidity, operations or financial
position.
The Company believes that it has sufficient capital resources available
to it to conduct its ongoing operations and to pursue new acquisitions and
other opportunities. Future acquisitions may require additional borrowings
and/or the issuance of equity.
RESULTS OF OPERATIONS
GENERAL
The Company recorded net income for the three and nine months ended
September 30, 1995, of $590 thousand, $.22 per share, and $979 thousand, $.36
per share, respectively, compared to net income of $110 thousand, $.04 per
share, and a net loss of $1.2 million, $.49 per share, for the comparative
periods in 1994. Revenues for the three and nine months ended September 30,
1995, were primarily attributable to gas storage activities and investment
income from the investment by the Company of cash received on the disposition
of its crude oil and natural gas properties in late 1994. Results for the
nine months ended September 30, 1995, also included a net gain of
approximately $.9 million from the sale of assets primarily in the first
quarter and charges of $490 thousand incurred primarily during the second
quarter for severance and other related expenses associated with the
reduction in the Company's staff. The charge for
-13-
<PAGE>
severance and related expenses was recorded as an offset to the gains on
sales of crude oil and natural gas properties recorded in the first quarter
of 1995 and as an extension of the restructuring plan contemplated in
connection with the sale of the Company's crude oil and natural gas
properties in the fourth quarter of 1994. The Company did not reflect any
sales of crude oil and natural gas during the three and nine months ended
September 30, 1995, due to the 1994 disposition of its crude oil and natural
gas properties. The sales of crude oil and natural gas for the three and
nine months ended September 30, 1994, were $7.5 million and $22.0 million,
respectively.
The Company recognized $3.3 million in revenues from gas storage
activities during the period of June 19, 1995, through September 30, 1995, as
a result of its acquisition of FRGC. Future results are expected to benefit
from additional gas storage revenues as the operations of FRGC are
consolidated with those of the Company. Operating expenses for the three and
nine months ended September 30, 1995, included $348 thousand and $397
thousand, respectively, associated with the Company's newly acquired gas
storage operations. Operating expenses and exploration cost for the
comparable 1994 period primarily related to crude oil and natural gas
exploration and production activities.
INVESTMENT INCOME
The Company's investment income for the three and nine month periods
ended September 30, 1995, were approximately $1.0 million and $3.7 million,
respectively, compared to approximately $183 thousand and $519 thousand,
respectively, for the comparative periods in 1994. The level of investment
income for the nine month period ended September 30, 1995, reflects the
average investment in debt securities of approximately $75.5 million.
Average interest rate received by the Company during the nine months ended
September 30, 1995, was 6.27%. The Company's investments of its liquid
assets are currently in investment grade commercial paper and short term
government securities.
OTHER INCOME
Other income for the nine months ended September 30, 1995, included a net
gain of $860 thousand from the disposition of the Company's proportionate
share of the net proceeds of asset sales from the Company's partnerships, the
sale of an exploratory prospect and the final liquidation and disposition of
various surplus equipment and inventory. Other income for the nine months
ended September 30, 1995, also included charges of $490 thousand incurred
primarily in the second quarter of 1995 relating to severance and other costs
associated with the reduction of the Company's staff. The charges were made
as an offset to the gains on sales of crude oil and natural gas properties
recorded in the first quarter of 1995 and as an extension of the
restructuring plan contemplated in connection with the sale of crude oil and
natural gas assets in the fourth quarter of 1994. Other income for the nine
months ended September 30, 1994, was $627 thousand.
DEPRECIATION, DEPLETION AND IMPAIRMENT
Depreciation, depletion and impairment declined substantially in the
three and nine month periods ended September 30, 1995, to $688 thousand and
$919 thousand, respectively, from $2.8 million and $8.1 million,
respectively, for the comparative periods in 1994. Such declines were
-14-
<PAGE>
attributable to the Company's 1994 disposition of the Company's crude oil and
gas properties. Current depreciation charges are primarily associated with
the Company's natural gas storage facility and other assets acquired in June
1995, which have a substantially longer depreciable life than the Company's
historical crude oil and natural gas properties.
INTEREST AND DEBT EXPENSE
The Company's interest and debt expense for the three and nine month
periods ended September 30, 1995, were $1.1 million and $1.2 million,
respectively, and reflected the effect of borrowing $60 million on June 16,
1995, for the acquisition of FRGC. The Company had no interest and debt
expense prior to the borrowing for the acquisition of FRGC due to the
repayment of substantially all of its outstanding debt at year end 1994.
