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, 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 Sept. 30,2000
<PAGE>
<TABLE>
PART 1 - FINANCIAL INFORMATION
CONDENSED BALANCE SHEETS
VINEYARD OIL & GAS COMPANY
<CAPTION>
September 30, December 31,
2000 1999
(unaudited)
<S> <C> <C>
ASSETS
Current Assets
Cash $1,710,632 $507,161
Accounts receivable 3,064,040 3,297,071
Inventories 109,087 97,500
Prepaid Expenses 152,466 32,204
---------- ----------
Total Current Assets 5,036,225 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 5,506,436 6,804,544
Drilling and other equipment 1,280,870 1,231,658
---------- ----------
7,237,994 8,486,890
Less Accumulated depreciation (6,740,595) (8,000,460)
---------- ----------
497,399 486,430
Other Assets
Cash restricted for well plugging 425,070 360,006
Investments 164,990 158,226
---------- ----------
590,060 518,232
---------- ----------
TOTAL ASSETS $6,123,684 $4,938,598
---------- ---------
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Accounts Payable
Trade $3,623,923 $2,729,620
Limited Partnerships 467,050 279,059
Accrued expenses 37,278 20,822
Current portion of long term debt 8,927 -0-
---------- ----------
Total Current Liabilities 4,137,178 3,029,501
Long-term debt-less current portion 62,536 -0-
<PAGE>
Deferred revenue 385,291 372,277
----------- ---------
Total Long Term Liabilities 447,827 372,277
Shareholder's Equity
Common Stock, authorized 15,000,000 shares
without par value, issued 5,125,562.5 shares
at Sept. 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) (3,428,109) (3,429,968)
---------- ----------
1,763,599 1,761,740
Less: cost of 67,944 shares held in treasury (224,920) (224,920)
---------- ----------
1,538,679 1,536,820
---------- ----------
$6,123,684 $4,938,598
---------- ----------
<FN>
See notes to condensed financial statements.
</TABLE>
<PAGE>
<TABLE>
PART I. - FINANCIAL INFORMATION
CONDENSED STATEMENTS OF INCOME (UNAUDITED)
FOR THE NINE MONTHS
ENDED SEPTEMBER 30, 2000 AND 1999
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,
2000 1999 2000 1999
<S> <C> <C> <C> <C>
Earned revenues
Gas and Electric Marketing $4,077,372 $2,670,909 $11,804,526 $9,092,893
Well Services 27,277 38,626 131,360 171,383
Production and Royalties 115,478 77,187 304,726 213,682
Equipment rental and
service income 15,629 41,870 114,869 106,990
--------- --------- --------- ---------
4,235,756 2,828,592 12,355,481 9,584,948
Other Income
Gain on deposition of assets 1,000 -0- 20,851 -0-
Rent and other income 34,194 19,171 93,919 47,920
Equity in earnings of jointly
owned company 13,492 12,094 37,777 61,459
--------- --------- --------- ---------
4,284,442 2,859,857 12,508,028 9,694,327
--------- --------- --------- ---------
Cost and Expenses
Direct costs of earned
revenues
Gas marketing 3,999,098 2,679,767 11,630,748 8,930,424
Well services 68,790 74,056 250,787 255,566
Production 66,658 11,701 134,314 52,473
Equipment expenses 1,746 842 4,766 7,219
Depreciation/amortization 19,556 15,512 47,922 46,299
--------- --------- --------- ---------
4,155,848 2,781,878 12,068,537 9,291,981
General and Administrative 168,556 142,055 421,486 415,852
Depreciation 4,653 4,134 13,960 12,402
Interest 1,302 -0- 2,186 -0-
--------- --------- --------- ---------
4,330,359 2,928,067 12,506,169 9,720,235
--------- --------- --------- ---------
Net income (loss) before
income taxes (45,917) (68,210) 1,859 (25,908)
--------- --------- --------- ---------
Income taxes (Note 3) -0- -0- -0- -0-
-------- --------- --------- --------
Net income (loss) (45,917) (68,210) 1,859 (25,908)
--------- --------- --------- ---------
Retained Earnings(Deficit)
<PAGE>
Beginning of Period (3,382,192) (3,315,224) (3,429,968) (3,357,526)
--------- --------- --------- ---------
End of Period (3,428,109) (3,383,434) (3,428,109) (3,383,434
Income (loss)per common share (.009) (.013) .0004 (.005)
--------- --------- --------- ---------
<FN>
See Note to condensed financial statements
</TABLE>
<TABLE>
<CAPTION>
CONDENSED STATEMENTS OF CASH FLOWS
VINEYARD OIL & GAS COMPANY (UNAUDITED)
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2000 AND 1999
3 Months 3 Months 9 Months 9 Months
Ended Ended Ended Ended
Sept. 30 Sept. 30, Sept. 30, Sept. 30,
2000 1999 2000 1999
<S> <C> <C> <C> <C>
Cash flow from operating
activities:
Income (loss) from operations ($ 45,917) ($ 68,210) $1,859 ($25,908)
Adjustments To Reconcile Net
Income to Net Cash Provided by
Operating Activities:
Depreciation and amortization 24,209 19,646 61,882 58,701
Provision for losses on
accounts receivable and
inventories 61,000 6,000 73,000 18,000
Gain on sale of property (1,000) -0- (20,851) -0-
Changes in operating assets
and liabilities providing
(using) cash:
Accounts receivable (116,038) (1,116,780) 160,031 (605,920)
