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, 2000
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 30,2000
<PAGE>
<TABLE>
PART 1 - FINANCIAL INFORMATION
CONDENSED BALANCE SHEETS
VINEYARD OIL & GAS COMPANY
<CAPTION>
June 30, December 31,
2000 1999
(unaudited)
<S> <C> <C>
ASSETS
Current Assets
Cash $1,187,257 $507,161
Accounts receivable 3,009,002 3,297,071
Inventories 110,526 97,500
Prepaid Expenses 32,769 32,204
---------- ----------
Total Current Assets 4,339,554 3,933,936
Property, Plant and Equipment
Land and land improvements 193,680 193,680
Building and improvements 257,008 257,008
Oil and gas properties 6,817,207 6,804,544
Drilling and other equipment 1,280,870 1,231,658
---------- ----------
8,548,765 8,486,890
Less Accumulated depreciation (8,014,494) (8,000,460)
---------- ----------
534,271 486,430
Other Assets
Cash restricted for well plugging 403,178 360,006
Investments 165,674 158,226
---------- ----------
568,852 518,232
---------- ----------
TOTAL ASSETS $5,442,677 $4,938,598
---------- ---------
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Accounts Payable
Trade $2,733,364 $2,729,620
Limited Partnerships 647,133 279,059
Accrued expenses 23,650 20,822
Current portion of long term debt 8,771 -0-
---------- ----------
Total Current Liabilities 3,412,918 3,029,501
Long-term debt-less current portion 64,827 -0-
Deferred revenue 380,336 372,277
<PAGE>
Shareholder's Equity
Common Stock, authorized 15,000,000 shares
without par value, issued 5,125,562.5 shares
at June 30, 2000, 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) (3,382,192) (3,429,968)
---------- ----------
1,809,516 1,761,740
Less: cost of 67,944 shares held in treasury (224,920) (224,920)
---------- ----------
1,584,596 1,536,820
---------- ----------
$5,442,677 $4,938,598
---------- ----------
<FN>
See notes to condensed financial statements.
</TABLE>
<PAGE>
<TABLE>
PART I. - FINANCIAL INFORMATION
CONDENSED STATEMENTS OF INCOME (UNAUDITED)
FOR THE SIX MONTHS
ENDED June 30, 2000 AND 1999
VINEYARD OIL & GAS COMPANY
<CAPTION>
3 Months 3 Months 6 Months 6 Months
Ended Ended Ended Ended
June 30 June 30 June 30, June30,
2000 1999 2000 1999
<S> <C> <C> <C> <C>
Earned revenues
Gas and Electric Marketing $3,706,977 $2,677,820 $7,727,154 $6,421,984
Well Services 71,942 85,193 104,083 132,757
Production and Royalties 88,468 63,767 189,248 136,495
Equipment rental and
service income 33,674 19,532 99,240 65,120
--------- --------- --------- ---------
3,901,061 2,846,312 8,119,725 6,756,356
Other Income
Gain on casualty -0- -0- 19,851 -0-
Rent and other income 51,031 23,593 59,725 28,749
Equity in earnings of jointly
owned company 12,837 42,905 24,285 49,365
--------- --------- --------- ---------
3,964,929 2,912,810 8,223,586 6,834,470
--------- --------- --------- ---------
Cost and Expenses
Direct costs of earned
revenues
Gas and electric marketing 3,670,783 2,602,064 7,631,650 6,250,657
Well services 88,231 98,869 181,997 181,510
Production 39,041 12,723 67,656 40,772
Equipment expenses 1,499 2,380 3,020 6,377
Depreciation/amortization 16,058 15,508 28,366 30,787
--------- --------- --------- ---------
3,815,612 2,731,544 7,912,689 6,510,103
General and Administrative 121,430 161,761 252,930 273,797
Depreciation 4,654 4,134 9,307 8,268
Interest 884 -0- 884 -0-
--------- --------- --------- ---------
3,942,580 2,897,439 8,175,810 6,792,168
--------- --------- --------- ---------
Net income before income taxes 22,349 15,371 47,776 42,302
--------- --------- --------- ---------
Income taxes (Note 3) -0- -0- -0- -0-
