VINEYARD OIL & GAS COMPANY
10299 West Main Road
North East, PA 16428
Securities and Exchange Commission
Washington, D.C. 20549
Gentlemen:
Pursuant to the requirements of the Securities Exchange Act of 1934, we are
transmitting herewith the attached Form 10-QSB.
Sincerely,
Vineyard Oil & Gas Company
James J. Concilla
President
<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
Quarterly Report Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
For the quarterly period ended March 31, 1999
Commission File Number 0-13871
Pennsylvania 25-1349204
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
10299 West Main Road, North East, Pennsylvania 16428-0391
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (814) 725-8742
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 practical
date:
Common Stock, No Par Value - 5,125,562.50 shares as of March 31, 1999
<PAGE>
<TABLE>
PART 1 - FINANCIAL INFORMATION
BALANCE SHEETS (UNAUDITED)
VINEYARD OIL & GAS COMPANY
<CAPTION>
March 31, December 31,
1999 1998
<S> <C> <C>
ASSETS
Current Assets
Cash $ 1,388,217 $ 432,703
Accounts receivable 2,217,404 2,998,441
Inventories 189,085 172,461
Prepaid Expenses 39,462 29,769
__________ __________
Total Current Assets 3,834,168 3,633,374
Property, Plant and Equipment
Land and land improvements 193,680 193,680
Building and improvements 257,008 257,008
Oil and gas properties 6,700,228 6,700,228
Drilling and other equipment 1,218,333 1,187,592
8,369,249 8,338,508
Less Accumulated depreciation 7,933,175 7,913,763
436,074 424,745
Other Assets
Cash restricted for well plugging 449,942 445,239
Investments 175,378 185,617
__________ __________
625,320 630,856
_________ __________
TOTAL ASSETS $ 4,895,562 $ 4,688,975
__________ __________
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Accounts Payable
Trade $2,657,294 $2,538,160
Limited Partnerships 191,932 142,836
Accrued expenses 51,859 45,137
Total Current Liabilities 2,901,085 2,726,133
Deferred revenue 358,284 353,582
Shareholder's Equity
Common Stock, authorized 15,000,000 shares
without par value, issued 5,125,562.5 shares
at March 31, 1999, at stated value of $.05
256,278 256,278
Additional paid-in capital 4,935,430 4,935,430
__________ __________
5,191,708 5,191,708
Retained earnings (deficit) (3,330,595) (3,357,528)
__________ __________
1,861,113 1,834,180
Less: cost of 67,944 shares held in treasury (224,920) ( 224,920)
__________ __________
1,636,193 1,609,260
__________ __________
$ 4,895,562 $ 4,688,975
__________ __________
<FN>
See notes to condensed financial statements.
</TABLE>
<PAGE>
<TABLE>
PART I. - FINANCIAL INFORMATION
STATEMENTS OF INCOME AND RETAINED EARNINGS (UNAUDITED)
FOR THE THREE MONTHS
ENDED MARCH 31, 1999 AND 1998
VINEYARD OIL & GAS COMPANY
<CAPTION>
3 Months 3 Months
Ended Ended
March 31, March 31,
1999 1998
<S> <C> <C>
Earned revenues
Gas Marketing $3,744,164 $2,679,514
Well Services 47,564 56,297
Production and Royalties 72,728 110,190
Equipment rental and
service income 45,588 26,592
3,910,044 2,872,593
Other Income
Equity in earnings
of jointly owned company 5,156 2,601
6,460 15,278
__________ __________
3,921,660 2,890,472
Cost and Expenses
Direct costs of earned
revenues
Gas marketing 3,648,593 2,587,826
Well services 82,641 89,683
Production 28,049 31,671
Equipment expenses 3,997 2,995
Depreciation/amortization 15,279 14,835
3,778,559 2,727,010
General and Administrative 112,036 110,506
Depreciation 4,134 2,892
Interest -0- -0-
3,894,729 2,840,408
Net income before income taxes 26,931 50,064
Income taxes (Note 3) -0- -0-
Net income 26,931 50,064
Income per common share .005 .010
__________ __________
<FN>
See Note to condensed financial statements
</TABLE>
<PAGE>
<TABLE>
STATEMENTS OF CASH FLOWS (UNAUDITED)
VINEYARD OIL & GAS COMPANY
FOR THE THREE MONTHS ENDED MARCH 31, 1999 AND 1998
<CAPTION>
3 Months 3 Months
Ended Ended
March 31, March 31,
1999 1998
<S> <C> <C>
Cash flow from operating
activities:
Income (loss) from operations $ 26,931 $ 50,064