Inventories 1,439 (18,857) (11,587) (29,073)
Prepaid expenses (119,697) 5,816 (120,262) 15,232
Other assets 684 (12,151) ( 6,764) 20,729
Accounts payable 710,476 755,089 1,082,294 480,429
Other current liabilities 13,628 10,791 16,456 (4,331)
Deferred revenue 4,955 4,806 13,014 14,152
---------- --------- --------- --------
Net cash provided by (used in)
operating activities 533,739 (413,850) 1,249,072 (57,989)
---------- ---------- ---------- --------
Cash flow from investing
activities: Capital expenditures 12,663 (6,455) (75,000) (45,239)
Proceeds from asset sale 1,000 -0- 23,000 -0-
--------- --------- --------- ---------
Net cash used in investing 13,663 (6,455) (52,000) (45,239)
activities --------- --------- --------- ---------
<PAGE>
Cash flow from financing activities:
Principal payments on borrowings (2,135) -0- (3,537) -0-
Borrowings -0- 75,000
--------- --------- --------- ---------
Net cash (used in) financing ( 2,135) -0- 71,463 -0-
activities --------- --------- --------- ---------
Increase (Decrease) in cash 545,267 (420,305) 1,268,535 (103,228)
Cash at beginning of period 1,590,435 1,195,019 867,167 877,942
--------- --------- --------- ----------
Cash at end of period $2,135,702 $ 774,714 $2,135,702 $ 774,714
--------- --------- --------- ----------
<FN>
See notes to condensed financial statements.
</TABLE>
<PAGE>
VINEYARD OIL & GAS COMPANY
NOTES TO CONDENSED FINANCIAL STATEMENTS
SEPTEMBER 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 nine months ended September 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
September 30, 2000, and 1999, due to available operating loss carry forwards.
4. Cash is classified as follows for financial statement reporting purposes:
For purposes of the statement of cash flows, cash includes demand
deposits, certificates of deposit, and short term investments with
original maturities of three months or less.
Short term investments consist of money market funds, and are reported at
market value, which equals cost.
The Company's non-cash investing and financing activities and cash
payments for interest and income taxes were as follows:
Cash paid during the year for:
2000 1999
Interest 3,537 -0-
Income Taxes -0- -0-
<PAGE>
<TABLE>
<CAPTION>
September 30, 2000 December 31, 1999
<S> <C> <C>
Cash in bank $1,710,632 $ 507,161
Cash restricted for well
plugging 425,070 360,006
---------- ----------
$2,135,702 $ 867,167
---------- ----------
</TABLE>
5. Loan payable
September 30, December 31,
2000 1999
Vehicle loan payable in monthly
installments to April, 2005 $71,463 -0-
Less current portion 8,927 -0-
--------
62,536
--------
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
September 30 Principal
----------- ---------
2002 $ 9,583
2003 10,286
2004 11,042
2005 31,625
------
$62,536
------
6. Marketing and production income and expenses are based on information
received from a third party. As a result of the untimely manner in which this
information is received, the Company has made a significant estimate for the
month of September, 2000, to record marketing income and expenses of $1,242,647
and $1,211,908, respectively. The production net income estimate for the month
of September, 2000, is $27,804. Due to the actual production and
transportation of the gas sales and purchases,the actual results may differ.
7. 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 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.
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
September 30,
2000
Revenues
from
external
customers 11,804,526 246,229 304,726 -0- 12,355,481
Intersegment
revenues -0- -0- -0- -0- -0-
Other
revenue -0- -0- -0- 152,547 152,547
Depreciation
and
amortization -0- 37,122 10,800 13,960 61,882
Segment profit 173,778 (46,446) 159,612 (285,085) 1,859
Segment
assets 2,738,775 444,878 1,086,262 1,853,769 6,123,684
<PAGE>
Expenditures
for segment
assets -0- 75,000 -0- -0- 75,000
September 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)
<PAGE>
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
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 SEPTEMBER 30, 2000
Material Changes in Financial Conditions
Vineyard Oil & Gas Company's cash position increased $1,268,535 for the
nine-month period and $545,267 for the three month period ended September 30,
2000. The principal reason was a decrease in gross accounts receivable of
$160,031, for the nine month period in an addition to an increase of accounts
payable of $1,082,294 for the same period, increasing cash by $1,242,325 for
the nine month period ended September 30, 2000. For the three month period,
the accounts receivable increase of $116,038 was offset by an increase in
accounts payable of $710,476 resulting in a net increase of $594,438.