-------- --------- --------- --------
Net income 22,349 15,371 47,776 42,302
--------- --------- --------- ---------
Income per common share .0044 .0030 .0093 .0083
--------- --------- --------- ---------
<PAGE>
<FN>
See Note to condensed financial statements
</TABLE>
<TABLE>
<CAPTION>
CONDENSED STATEMENTS OF CASH FLOWS
VINEYARD OIL & GAS COMPANY (UNAUDITED)
FOR THE SIX MONTHS ENDED June 30, 2000 AND 1999
3 Months 3 Months 6 Months 6 Months
Ended Ended Ended Ended
June 30, June 30, June 30, June 30,
2000 1999 2000 1999
<S> <C> <C> <C> <C>
Cash flow from operating
activities:
Income (loss) from operations $ 22,349 $ 15,371 $47,776 $42,302
Adjustments To Reconcile Net
Income to Net Cash Provided by
Operating Activities:
Depreciation and amortization 20,712 19,642 37,673 39,055
Provision for losses on
accounts receivable and
inventories 6,000 6,000 12,000 12,000
Gain on sale of property -0- -0- (19,851) -0-
Changes in operating assets
and liabilities providing
(using) cash:
Accounts receivable 702,907 (264,178) 276,069 510,860
Inventories (1,603) 6,408 (13,026) (10,216)
Prepaid expenses (7,980) 19,109 ( 565) 9,416
Other assets 4,000 22,641 ( 7,448) 32,880
Accounts payable (431,876) (442,890) 371,818 (274,660)
Other current liabilities 4,206 (21,844) 2,828 (15,122)
Deferred revenue 4,348 4,644 8,059 9,346
---------- --------- --------- --------
Net cash provided by (used in)
operating activities 323,063 (635,097) 715,333 355,861
---------- ---------- --------- --------
Cash flow from investing
activities: Capital expenditures (87,663) (8,043) (87,663) (38,784)
Proceeds from asset sale -0- -0- 22,000 -0-
--------- --------- --------- ---------
Net cash used in investing (87,663) (8,043) (65,663) (38,784)
activities --------- --------- --------- ---------
Cash flow from financing activities:
Principal payments on borrowings (1,402) -0- (1,402) -0-
Borrowings 75,000 75,000
--------- --------- --------- ---------
Net cash (used in) financing 73,598 -0- 73,598 -0-
activities --------- --------- --------- ---------
Increase (Decrease) in cash 308,998 (643,140) 723,268 317,077
Cash at beginning of period 1,281,437 1,838,159 867,167 877,942
--------- --------- --------- ----------
Cash at end of period $1,590,435 $1,195,019 $1,590,435 $1,195,019
--------- --------- --------- ----------
<FN>
See notes to condensed financial statements.
</TABLE>
<PAGE>
VINEYARD OIL & GAS COMPANY
NOTES TO CONDENSED FINANCIAL STATEMENTS
JUNE 30, 2000
1. In the opinion of the Company, the accompanying condensed (unaudited)
financial statements contain all adjustments (consisting of only normal
recurring accruals) necessary to present fairly the results for
the six months ended June 30, 2000 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 2000 and 1999).
3. No federal income tax was due or paid during the periods ending June 30,
2000, and 1999, due to available operating loss carry forwards.
4. Cash is classified as follows for financial statement reporting purposes:
<TABLE>
<CAPTION>
June 30, 2000 December 31, 1999
<S> <C> <C>
Cash in bank $1,187,257 $ 507,161
Cash restricted for well
plugging 403,178 360,006
---------- ----------
$1,590,435 $ 867,167
---------- ----------
</TABLE>
<PAGE>
5. Loan payable
June 30, December 31,
2000 1999
Vehicle loan payable in monthly
installments to April, 2005 $73,598 -0-
Less current portion 8,771 -0-
--------
64,827
--------
7.125% loan, secured by vehicle, payable in monthly installments of
$1,143 including interest to April 2005, with a final payment of $25,956.
