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
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 June 30, 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 June 30, 1999
<PAGE>
<TABLE>
PART 1 - FINANCIAL INFORMATION
BALANCE SHEETS (UNAUDITED)
VINEYARD OIL & GAS COMPANY
<CAPTION>
June 30, December 31,
1999 1998
<S> <C> <C>
ASSETS
Current Assets
Cash $ 740,435 $ 432,703
Accounts receivable 2,475,581 2,998,441
Inventories 182,677 172,461
Prepaid Expenses 20,353 29,769
__________ __________
Total Current Assets 3,419,046 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 1,226,376 1,187,592
_________ _________
8,377,292 8,338,508
Less Accumulated depreciation 7,952.818 7,913,763
_________ _________
424,474 424,745
Other Assets
Cash restricted for well plugging 454,584 445,239
Investments 152,737 185,617
__________ __________
607,321 630,856
_________ __________
TOTAL ASSETS $ 4,450,841 $ 4,688,975
__________ __________
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Accounts Payable
Trade $1,894,655 $2,538,160
Limited Partnerships 511,681 142,836
Accrued expenses 30,015 45,137
_________ _________
Total Current Liabilities 2,436,351 2,726,133
Deferred revenue 362,927 353,582
Shareholder's Equity
Common Stock, authorized 15,000,000 shares
without par value, issued 5,125,562.5 shares
at June 30, 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) (3,315,225) (3,357,528)
__________ __________
1,876,483 1,834,180
Less: cost of 67,944 shares held in treasury (224,920) ( 224,920)
__________ __________
1,651,563 1,609,260
__________ __________
$ 4,450,841 $ 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 SIX MONTHHS
ENDED JUNE 30, 1999 AND 1998
VINEYARD OIL & GAS COMPANY
<CAPTION>
3 Months 3 Months 6 Months 6 Months
Ended Ended Ended Ended
June 30, June 30, June 30, June 30,
1999 1998 1999 1998
<S> <C> <C> <C> <C>
Earned revenues
Gas Marketing $2,677,820 $2,496,614 $6,421,984 $5,176,128
Well Services 85,193 61,276 132,757 117,573
Production and Royalties 63,767 80,429 136,495 190,619
Equipment rental and
service income 19,532 93,631 65,120 120,223
_________ _________ _________ _________
2,846,312 2,731,950 6,756,356 5,604,543
Other Income
Equity in earnings
of jointly owned company 23,593 11,268 28,749 21,664
42,905 7,795 49,365 15,278
__________ __________ _________ ________
2,912,810 _2,751,013 6,834,470 5,641,485
__________ __________ _________ ________
Cost and Expenses
Direct costs of earned
revenues
Gas marketing 2,602,064 2,449,782 6,250,657 5,037,608
Well services 98,869 100,252 181,510 189,935
Production 12,723 78,411 40,772 110,082
Equipment expenses 2,380 13,372 6,377 16,367
Depreciation/amortization 15,508 15,308 30,787 30,143
_________ _________ _________ _________
2,731,544 2,657,125 6,510,103 5,384,135
General and Administrative 161,761 139,458 273,797 249,964
Depreciation 4,134 2,891 8,268 5,783
Interest -0- 469 -0- 469
_________ ________ ________ _________
2,897,439 2,799,943 6,792,168 5,640,351
_________ _________ _________ _________
Net income before income taxes 15,371 (48,930) 42,302 1,134
________ _________ __________ _______
Income taxes (Note 3) -0- -0- -0- -0-
________ _________ __________ _______
Net income 15,371 (48,930) 42,302 1,134
_________ _______ ______ _____
Income per common share .0030 (.0095) .0083 .0002
__________ __________ ________ ________
<FN>
See Note to condensed financial statements
</TABLE>
<TABLE> STATEMENTS OF CASH FLOWS (UNAUDITED)
VINEYARD OIL & GAS COMPANY
FOR THE SIX MONTHS ENDED JUNE 30, 1999 AND 1998
<CAPTION>
3 Months 3 Months 6 Months 6 Months
Ended Ended Ended Ended
June 30, June 30, June 30, June 30,
1999 1998 1999 1998
<S> <C> <C> <C> <C>
Cash flow from operating
activities:
Income (loss) from operations $ 15,371 $ (48,930) $ 42,302 $ 1,134
Adjustments To Reconcile Net
Income to Net Cash Provided by
Operating Activities:
Depreciation and amortization 19,642 18,199 39,055 35,926