<PAGE>
Inventories increased $11,587 for the nine month period and decreased $1,439
for the three month period, reflecting normal activity. Prepaid expenses
increased $120,262 and $119,697 for the nine month and for the three month
periods, respectively. The principal reason for the increase was $125,520 of
prepaid gas in the third quarter. This represents gas which was purchased and
will be distributed to customers within the next two months. Other assets
represent the company's investment in a jointly owned company. The investment
had a net increase of $6,764 for the nine month period. This represents
$37,777, the company's share of earnings, and $10,013 of additional
investment, offset by $41,026 of distribution received by the Company. Long-
lived assets were increased by $75,000, a vehicle for the field services, and
decreased by $25,788, the write off of a vehicle which was in an accident.
There was an additional write off of $1,298,108 from the long lived assets and
the related allowance for depreciation amounts at September 30, 2000. This
represents fully depreciated costs of drilling wells, well-site equipment and
other original well-site costs of wells which have been sold or plugged. The
allowance for depreciation was affected by the above $1,298,108, increased by
the depreciation provision of $61,882 for the same month period, and decreased
by the $23,639 allowance for the vehicle written off. Deferred revenues
increased for the nine month period ended September 30, 2000 by $13,014, the
amount earned on funds held for future well plugging. Long term debt increased
$71,463 for nine month period; $75,000 used for a truck purchase, offset by
principal payments of $3,537 to September 30, 2000.
Comparative results of operations
Total operating revenues increased $2,770,533, or 29%, over the comparable nine
month period in 1999, and $1,407,164, or 50%, over the same three month period
ended September 30, 1999. Of these totals gas marketing accounted for
increases of $2,757,541 or 31% for the nine moth period and $1,418,771 or 54%
for the three month period ended September 30,2000 as compared to the same
periods in 1999. The principal cause of the increase was a continuing increase
in gas prices during the current year. Gas volumes also increased during this
period. Well services revenue decreased $25,072 for the nine month period
ended September 30, 2000 as compared to 1999. Since purchasing the majority of
limited partnerships prior to the current year, the amount of well maintenance
services has decreased considerably. Production and royalties revenues
increased $91,044 or 43% for the comparable nine month period, and $38,290 for
the three month period. The increase is attributable to the prior year purchase
of limited partnerships and the increase in gas prices. Equipment rental and
service income remained fairly consistent in the two comparable periods. Other
income increased $43,168 over this period which included an increase in
interest income of $22,863, a result of more favorable interest rates.
Earnings from jointly owned company decreased $23,682 due mainly because the
1999 period included a substantial gain on sale of a portion of unused
pipeline. Other income includes a legal settlement of $24,517 and a gain on
disposition of property of $20,851.
Direct costs increased $2,776,556, or 30%, over the nine-month period and
$1,417,892 or 47% over the three-month period ended September 30, 2000 over
the same periods in 1999. These are comparable to the increases in revenues
explained above. The majority of this increase is due to gas purchases.
For the nine month period, gas purchases increased $2,654,324 or 30% over
the nine month period and $1,297,166 or 49% over the three month period ended
September 30, 2000, over 1999. The only other significant change in direct
costs was an increase in production costs of $81,841 for the nine month period
<PAGE>
and $54,957 for the three month period over the previous year. Of these
production costs well related expenses increased $67,467 over the same nine
month period in the previous year. The company implemented a well renovation
plan in an attempt to improve gas production. The majority of the increase was
attributable to this effort.
Overall, general and administrative expenses remained comparable to the nine
month total of 1999, but the three month period increased $26,501 over the same
period last year. Certain expenses decreased from 1999 but there was an
additional charge to bad debt expense at September 30, 2000 of $55,000 to
offset account balances of two customers which were deemed un-collectable at
the time.
For the month ended September, 2000, marketing and production was estimated as
disclosed in Note 6.
The schedule of business segment information shows segment profit by divisions
as segregated for reporting purposes. Marketing profit increased $11,309 over
the same nine month period in 1999. Of this total, gas profit on gas marketing
increased $113,217 but was offset by a decrease in net electric brokering of
$36,281 and an increase in salaries and related costs of $65,627. Well service
and equipment rental loss increased $28,225 for the nine month period. This
was due to an increased effort to improve company well production which
limited outside billing. This decrease in well service and equipment rental
revenues was partially offset by the production profit increase of $10,893.
Overall net income increased $27,767 over the same nine month period ended
September 30, 1999, but decreased in the third quarter of 2000 from June 30,
2000 by $45,917. This decrease was due mostly to the additional $55,000 charge
to bad debt expense as explained previously.
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
<PAGE>
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
___________________________________________
(a) EXHIBITS
________
NONE
(b) REPORTS ON FORM 8-K
___________________
NONE.
