-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, LfQ7Tys6mpO2ZuAL1JPhnjIOsvCVpDXxMFB2qee64E8S/i7wsrVoVQY79I7IdHKk 5TV19E3qpGjzsrbHiPWeJQ== 0000355115-97-000002.txt : 19970123 0000355115-97-000002.hdr.sgml : 19970123 ACCESSION NUMBER: 0000355115-97-000002 CONFORMED SUBMISSION TYPE: 10-Q/A PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19960331 FILED AS OF DATE: 19970122 SROS: AMEX FILER: COMPANY DATA: COMPANY CONFORMED NAME: ALAMCO INC CENTRAL INDEX KEY: 0000355115 STANDARD INDUSTRIAL CLASSIFICATION: CRUDE PETROLEUM & NATURAL GAS [1311] IRS NUMBER: 550615701 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q/A SEC ACT: 1934 Act SEC FILE NUMBER: 001-08490 FILM NUMBER: 97508677 BUSINESS ADDRESS: STREET 1: 200 W MAIN ST CITY: CLARKSBURG STATE: WV ZIP: 26301 BUSINESS PHONE: 3046236671 MAIL ADDRESS: STREET 1: P.O. BOX 1740 STREET 2: 200 W. MAIN STREET CITY: CLARKSBURG STATE: WV ZIP: 26302-1740 FORMER COMPANY: FORMER CONFORMED NAME: ALLEGHENY LAND & MINERAL CO DATE OF NAME CHANGE: 19830718 10-Q/A 1 SECURITIES AND EXCHANGE COMMISSION Washington, D. C. 20549 FORM 10-Q/A AMENDMENT NO. 1 (Mark One) (X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the Quarterly Period Ended March 31, 1996 OR ( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Commission File Number: 1-8490 ALAMCO, INC. (Exact name of registrant as specified in its charter) Delaware 55-0615701 (State or other jurisdiction (IRS Employer Identification No.) of incorporation or organization) 200 West Main Street, Clarksburg, WV 26301 (Address of principal executive (Zip Code) offices) Registrant's telephone number, including area code (304) 623-6671 - -------------------------------------------------------------------------------- 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, and (2) has been subject to such filing requirements for the past 90 days. Yes X No ------ ------ The number of shares outstanding of each of the registrant's classes of common stock as of May 1, 1996, is set forth below: Class of Stock Number of Shares Outstanding Common Stock, $.10 par value 4,717,774 PART I. Financial Information Pages Item 1. Financial Statements Condensed Consolidated Statements of Income . . . . . . . . . 3 for the three months ended March 31, 1996 and 1995 Condensed Consolidated Balance Sheets as of . . . . . . . . . 4-5 March 31, 1996 and December 31, 1995 Condensed Consolidated Statements of Cash Flows . . . . . . . 6 for the three months ended March 31, 1996 and 1995 Condensed Consolidated Statements of Stockholders' . . . . . . 7 Equity for the three months ended March 31, 1996 and 1995 Notes to the Condensed Consolidated Financial . . . . . . . . 8-9 Statements Item 2. Management's Discussion and Analysis of . . . . . . . . . . . 10-12 Financial Condition and Results of Operations PART II. Other Information Item 6. Exhibits and Reports on Form 8-K . . . . . . . . . . . . . . . 13 Signature Page . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14 Three Months Ended March 31, ----------------- 1996 1995 ---- ---- Revenues: Gas and oil sales $ 6,187 $ 3,011 Well tending income 179 249 Other 258 200 ------ ------- Total revenues 6,624 3,460 ------ ------- Expenses: Operating 2,073 1,561 General and administrative 698 772 Option plan compensation 633 (29) Depreciation, depletion and amortization 1,078 1,016 Interest 341 299 ------- -------- Total expenses 4,823 3,619 ------- -------- Income (loss) from operations 1,801 (159) Other nonoperating income, net 83 64 -------- ------- Income (loss) before income taxes 1,884 (95) Income tax provision (benefit) 586 (14) -------- ------- Net income (loss) $1,298 ($81) ======== ======= Net income (loss) per share (Note 6) $0.27 ($0.02) ======== ======== Weighted average number of common and common equivalent shares outstanding 4,865,865 4,653,382 ========= ========= March 31, December 31, 1996 1995 ---- ---- (Unaudited) ASSETS Current assets: Cash and cash equivalents $ 3,243 $ 3,297 Accounts receivable 5,468 3,116 Due from partnerships and programs 57 72 Inventories and other current assets 288 368 Deferred taxes 202 138 ------ ------ Total current assets 9,258 6,991 ------ ------ Property and equipment: Gas and oil producing properties (Successful Efforts Method) 79,530 78,076 Other property and equipment 6,755 5,740 ------ ------- 86,285 83,816 Less