Provision for losses on
accounts receivable and
inventories 6,000 6,000 12,000 12,000
Gain on sale of property -0- (1,459) -0- (1,459)
Changes in operating assets
and liabilities providing
(using) cash:
Accounts receivable (264,178) (85,299) 510,860 329,682
Inventories 6,408 1,375 (10,216) 831
Prepaid expenses 19,109 10,350 9,416 8,424
Other assets 22,641 (7,794) 32,880 (15,451)
Accounts payable (442,890) (283,496) (274,660) (353,105)
Other current liabilities (21,844) (10,218) (15,122) 9,946
Deferred revenue 4,644 4,068 9,346 7,137
_________ __________ __________ ________
Net cash provided by (used in)
operating activities (635,097) (397,204) 355,861 35,065
_________ __________ __________ ________
Cash flow from investing
activities: (8,043) -0- (38,784) (2,500)
Capital expenditures
Proceeds from asset sales -0- 3,085 -0- 3,085
_________ __________ __________ ________
Net cash used in investing
activities (8,043) 3,085 (38,784) 585
_________ __________ __________ ________
Cash flow from financing
activities:Principal payments
on borrowings 0 0 0 0
_________ __________ __________ ________
Net cash (used in) financing
activities 0 0 0 0
_________ __________ __________ ________
Increase (Decrease) in cash (643,140) (394,119) 317,077 35,650
Cash at beginning of period 1,838,159 1,492,290 877,942 1,062,521
_________ __________ __________ ________
Cash at end of period $1,195,019 $1,098,171 1,195,019 1,098,171
_________ __________ __________ ________
<FN>
See notes to condensed financial statements.
</TABLE>
VINEYARD OIL & GAS COMPANY
NOTES TO CONDENSED FINANCIAL STATEMENTS
JUNE 30, 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 six months ended June 30, 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 June 30
1999, and 1998, due to available operating loss carry forwards.
4. Cash is classified as follows for financial statement reporting purposes:
<TABLE>
<CAPTION>
June 30, 1999 December 31, 1998
<S> <C> <C>
Cash in bank $ 740,435 $1,150,724
Cash restricted for well
plugging 454,584 341,566
__________ __________
$1,195,019 $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 production and
its managed limited partnerships, and selling that gas to industrial and
commercial 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.
The Company's segment profit or loss and assets are as follows:
<TABLE>
<CAPTION>
Well Services
and Equipment Oil & Gas All
Marketing Rental Production Others Totals
<S> <C> <C> <C> <C> <C>
June 30,
1999
Revenues
from
external
customers 6,421,984 197,877 136,495 -0- 6,756,356
Intersegment
Revenues -0- -0- -0- -0- -0-
Other
Revenue -0- -0- -0- 78,114 78,114
Depreciation
and
amortization -0- 22,539 8,248 8,268 39,055
Segment profit 171,327 (12,549) 87,475 (203,951) 42,302
Segment
assets 2,428,910 547,287 587,604 887,040 4,450,841
Expenditures
for segment
assets -0- 38,784 -0- -0- 38,784
June30,
1998
Revenues
from
external
customers 5,176,128 237,796 190,619 -0- 5,604,543
Intersegment
revenues -0- -0- -0- -0- -0-
Other
revenue -0- -0- -0- 36,942 36,942
Depreciation
and
amortization -0- 23,079 7,064 5,783 35,926
Segment profit 138,520 8,415 73,473 (219,274) 1,134
Segment
assets 2,130,688 612,758 718,734 653,243 4,115,423
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"
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
IN THE QUARTER ENDING JUNE 30, 1999
Material Changes in Financial Conditions
Vineyard Oil & Gas Company's cash position increased $317,077 or 36% for
the six month period and decreased $643,140 or 35% for the three month period
ended June 30, 1999. The majority of the change is the result of changes in
accounts receivable and accounts payable. In the six-month period, accounts
receivable decreased $510,860 and accounts payable decreased $274, 660
resulting in a net increase of $236,200 in cash. For the three-month
period, accounts receivable increased $264,178 while accounts payable
