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 September 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 September 30, 1999
<PAGE>
<TABLE>
PART 1 - FINANCIAL INFORMATION
BALANCE SHEETS (UNAUDITED)
VINEYARD OIL & GAS COMPANY
<CAPTION>
September 30, December 31,
1999 1998
<S> <C> <C>
ASSETS
Current Assets
Cash $ 365,322 $ 432,703
Accounts receivable 3,586,361 2,998,441
Inventories 201,534 172,461
Prepaid Expenses 14,537 29,769
__________ __________
Total Current Assets 4,167,754 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 1,232,831 1,187,592
_________ _________
8,383,747 8,338,508
Less Accumulated depreciation 7,972,464 7,913,763
_________ _________
411,283 424,745
Other Assets
Cash restricted for well plugging 409,392 445,239
Investments 164,888 185,617
__________ __________
574,280 630,856
_________ __________
TOTAL ASSETS $ 5,153,317 $ 4,688,975
__________ __________
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Accounts Payable
Trade $1,534,202 $2,538,160
Limited Partnerships 1,627,223 142,836
Accrued expenses 40,804 45,137
_________ _________
Total Current Liabilities 3,202,229 2,726,133
Deferred revenue 367,734 353,582
Shareholder's Equity
Common Stock, authorized 15,000,000 shares
without par value, issued 5,125,563 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) (3,383,434) (3,357,528)
__________ __________
1,808,274 1,834,180
Less: cost of 67,944 shares held in treasury (224,920) ( 224,920)
__________ __________
1,583,354 1,609,260
__________ __________
$ 5,153,317 $ 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 9 Months 9 Months
Ended Ended Ended Ended
Sept. 30 Sept.30 Sept. 30, Sept. 30,
1999 1998 1999 1998
<S> <C> <C> <C> <C>
Earned revenues
Gas Marketing $2,670,909 $3,204,088 $9,092,893 $8,380,216
Well Services 38,626 66,773 171,383 184,346
Production and Royalties 77,187 82,777 213,682 273,396
Equipment rental and
service income 41,870 93,055 106,990 213,278
_________ _________ _________ _________
2,828,592 3,446,693 9,584,948 9,051,236
Other Income 19,171 37,765 47,920 59,429
Equity in earnings
of jointly owned company 12,094 12,040 61,459 27,318
__________ __________ _________ ________
2,859,857 3,496,498 9,694,327 9,137,983
__________ __________ _________ ________
Cost and Expenses
Direct costs of earned
revenues
Gas marketing 2,679,767 3,142,153 8,430,424 8,179,761
Well services 74,056 127,581 255,566 317,516
Production 11,701 7,507 52,473 117,589
Equipment expenses 842 28,773 7,219 45,146
Depreciation/amortization 15,512 17,903 46,299 48,046
_________ _________ _________ _________
2,781,878 3,323,917 9,291,981 8,708,052
General and Administrative 142,055 127,626 415,852 377,590
Depreciation 4,134 2,892 12,402 8,675
Interest -0- -0- -0- 469
_________ _________ ________ _________
2,928,067 3,454,435 9,720,235 9,094,786
_________ _________ _________ _________
Net income before income taxes (68,210) 42,063 (25,908) 43,197
_________ _________ __________ _________
Income taxes (Note 3) -0- -0- -0- -0-
_________ _________ _________ _________
Net income (68,210) 42,063 (25,908) 43,197
_________ _________ _________ _________
Retained Earnings (Deficit)
Beginning of Period (3,315,224) (3,542,962) (3,357,526) (3,544,096)
_________ _________ _________ _________
Retained Earnings (Deficit)
End of Period (3,383,434) (3,500,899) (3,383,434) (3,500,899)
_________ _________ _________ _________
Income per common share (.013) .008 (.005) .008
_________ _________ _________ _________
Certain 1998 Amounts have been reclassified to conform to 1999 classifications.