Interest and debt expense in future quarters will be dependent upon the
specific form in which the Company refinances its acquisition debt for FRGC
as well as other financings that may be effected in the future for
acquisitions. Interest and debt expense for the three and nine month periods
ended September 30, 1994, were $675 thousand and $2.1 million, respectively.
GENERAL AND ADMINISTRATIVE EXPENSE
The Company's general and administrative expense for the three and nine
month periods ended September 30, 1995, decreased approximately $492 thousand
and $1.0 million, respectively, as compared to the same periods in 1994. The
decrease in general and administrative expenses reflected the reduction in
the Company's staff following the disposition of its crude oil and natural
gas properties in late 1994. The staff reductions continued through the first
two quarters of 1995 as the Company completed various post-closing matters
associated with the sale. The staff reductions are now substantially
complete. The decline in general and administrative expenses realized during
the nine month period ended September 30, 1995, was partially offset by
certain transitional expenses and costs relating to the Company's Russian
operations. The Company, however, has taken actions to reduce its expenses
relating to its Russian operations. General and administrative expense also
included approximately $118 thousand for the settlement of various lawsuits
during the first quarter of 1995.
TAXES AND QUASI-REORGANIZATION ADJUSTMENT
The results for the three and nine month periods ended September 30,
1995, included a provision in lieu of income taxes of $381 thousand and $627
thousand, respectively. The Company had a provision in lieu of income taxes
of $74 thousand for the three month period ended September 30, 1994, and an
income tax benefit of $793 thousand for the nine month period ended September
30, 1994.
The provision in lieu of income taxes is an accounting charge required by
virtue of the Company's quasi-reorganization in 1986 and requires the Company
to record a non-cash charge in an amount equal to the deferred income taxes
that the Company would have recognized had it not been able to utilize its
net operating loss carryforwards against such income taxes. Because the
provision in lieu of income taxes primarily represents a charge that will not
be required to be paid by the Company in the future, stockholders' equity is
increased by the benefit realized by the Company for the use of its net
operating loss carryforwards against such assumed income taxes. The
provision in lieu of income taxes also includes alternative minimum taxes.
-15-
<PAGE>
OTHER MATTERS
The Company was recently advised by a major oil company of the existence
of a potential environmental cleanup of a mining site that was disposed of by
a subsidiary of the Company to such oil company over 15 years ago. The
mining assets of this subsidiary were owned by the Company's subsidiary for
only a few years during the 1970s and were sold by the subsidiary to such oil
company in 1980. The Company is currently investigating this matter and is
unable to predict the impact, if any, that it may have on its liquidity or
future results of operations.
-16-
<PAGE>
PART II: OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
<TABLE>
<S> <C>
2.1 Purchase and Sale Agreement dated November 6, 1994, between
Crystal Oil Company as Seller and Apache Corporation as
Buyer (Reference is made to Report of Form 10-Q filed by
the Company for the period ended September 30, 1994).
3.1 Amended and Restated Articles of Incorporation of the Company,
as amended. (Reference is made to Report on Form 10-K filed
by the Company for the period ended December 31, 1993).
3.2 By-laws of the Company, as amended through January 29, 1988
(Reference is made to Report on Form 10-K filed by the
Company for the period ended December 31, 1987).
4.1 Credit Agreement dated March 31, 1995, (the "Credit
Agreement"), between the Company and Bankers Trust Company,
Morgan Guaranty Trust Company of New York and Texas
Commerce Bank, National Association (Reference is made to Report
on Form 10-Q filed by the Company for the period ended
March 31, 1995).
4.2 Term and Note Agreement dated June 16, 1995, between the
Company and Texas Commerce Bank, National Association
(Reference is made to Report on Form 10-Q filed by the
Company for the period ended June 30, 1995).
4.3 Guarantee Agreement dated December 15, 1992, by Vermilion Bay
Land Company in favor of Bankers Trust Company, individually
and as Agent for the others Lenders as defined in the Credit
Agreement (Reference is made to Report on Form 10-K filed by
the Company for the period ended December 31, 1992).
4.4 Guarantee Agreement dated as of December 15, 1992, by Crystal
Exploration and Production Company in favor of Bankers Trust
Company, individually and as Agent for the other Lenders as
defined in the Credit Agreement. (Reference is made to
Report on Form 10-K filed by the Company for the period
ended December 31, 1992).
4.5 Security Agreement (contract rights) dated as of December 15,
1992, between Crystal Oil Company and Bankers Trust Company,
as Agent for itself and the other financial institutions now
or hereafter parties to the Credit Agreement (Reference is
made to Report on Form 10-K filed by the Company for the
period ended December 31, 1992).