Maturities of long term portion are as follows:
Year ending
June 30 Principal
----------- ---------
2002 $ 9,415
2003 10,106
2004 10,848
2005 34,458
------
$64,827
6. 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 through0
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 work-over 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>
The Company's segment profit or loss and assets are as follows:
Well Services
Gas & Electric and Equipment Oil & Gas All
Marketing Rental Production Others Totals
June 30,
2000
Revenues
from
external
customers 7,727,154 203,323 189,248 -0- 8,119,725
Intersegment
revenues -0- -0- -0- -0- -0-
Other
revenue -0- -0- -0- 103,861 103,861
Depreciation
and
amortization -0- 21,166 7,200 9,307 37,673
Segment profit 95,504 (2,860) 114,392 (159,260) 47,776
Segment
assets 2,781,546 512,433 840,484 1,308,214
Expenditures
for segment
assets -0- 87,663 -0- -0- 87,663
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
<PAGE>
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
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 ENDED JUNE 30, 2000
Material Changes in Financial Conditions
Vineyard Oil & Gas Company's cash position increased $723,268 for the
six-month period ended June 30,2000. The principal reason was a decrease in
accounts receivable of $276,069, and an increase in accounts payable of
$371,818, accounting for $647,887 of the total increase. For the three month
period ended June 30, 2000, cash increased $308,998. For that period accounts
receivable decreased $702,907, while accounts payable decreased $431,876,
resulting in a net increase in cash of $271,031. Inventories increased $1,603
for the three month period and $13,026 for the six month period ended June 30,
2000. Prepaid expenses increased $7,980 for the three month period ended June
30,2000 the net result of monthly write downs to insurance expense, offset by
prepayment of state corporate taxes. Other assets represent the company's
investment in a jointly owned company. The increase of $7,448 for the six
months ended June 30,2000 is the net result of the company's six month share of
earnings of $24,285 offset by distributions received by the company. Long lived
assets showed a net increase of $61,875 for the six month period ending June
30, 2000. This represents additions of $87,663 offset by the write off of a
vehicle which was in an accident, of $25,788. The allowance for depreciation
increased by $37,673 charged to operations offset by $23,639 which was the
accumulated depreciation of the vehicle that was written off. Deferred revenues
increased $8,059 for the six month period, the amount of earnings on funds held
for future well plugging. Long term debt increased $75,000 for six month period
ended June 30, 2000. These funds were used for the purchase of a truck, and
will be repaid over a five year period. Shareholders equity increased $47,776,
the amount of net income for the six month period ended June 30, 2000.
Comparative results of operations
Total operating revenues for the six month period ended June 30, 2000,
increased $1,363,369, or 20%, over the prior year. Of this increase, gas
marketing accounted for $1,338,770 while electric brokering income decreased
$33,600. Well services decreased $28,674 from the same period in 1999 as a
result of reduced well maintenance for limited partnerships. The Company
purchased additional limited partnerships at the end of 1999. Consequently,
well maintenance billing is reduced in 2000. Production and royalties revenue
<PAGE>
increased $52,753, or 39%, for the six month period over the prior year's
revenue for the same period. This was the result of the Company's having
purchased the aforementioned partnerships with gas revenues coming directly to
the Company. Equipment and service rental income increased $34,120, or 52%, for
the six month period. This was the result of having completed more bid jobs in
the current year, especially in the second quarter. Other income increased
$25,747 over the similar period ended June 30, 1999. Interest income increased
$14,909. Earnings from jointly owned company decreased $25,080 because the 1999
period included a substantial gain on sale of a portion of unused pipeline.
Other income for June 30, 2000, includes a legal settlement of $24,517 and a
gain on casualty of $19,851.
Direct costs increased $1,402,586, or 22%, over the similar period ending June
30, 1999. Of this increase, gas purchases increased $1,380,993. Well
service costs remained substantially the same. Production costs increased
$26,884, or 66%, over the same period last year. This was because of the
increased number of wells which required tending and maintenance. Equipment
expense decreased $3,391 for the six month period ended June 30, 2000, as
compared to the same period last year. General and administrative expenses
decreased $20,867, or 8%, during this six month period. The largest decrease
was $10,826 in office salaries. Corporate taxes decreased $9,132 and insurances
decreased $3,391. Depreciation increased slightly, a result of the new
computer system purchased in 1999. The borrowing for a 2000 Mack truck resulted
in interest expense of $884 at June 30, 2000.
The schedule of business segment information shows segment profit by divisions
as segregated for reporting purposes. Marketing profit decreased $75,823 from
profit shown at June 30, 1999. Volume increased, and the rates were higher but
the profit margin overall was lower than the prior year. Segment profit in
1999 included unreimbursed TBF charges. These charges were not incurred in
2000. Net electric brokering profit decreased $24,024. Marketing salaries
increased $43,876 during this six month period. Well services and equipment
<PAGE>
rental loss for this six month period was $9,689 less than that of June 30,
1999. The decrease in well tending revenues was overcome by the increased
profit in equipment rental services. Production profit increased $26,917 due
mainly to the increase in company owned well production.
Overall, net income at June 30, 2000, increased $5,474 over the same six month
period as last year. This year's net income includes a gain on casualty of
$19,851, and a legal settlement of $24,517. The June 30, 1999, net income
included a gain on sale of unused portion of pipeline of $44,403.
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
____________________________
NOT APPLICABLE
ITEM 2. CHANGES IN SECURITIES
________________________________
NOT APPLICABLE
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
__________________________________________
<PAGE>
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.