Adjustments To Reconcile Net
Income to Net Cash Provided by
Operating Activities:
Depreciation and amortization 19,413 17,727
Provision for losses on
accounts receivable and
inventories 6,000 6,000
Changes in operating assets
and liabilities providing
(using) cash:
Accounts receivable 775,038 414,981
Inventories (16,624) (544)
Prepaid expenses (9,693) (1,926)
Other assets 10,239 (7,657)
Accounts payable 168,230 (69,609)
Other current liabilities 6,722 20,164
Deferred revenue 4,702 3,069
__________ __________
Net cash provided by (used in)
operating activities 990,958 432,269
__________ __________
Cash flow from investing
activities:Capital expenditures (30,741) (2,500)
__________ __________
Net cash used in investing
activities (30,741) (2,500)
__________ __________
Cash flow from financing
activities:Principal payments
on borrowings 0
__________ __________
Net cash (used in) financing
activities 0
__________ __________
Increase (Decrease) in cash 960,217 429,769
Cash at beginning of period 877,942 1,062,521
__________ __________
Cash at end of period $1,838,159 $1,492,290
__________ __________
<FN>
See notes to condensed financial statements.
</TABLE>
<PAGE>
VINEYARD OIL & GAS COMPANY
NOTES TO CONDENSED FINANCIAL STATEMENTS
MARCH 31, 1999
1. In the opinion of the Company, the accompanying unaudited condensed
consolidated financial statements contain all adjustments (consisting of
only normal recurring accruals) necessary to present fairly the results for
the three months ended March 31, 1999, and are not necessarily indicative of
the results to be expected for the full year.
2. Primary earnings per share are determined by dividing net income by the
weighted average number of common equivalent shares outstanding (5,125,562.50
in 1999 and 1998).
3. No federal income tax was due or paid during the periods ending March 31
1999, and 1998, due to available operating loss carry forwards.
4. Cash is classified as follows for financial statement reporting purposes:
<TABLE>
<CAPTION>
March 31, 1999 December 31, 1998
<S> <C> <C>
Cash in bank $1,388,217 $1,150,724
Cash restricted for well
plugging 449,942 341,566
__________ __________
1,838,159 1,492,290
__________ __________
</TABLE>
NOTE 5. BUSINESS SEGMENT INFORMATION
Description of the types of products and services from which each
reportable segment derives its revenue
The Company's three reportable business segments are gas marketing, well
services and equipment rental and oil and gas production. The Company's gas
marketing operation involves marketing gas from local producers and interstate
pipeline sources, as well as marketing gas from the Company's managed limited
partnerships, and selling that gas to industrial gas users through
transportation arrangements on intrastate and interstate pipeline systems.
In the well services and equipment rental operation, the Company rents
well service equipment (e.g. for use in water hauling, pipeline installation,
and welding) and provides workover and well tending services for producing
wells.
Revenues from oil and gas production operations are primarily derived from
working and royalty interests in the sale of oil and gas production and for the
transmission of such production.
Measurement of segment profit or loss and segment assets
The accounting policies of the segments are the same as those described in
the summary of significant accounting policies. The Company evaluates
performance based on profit and loss from operations before income taxes not
including nonrecurring gains and losses.
The Company accounts for intersegment sales and transfers as if the sales
or transfers were to third parties, that is, at current market prices.
Factors management used to identify the Company's reportable segments
The Company's reportable segments are strategic business units that offer
different products and services. They are managed separately because each
segment requires different technology and marketing strategies.