<FN>
See Note to condensed financial statements
</TABLE>
<TABLE> STATEMENTS OF CASH FLOWS (UNAUDITED)
VINEYARD OIL & GAS COMPANY
FOR THE SIX MONTHS ENDED SEPTEMBER 30, 1999 AND 1998
<CAPTION>
3 Months 3 Months 9 Months 9 Months
Ended Ended Ended Ended
Sept 30, Sept 30, Sept 30, Sept 30,
1999 1998 1999 1998
<S> <C> <C> <C> <C>
Cash flow from operating
activities:
Income (loss) from operations $ (68,210) $ 42,063 $ (25,908) $ 43,197
Adjustments To Reconcile Net
Income to Net Cash Provided by
Operating Activities:
Depreciation and amortization 19,646 20,795 58,701 56,721
Provision for losses on
accounts receivable and
inventories 6,000 6,000 18,000 18,000
Gain on sale of property -0- -0- -0- (1,459)
Changes in operating assets
and liabilities providing
(using) cash:
Accounts receivable (1,116,780) (365,910) (605,920) (36,228)
Inventories (18,857) 4,968 (29,073) 5,799
Prepaid expenses 5,816 (6,156) 15,232 2,268
Other assets (12,151) 35,425 20,729 19,974
Accounts payable 755,089 533,179 480,429 180,074
Other current liabilities 10,791 1,844 (4,331) 11,790
Deferred revenue 4,806 (42,969) 14,152 (35,832)
_________ _______ _______ ________
Net cash provided by (used in)
operating activities (413,850) 229,239 (57,989) 264,304
_________ _________ _________ ________
Cash flow from investing
activities: (6,455) -0- (45,239) (2,500)
Capital expenditures
Proceeds from asset sales -0- -0- -0- 3,085
_________ __________ __________ ________
Net cash used in investing
activities (6,455) -0- (45,239) 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 (420,305) 229,239 (103,228) 264,889
Cash at beginning of period 1,195,019 1,098,171 877,942 1,062,521
_________ __________ __________ ________
Cash at end of period 774,714 $1,327,410 774,714 1,327,410
_________ __________ __________ ________
<FN>
See notes to condensed financial statements.
</TABLE>
VINEYARD OIL & GAS COMPANY
NOTES TO CONDENSED FINANCIAL STATEMENTS
SEPTEMBER 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 nine months ended September 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 September 30
1999, and 1998, due to available operating loss carry forwards.
4. Cash is classified as follows for financial statement reporting purposes:
<TABLE>
<CAPTION>
Sept 30, 1999 December 31, 1998
<S> <C> <C>
Cash in bank $ 365,322 $1,150,724
Cash restricted for well
plugging 409,392 341,566
__________ __________
$ 774,714 $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>
Sept 30,
1999
Revenues
from
external
customers 9,092,893 278,373 213,682 -0- 9,584,948
Intersegment
Revenues -0- -0- -0- -0- -0-
Other
Revenue -0- -0- -0- 109,379 109,379
Depreciation
and
amortization -0- 33,809 12,490 12,402 58,701
Segment profit 162,469 (18,221) 148,719 (318,875) (25,908)
Segment
assets 3,569,109 496,695 611,942 475,571 5,153,317
Expenditures
for segment
assets -0- 45,239 -0- -0- 45,239
Sept.30,
1998
Revenues
from
external
customers 8,380,216 390,624 273,396 -0- 9,051,236
Intersegment
revenues -0- -0- -0- -0- -0-
Other
revenue -0- -0- -0- 86,747 86,747
Depreciation
and
amortization -0- 34,685 13,361 8,675 56,721
Segment profit 200,455 283 142,446 (299,987) 43,197
Segment
assets 2,334,335 1,165,137 741,706 408,363 4,649,541
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 SEPTEMBER 30, 1999
Material Changes in Financial Conditions
Vineyard Oil & Gas Company's cash position decreased $103,228 for the nine
month period and $420,305 for the three month period ended September 30, 1999.