accumulated depreciation, depletion and amortization 33,153 32,201 ------- ------- 53,132 51,615 Other assets 1,217 1,294 ------- ------- Total assets $63,607 $59,900 ======= ======= (Continued) March 31, December 31, 1996 1995 ---- ---- (Unaudited) LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Current portion of long-term debt and capital lease obligations $ 35 $ 33 Accounts payable 847 1,026 Accrued expenses 1,313 1,545 Due working interest and royalty owners 1,911 3,309 Deferred revenue 7 113 Cash compensation under stock option plan (Note 7) 517 355 Income tax payable 51 -- ------- ------- Total current liabilities 4,681 6,381 ------- ------- Long-term debt and capital lease obligations 16,857 13,674 Due working interest and royalty owners 273 325 Deferred revenue 27 29 Deferred taxes 9,033 8,566 Other long-term liabilities 378 429 ------- ------- Total liabilities 31,249 29,404 ------- ------- Commitments and contingencies Stockholders' equity: Preferred stock, par value $1.00 per share; 1,000,000 shares authorized; none issued Common stock, par value $.10 per share; 15,000,000 shares authorized; 4,768,898 and 4,762,898 shares issued and outstanding, respectively including treasury stock 477 476 Common stock issuable under options (Note 7) 1,382 948 Additional paid-in capital 31,355 31,245 Accumulated deficit (651) (1,949) -------- ------- 32,563 30,720 Less: Treasury stock, at cost, 51,124 and 62,405 shares of common stock, respectively 205 224 ------- ------- Total stockholders' equity 32,358 30,496 -------- ------- Total liabilities and stockholders' equity $ 63,607 $ 59,900 ======= ======= Three Months Ended March 31, ----------------- 1996 1995 ---- ---- Cash flows from operating activities: Net income (loss) $ 1,298 ($ 81) Adjustments to reconcile net income to net cash provided by operating activities: Depreciation, depletion and amortization 1,078 1,016 Deferred taxes 403 73 Provision for common stock issuable under options 449 (24) Gains on asset sales (26) (22) Issuance of stock for employee benefits and compensation expense 111 70 Other factors, net 1 (3) Increase (decrease) in cash from changes in: Accounts receivable (2,352) 330 Due from partnerships and programs 15 13 Due working interest and royalty owners (1,398) 69 Inventories and other current assets 80 33 Accounts payable & accrued expenses (411) (958) Deferred revenue (106) 93 Accrued cash compensation under stock option plan 162 (8) Income tax payable 51 -- -------- ------- Net cash (used in) provided by operating activities (645) 601 -------- ------- Cash flows from investing activities: Proceeds from disposal of fixed assets 36 233 Capital expenditures (2,566) (1,350) Investment in limited partnership (21) -- Other assets 59 (9) -------- ------- Net cash used in investing activities (2,492) (1,126) -------- ------- Cash flows from financing activities: Borrowings under line of credit 3,200 750 Payments on line of credit -- (500) Principal payments on long-term debt and capital lease obligations (16) (47) Acquisition of treasury stock (15) (5) Proceeds from exercise of stock options 19 11 Other liabilities (105) (635) ------- ------- Net cash provided by (used in) financing activities 3,083 (426) ------- ------- Net decrease in cash and cash equivalents (54) (951) Cash and cash equivalents - beginning of period 3,297 2,632 ------- ------- Cash and cash equivalents - end of period $ 3,243 $ 1,681 ======= ======= Supplemental disclosure of cash flow information: Cash paid during the period for: Interest $ 341 $ 303 Common Common Addit- Stock Treasury Stock ional Accumu- Issuable Stock ------------- Paid-in lated Under -------------- Shares Dollars Capital Deficit Options Shares Dollars ------ ------- -------- -------- ------ -------------- Balance December 31, 1994 4,712,713 $471 $30,995 ($3,228) $507 63,360 $188 Issuance of treasury stock -- -- 36 -- -- (10,370) (34) Acquisition of treasury stock -- -- -- -- -- 795 5 Exercise of stock options 3,733 1 10 -- -- -- -- Stock option compensation -- -- (3) -- (21) -- -- Net loss -- -- -- (81) -- -- -- --------- ---- ------- ------- ---- ------ ---- Balance March 31, 1995 4,716,446 $472 $31,038 ($3,309) $486 53,785 $159 ========= ==== ======= ======= ==== ====== ==== Balance December 31, 1995 4,762,898 $476 $31,245 ($1,949) $948 62,405 $224 Issuance of treasury