<PAGE>
<TABLE>
The Company's segment profit or loss and assets are as follows:
<CAPTION>
Well Services
Gas and Equipment Oil & Gas All
Marketing Rental Production Others Totals
1999
<S> <C> <C> <C> <C> <C>
Revenues
from
external
customers 3,744,164 93,152 72,728 -0- 3,910,044
Intersegment
revenues -0- -0- -0- -0- -0-
Other
revenue -0- -0- -0- 11,616 11,616
Depreciation
and
amortization -0- 10,914 4,365 4,134 19,413
Segment profit 95,571 (4,400) 40,314 (104,554) 26,931
Segment
assets 2,200,583 903,837 635,859 1,155,283 4,895,562
Expenditures
for segment
assets -0- 30,741 -0- -0- -0-
1998
Revenues
from
external
customers 2,679,514 82,889 110,190 -0- 2,872,593
Intersegment
revenues -0- -0- -0- -0- -0-
Other
revenue -0- -0- -0- 17,879 17,879
Depreciation
and
amortization -0- 10,589 4,246 2,892 17,727
Segment profit 91,688 (20,378) 74,273 (95,519) 50,064
Segment
assets 2,010,041 1,325,070 602,806 516,082 4,453,999
Expenditures
for segment
assets -0- 2,500 -0- -0- 2,500
</TABLE>
A) Revenue from segments below quantitative thresholds are attributed to the
Company's equity in earnings of its jointly owned company and unallocated
revenues such as interest income and gains recognized on the disposition of
assets. General and administrative expenses are not allocated to the Company's
three business segments. This activity is reported as "all others"
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
IN THE QUARTER ENDED MARCH 31, 1999
Material Changes in Financial Conditions
Vineyard Oil & Gas Company's cash position increased $960,217 during the
quarter ended March 31, 1999. The principal cause was a decrease in accounts
receivable of $775,038 plus an increase in accounts payable of $168,230,
resulting in a net increase of $943,268. Inventories increased $16,624 or 9%
and prepaid expenses by $9,693, both normal seasonal increases. Other assets
decreased by $10,239,the net result of an increase of$6,460, Vineyard's share
of income from a jointly owned company, offset by cash distributions of $16,699
received during the quarter. Long lived assets increased $30,741 during the
period, the cost of a vehicle and office equipment. The allowance for
depreciation increased the amount of depreciation charged for the period.
Accrued expenses increased $6,722 and deferred revenue increased
$4,702,the amount of earnings on funds held for future plugging costs.
Shareholders' equity decreased by the amount of net loss for the period ended
March 31, 1999.
Earned revenues increased $1,037,451 over the three-month period
ended March 31, 1999, over the same period in 1998. Marketing revenues
increased $1,064,650 while well services, production and service income
decreased $27,199. Other income increased slightly, by $2,555 while earnings
from a jointly owned company decreased $8,818. Cost of revenues increased
$1,051,549. General and administrative expenses and depreciation increased
$2,772, resulting in a decrease in net income of $23,133 as compared to March
31,1998. This decrease is generally attributable to the following areas.
Segmented marketing profit increased $3,883 from the same period in 1998. Of
this amount, $19,300 increase was due to estimated electric brokering fees and
the balance represented a decrease in gas marketing of $15,417. The
large increase in gas volume was offset by smaller margins on sales. Production
decreased $33,959 due to a decrease in volume of gas produced. The
balance was an increase in well service and equipment rental income of $15,978
and a decrease in all others of $9,035.
<PAGE>
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
____________________________
NOT APPLICABLE
ITEM 2. CHANGES IN SECURITIES
________________________________
NOT APPLICABLE
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
__________________________________________
NOT APPLICABLE
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
______________________________________________________________
NOT APPLICABLE
ITEM 5. OTHER INFORMATION
____________________________
NOT APPLICABLE
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
___________________________________________
(a) EXHIBITS
________
NONE
(b) REPORTS ON FORM 8-K
___________________
NONE.
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> 3-MOS
<EXCHANGE-RATE> 1
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-END> MAR-31-1999
<CASH> 1,388,217
<SECURITIES> 0
<RECEIVABLES> 2,317,253
<ALLOWANCES> 99,849
<INVENTORY> 189,085
<CURRENT-ASSETS> 3,834,168
<PP&E> 8,369,249
<DEPRECIATION> 7,933,175
<TOTAL-ASSETS> 4,895,562
<CURRENT-LIABILITIES> 2,901,085
<BONDS> 0
<COMMON> 256,278
0
0
<OTHER-SE> 1,379,915
<TOTAL-LIABILITY-AND-EQUITY> 4,895,562
<SALES> 3,910,044
<TOTAL-REVENUES> 3,921,660
<CGS> 3,778,559
<TOTAL-COSTS> 3,778,559
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 6,000
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 26,931
<INCOME-TAX> 0
<INCOME-CONTINUING> 26,931
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 26,931
<EPS-BASIC> .005
<EPS-DILUTED> .005
</TABLE>