For the nine month period, accounts receivable balances increased $587,920 and
accounts payable increased $480,429 resulting in a net decrease in cash
$107,491. For the three month period, accounts receivable increased $1,110,780
and accounts payable increased $755,089 resulting in a cash decrease of
$355,691. Inventories increased $29,073 for the nine month period and $18,857
for the three month period ended September 30, 1999. These increases resulted
in a cash decrease for the respective periods. Prepaid expenses decreased
$15,232 for the nine month period, and $5,816 for the three month period,
reflecting normal monthly charge offs. Other assets, excluding restricted
cash, decreased $20,729 for the nine month period ended September 30, 1999.
This consists of net profits from a jointly owned company of $49,365 offset by
cash withdrawals of $70,094. For the three month period, profits of $12,094
accounted for substantially all of the increase for the quarter. Fixed assets
increased $45,239 for the nine month period and $6,455 for the third quarter.
Major purchases included computers and related equipment. Accumulated
depreciation for the periods reflect depreciation expense for the periods.
Accounts payable accounted for substantially all of the increases in
current liabilities. These were explained above. Deferred revenue increased
$14,152 for the nine month period and $4,806 for the three month period
representing interest earned on monies held for future plugging activities.
Shareholder's equity decreased $25,908, the amount of the earnings deficit
for the nine month period ending September 30, 1999.
Material Changes and Results of Operations
Earned revenues increased $533,712 for the nine month period and decreased
$618,101 for the three month period ended September 30, 1999 as compared to
1998. Gas marketing increased $637,677 for the nine month period and decreased
$558,179 for the three month period ended September 30, 1999 as compared to the
prior year. Electric brokering income was $75,000 and $25,000 for the nine and
three month periods in 1999. Such income in 1998 was negligible and included
in other income. Well service, production, and equipment rental all decreased
a total of $178,965 for the nine month period and $84,922 for the three month
period as compared to 1998. Income from earnings of jointly owned company
increased $34,141 for the nine month period ended September 30, 1999 over 1998.
This accounted for the majority of the increase in other income. Cost of sales
increased $583,929 for the nine month period and decreased $542,039 for the
three month period ended September 30, 1999 as compared to 1998. Gas marketing
costs increased $735,413 for the nine month period and decreased $448,986 for
the three month period as compared to 1998. Well services, production and
equipment rental costs decreased $164,987 for the nine month period and $77,267
for the three month period ended September 30, 1999 which is consistent with
the decrease in revenues. General and administrative expenses increased for
the nine month and three month periods by $38,262 and $14,429 respectively.
Officer's Salaries increased $23,262 for the nine month period as compared to
1998. This was due to a retroactive salary adjustment. Net income for the
nine month period ended September 30, 1999 decreased $69,105 from the same
period in 1998. Income decreased $110,273 for the comparable three month
periods ended September 30. Gas marketing costs exceeded revenues by
$35,708 in the third quarter 1999 as opposed to gas revenues exceeding
costs by $61,935 for the three month period ended September 30, 1998,
a total decrease of $97,643.
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.
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> 9-MOS
<EXCHANGE-RATE> 1
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-END> SEPT-30-1999
<CASH> 365,322
<SECURITIES> 0
<RECEIVABLES> 3,710,627
<ALLOWANCES> 124,266
<INVENTORY> 201,534
<CURRENT-ASSETS> 4,167,754
<PP&E> 8,383,747
<DEPRECIATION> 7,972,464
<TOTAL-ASSETS> 5,153,317
<CURRENT-LIABILITIES> 3,202,229
<BONDS> 0
<COMMON> 256,278
0
0
<OTHER-SE> 1,327,076
<TOTAL-LIABILITY-AND-EQUITY> 5,153,317
<SALES> 9,584,948
<TOTAL-REVENUES> 9,694,327
<CGS> 9,291,981
<TOTAL-COSTS> 6,510,103
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 18,000
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (25,908)
<INCOME-TAX> 0
<INCOME-CONTINUING> (25,908)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (25,908)
<EPS-BASIC> (.005)
<EPS-DILUTED> (.005)
</TABLE>