4.6 Security Agreement (stock pledge) dated as of December 15,
1992, between Crystal Oil Company and Bankers Trust Company,
as Agent for itself and the other financial institutions now
or hereafter parties to the Credit Agreement (Reference is
made to Report on Form 10-K filed by the Company for the
period ended December 31, 1992).
</TABLE>
-17-
<PAGE>
<TABLE>
<S> <C>
4.7 Indenture of Mortgage, Deed of Trust, Assignment and Security
Agreement dated as of December 31, 1986, between the Company
and IBJ Schroder Bank & Trust Company (Reference is made to
Exhibit 2(a) to the Report on Form 8-A filed by the Company
on February 12, 1987).
4.8 First Supplemental Indenture of Mortgage, Deed of Trust,
Assignment and Security Agreement dated as of October 10,
1988, between the Company and IBJ Schroder Bank & Trust
Company and George R. Sievers (Reference is made to Report
on Form 10-Q filed by the Company for the period ended
September 30, 1988).
4.9 Form of Non-Interest Bearing Convertible Note due 1997
(Reference is made to Report on Form 10-K filed by the
Company for the period ended December 31, 1989).
4.10 Article IV of the Amended and Restated Articles of
Incorporation of the Company (Reference is made to Exhibit
3.1 contained herein).
4.11 Amended and Restated Warrant Agreement dated as of January 1,
1987, between the Registrant and RepublicBank Dallas,
National Association relating to the $.075 Warrants
(Reference is made to Exhibit 2(c) to the Report on Form 8
filed by the Company on April 6, 1987).
4.12 Amended and Restated Warrant Agreement dated as of January 1,
1987, between the Registrant and RepublicBank Dallas,
National Association relating to the $.10 Warrants
(Reference is made to Exhibit 2(d) to the Report on Form 8
filed by the Company on April 6, 1987).
4.13 Amended and Restated Warrant Agreement dated as of January 1,
1987, between the Registrant and RepublicBank Dallas,
National Association relating to the $.125 Warrants
(Reference is made to Exhibit 2(e) to the Report on Form 8
filed by the Company on April 6, 1987).
4.14 Amended and Restated Warrant Agreement dated as of January 1,
1987, between the Registrant and RepublicBank Dallas,
National Association relating to the $.15 Warrants
(Reference is made to Exhibit 2(f) to the Report on Form 8
filed by the Company on April 6, 1987).
4.15 Amended and Restated Warrant Agreement dated as of January 1,
1987, between the Registrant and RepublicBank Dallas,
National Association relating to the $.25 Warrants
(Reference is made to Exhibit 2(g) to the Report on Form 8
filed by the Company on April 6, 1987).
10.1 Form of Indemnity Agreement between the Company and each of
its directors and executive officers (Reference is made to
Report on Form 10-K filed by the Company for the period
ended December 31, 1989).
-18-
<PAGE>
(a) 10.2 Employment Agreement dated August 22, 1989, as amended between
the Company and J. N. Averett, Jr. (Reference is made to
Report on Form 10-K filed by the Company for the period
ended December 31, 1989).
(a) 10.3 Crystal Oil Company Employee Stock Option Plan and Form of
Option Agreement dated March 23, 1992, as amended through
May 27, 1993, between the Company and its executives.
(Reference is made to Report of Form 10-K filed by the
Company for the period ended December 31, 1993).
(a) 10.4 Crystal Oil Company Employee Stock Ownership Plan dated
January 1, 1993, between the Company and its employees
(Reference is made to Report on Form 10-K filed by the
Company for the period ended December 31, 1992).
(a) 10.5 First Amendment to the Crystal Oil Company Employee Stock
Ownership Plan dated July 21, 1993. (Reference is made to
Report on Form 10-K filed by the Company for the period
ended December 31, 1993).
(a) 10.6 Form of Executive Compensation and Severance Agreement dated
November 10, 1994, between the Company and the Executives.
(Reference is made to Report on Form 10-Q filed by the
Company for the period ended September 30, 1994).
10.7 Stock Purchase Agreement dated May 2, 1995, between the
Company as Purchaser and First Reserve Secured Energy
Assets Fund, Limited Partnership and First Reserves
Fund V, Limited Partnership as Sellers (Reference is made
to Report on Form 10-Q filed by the Company for the period
ended March 31, 1995).
*11 Computation of Earnings (Loss) Per Common Share.