stock -- -- 77 -- -- (12,929) (34) Acquisition of treasury stock -- -- -- -- -- 1,648 15 Exercise of stock options 6,000 1 18 -- -- -- -- Stock option compensation -- -- 15 -- 434 -- -- Net income -- -- -- 1,298 -- -- -- --------- ---- ------- ------ ---- ------ ---- Balance March 31, 1996 4,768,898 $477 $31,355 ($651) $1,382 51,124 $205 ========= ==== ======= ====== ===== ====== ==== 1. Accounting Policies Reference is hereby made to the Company's Annual Report on Form 10-K for the year ended December 31, 1995 ("1995 10-K"), which includes additional information about the Company, its operations and its consolidated financial statements, and contains a summary of major accounting policies followed by the Company in preparation of its consolidated financial statements. These policies were also followed in preparing the quarterly financial statements included herein. The year-end consolidated balance sheet data contained herein was derived from audited financial statements, but does not include all disclosures required by generally accepted accounting principles. The management of the Company believes that all adjustments necessary to make a fair statement of the results in these interim periods have been made. All adjustments reflected in the financial statements are of a normal recurring nature except as described in the Notes to Condensed Consolidated Financial Statements. Net results for the three month period ended March 31, 1996 are not necessarily indicative of the results to be expected for the full year. The disclosure provisions of Statement of Financial Accounting Standards No. 123, "Accounting for Stock-Based Compensation" will be adopted by the Company in its 1996 annual financial statements. 2. Cash and Cash Equivalents Cash and cash equivalents totalled $3,243,000 at March 31, 1996. Of this amount, approximately $2,694,000 was available for general corporate purposes and the balance was held for third parties, including $392,000 in gas and oil sales proceeds held for eventual distribution to outside working interest and royalty owners, $40,000 in drilling advances from other owners and $117,000 withheld from outside working interest owners' distributions to be utilized for future ad valorem tax payments (Note 3). The Company's cash balance at March 31, 1996 includes $2,980,000 invested in commercial paper, U.S. Government and Agency Securities with an annualized 4.97 percent return. 3. Plugging and Ad Valorem Tax Funds The Company retains a portion of outside investors' monthly gas and oil production proceeds to be utilized for anticipated future well plugging and abandonment costs and ad valorem tax payments. The funds, totalling $389,000 at March 31, 1996, are invested in securities issued or guaranteed by the United States Treasury at BANK ONE, Texas, N.A. ("BANK ONE") in accounts segregated from those of the Company, of which $272,000 is included in other assets. Interest earned on the funds accrues to the benefit of the working interest owners. Amounts corresponding to these assets are recorded in liabilities. 4. Income Taxes Income taxes are provided for financial reporting purposes based on management's best estimate of the effective tax rate expected to be applicable for the full calendar year. The effective tax rate for first quarter 1996 is higher than for first quarter 1995 due to decreased effect of percentage depletion deductions. 5. Common Stock Held In Treasury The Company contributed 8,750 and 10,370 shares of its common stock held in treasury to the Company's 401(k) Plan on January 16, 1996 and February 28, 1995. 6. Earnings Per Share Primary earnings per share is based on the weighted average number of common and common equivalent shares outstanding. Common equivalent shares are included in the calculation beginning in 1996. They were not significant in previous years. Primary and fully diluted earnings per share are the same. 7. Option Plan Compensation As a result of exercises of nonqualified stock options in 1996, Alamco reviewed its accounting for stock options and concluded that certain options should have been treated as variable awards rather than fixed awards. An employee tax reimbursement feature included in the option agreements requires that variable award accounting be followed. Under variable award accounting, periodic changes in the