decreased $442,890 causing a decrease in cash of $707,068. Inventories
increased $10,216 or 6% over the six-month period and decreased $6,408 or 4%
over the three-month period, reflecting normal fluctuations. Prepaid expenses
decreased $9416 and $19,109 over the six and three month periods due to
periodic charge offs to operations. Fixed assets increased $38,784, the
cost of equipment purchases. The increase in the allowance for
depreciation of $39,055 reflects the amount of depreciation
charged to operations for the six-month period. Cash restricted for well
plugging increased $9,345 for the six-month period, the amount of investment
income Vineyards investment in a jointly held company decreased $32,880 for the
six-month period. This amount was the net result of income of $49,365 offset by
cash distributions of $82,245.Current liabilities decreased $289,782 for the
six-month period ended June30, 1999. Accounts payable decrease of $274,660
accounted for substantially all of that amount.
The Company incurred no long-term debt during this six-month period.
Deferred revenue increased $9,345 and 4,702 over the six and three month
Periods ending June 30, 1999, such amounts representing interest earned on
monies held for future plugging activities. Shareholders' equity increased
$42,303 and $15,371 for the six and three month periods ended June 30, 1999,
the amount of net income for the periods.
Material Charges and Results of Operations
Earned revenues increased $1,151,813 for the six month period and $114,362
for the three month period ended June 30, 1999, as compared the same
periods in Gas and electric marketing was responsible for increases of
$1,245,856 and $181,206 respectively, while production and service income
decreased for the same periods. Other income increased $7,085 and $12,325
over the comparative six and three month periods. Income from earnings of
jointly owned company increased $34,087 for the six month period and
$35,310 for the three month period ended June 30, 1999 as compared to
1998. The increase was the result of Vineyards share of a gain on sale
of certain assets.
Cost of sales increased $1,176,668 for the six-month period and
$74,419 for the three-month period ended June 30, 1999, as compared
to the same periods in Gas cost increases were proportionate to gas
sales increases. Production costs decreased $69,310 for the six-month period
ended June 30, 1999 as compared to the same three-month period in 1998.
Production income decreased $54,124 for the same period. General and
administrative expenses increased $23,833 or 9.5%for the six-month period
and $22,303 or 16% for the three-month period ended. June 30, 1999, as
compared to the same periods in 1998. The increases were generally due
to an increase in salaries and related payroll taxes.
Net income increased $41,168 for the six-month period and $64,301 for
the three month period ended June 30, 1999, as compared to the same periods
in 1998. Of these increases $34,087 and $35,110 were increases in income
from jointly owned a company for those respective periods.
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> 6-MOS
<EXCHANGE-RATE> 1
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-END> JUN-30-1999
<CASH> 740,435
<SECURITIES> 0
<RECEIVABLES> 2,588,460
<ALLOWANCES> 112,879
<INVENTORY> 182,677
<CURRENT-ASSETS> 3,419,046
<PP&E> 8,377,292
<DEPRECIATION> 7,952,818
<TOTAL-ASSETS> 4,450,841
<CURRENT-LIABILITIES> 2,436,351
<BONDS> 0
<COMMON> 256,278
0
0
<OTHER-SE> 1,395,285
<TOTAL-LIABILITY-AND-EQUITY> 4,450,841
<SALES> 6,756,356
<TOTAL-REVENUES> 6,834,470
<CGS> 6,510,103
<TOTAL-COSTS> 6,510,103
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 12,000
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 42,302
<INCOME-TAX> 0
<INCOME-CONTINUING> 42,302
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 42,302
<EPS-BASIC> .008
<EPS-DILUTED> .008
</TABLE>