*27 Financial Data Schedule
(b) Reports on Form 8-K
None
</TABLE>
_______________________
(a) Management Incentive Compensation Plans
* Filed herein
-19-
<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, on the 7th day of November 1995.
CRYSTAL OIL COMPANY
BY: /S/ J. N. AVERETT, JR.
------------------------------------
J. N. Averett, Jr.
President
and Director
(Principal Executive Officer)
BY: /S/ J. A. BALLEW
------------------------------------
J. A. Ballew
Senior Vice President,
Treasurer, and
Chief Financial Officer
BY: /S/ PAUL E. HOLMES
------------------------------------
Paul E. Holmes
Vice President/Controller
(Principal Accounting Officer)
-20-
<PAGE>
Exhibit 11
CRYSTAL OIL COMPANY
COMPUTATION OF INCOME (LOSS) PER COMMON SHARE
(In Thousands Except Share and Per Share Amounts)
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
September 30 September 30
------------------------ --------------------------
1995 1994 1995 1994
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Primary: (Including dilutive
Common Stock
equivalents)
Income (loss) from operation $ 590 $ 110 $ 979 $ (1,238)
Adjustments to income (loss)
(net of income tax):
Non-interest bearing
convertible notes
amortization of discount - - - -
---------- ---------- ---------- ----------
Adjusted net income (loss) $ 590 $ 110 $ 979 $ (1,238)
========== ========== ========== ==========
Weighted average of common
and common equivalent
shares:
Outstanding 2,652,375 2,555,942 2,646,820 2,536,948
Assuming conversion of:
Stock options, net
of treasury shares 23,579 36,356 23,579 -
Senior preferred stock
through the exercise
of warrants - - - -
Remaining senior
preferred stock 33,274 40,828 33,274 -
Series A preferred stock - - - -
---------- ---------- ---------- ----------
2,709,228 2,633,126 2,703,673 2,536,948
========== ========== ========== ==========
Per share amount:
Net income (loss) $ .22 $ .04 $ .36 $ (.49)
========== ========== ========== ==========
</TABLE>
<PAGE>
Exhibit 11
(continued)
CRYSTAL OIL COMPANY
COMPUTATION OF INCOME (LOSS) PER COMMON SHARE
(In Thousands Except Share and Per Share Amounts)
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
September 30 September 30
------------------------ --------------------------
1995 1994 1995 1994
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Fully-diluted:
Income (loss) from operation $ 590 $ 110 $ 979 $ (1,238)
Adjustments to income (loss)
(net of income tax):
Non-interest bearing
convertible notes
amortization of discount - - - -
---------- ---------- ---------- ----------
Adjusted net income (loss) $ 590 $ 110 $ 979 $ (1,238)
========== ========== ========== ==========
Weighted average of
common shares:
Outstanding 2,652,375 2,555,942 2,646,820 2,536,948
Assuming conversion of:
Stock options, net
of treasury shares 23,579 36,356 23,579 -
Senior preferred stock
through the exercise
of warrants - - - -
Remaining senior
preferred stock 33,274 40,828 33,274 -
Series A preferred stock - - - -
---------- ---------- ---------- ----------
2,709,228 2,633,126 2,703,673 2,536,948
========== ========== ========== ==========
Per share amount:
Net income (loss) $ .22 $ .04 $ .36 $ (.49)
========== ========== ========== ==========
</TABLE>
NOTE: See Notes 5 and 6 of Notes to Consolidated Condensed Financial Statements.
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the
consolidated balance sheet at September 30, 1995 and the consolidated
statement of income for the three and nine months ended September 30, 1995
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-31-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> SEP-30-1995
<CASH> 12,341
<SECURITIES> 55,366
<RECEIVABLES> 768
<ALLOWANCES> 204
<INVENTORY> 0
<CURRENT-ASSETS> 68,783
<PP&E> 82,779
<DEPRECIATION> 1,958
<TOTAL-ASSETS> 151,979
<CURRENT-LIABILITIES> 2,694
<BONDS> 60,146
<COMMON> 26
0
148
<OTHER-SE> 88,965
<TOTAL-LIABILITY-AND-EQUITY> 151,979
<SALES> 3,278
<TOTAL-REVENUES> 3,683
<CGS> 0
<TOTAL-COSTS> 1,639
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 27
<INTEREST-EXPENSE> 1,239
<INCOME-PRETAX> 1,606
<INCOME-TAX> 627
<INCOME-CONTINUING> 979
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 979
<EPS-PRIMARY> .36
<EPS-DILUTED> .36
</TABLE>