difference between the market price of the Company's common stock and the exercise prices of outstanding nonqualified stock options should be recognized as non-cash compensation expense. As a result, option plan compensation expense of $633,000 was recorded in the first quarter of 1996 and option plan compensation benefit of $29,000 was recorded in the same period of 1995. Management's discussion and analysis of changes in the Company's financial condition, including results of operations and liquidity and capital resources during the three-month periods ended March 31, 1996 and 1995, respectively, are presented below. Results of Operations The Company recorded net income of $1,298,000 for the three months ended March 31, 1996, compared to a net loss of $81,000 for the same period in 1995. Income from operations for the first quarter of 1996 totalled $1,801,000 compared to a loss from operations of $159,000 for the first quarter of 1995. Total revenues of $6,624,000 in the first three months of 1996 were $3,164,000 or 91 percent higher than total revenues of $3,460,000 in the first three months of 1995. Gas and oil sales totalled $6,187,000 in the first quarter of 1996 and represented a $3,176,000 increase over the same period last year. Higher gas prices, higher gas sales volumes and higher oil sales volumes and prices contributed $2,517,000, $582,000 and $77,000, respectively, to the increase as compared to the first quarter of 1995. Gas and oil sales volumes totalled 1,685,700 equivalent thousand cubic feet ("EMCF"), a 21 percent increase over the 1,392,400 EMCF sold during the three month period ending March 31, 1995. The Company received an average of $3.74 per MCF for gas and $17.31 per barrel ("BBL") for oil for the three month period ending March 31, 1996, compared to $2.11 per MCF and $16.05 per BBL in the same period last year. Well tending income decreased $70,000 due principally to the reduction in the number of wells the Company operates for outside investors. Other operating revenue increased $58,000 due primarily to increased marketing revenue as a result of higher gas and oil sales. Total expenses in the first quarter of 1996 were $4,823,000, an increase of $1,204,000 or 33 percent compared to expenses in the first three months of 1995 of $3,619,000. Operating expenses were higher by $512,000 or 33 percent due primarily to the Company's higher well ownership percentage. First quarter 1996 included higher operating expenses of $48,000 due to snow removal, higher gas and oil production taxes of $186,000 and higher employee-related expenses of $169,000. General and administrative expenses for the first quarter of 1996 were lower by $74,000 or 10 percent as compared to last year mainly because of lower employee-related expenses. As a result of exercises of nonqualified stock options in 1996, Alamco reviewed its accounting for stock options and concluded that certain options should have been treated as variable awards rather than fixed awards. An employee tax reimbursement feature included in the option agreements requires that variable award accounting be followed. Under variable award accounting, periodic changes in the difference between the market price of the Company's common stock and the exercise prices of outstanding nonqualified stock options should be recognized as non-cash compensation expense. As a result, option plan compensation expense of $633,000 was recorded in the first quarter of 1996 and option plan compensation benefit of $29,000 was recorded in the same period of 1995. Depreciation, depletion and amortization expense was higher by $62,000 in the first quarter of 1996 due to higher production and property and equipment levels, partially offset by higher oil and gas reserve levels. Interest expense for the first three months of 1996 was $341,000, an increase of $42,000 over the same period last year due primarily to higher debt balances. Non-operating income in the first quarter of 1996 totalled $83,000 as compared to $64,000 in the same period last year due to higher interest income. The Company recorded an income tax provision of $586,000 in the first quarter of 1996 as compared to an income tax benefit of $14,000 for the first quarter of 1995. Liquidity and Capital Resources Working Capital. At March 31, 1996, the Company had working capital of $4,577,000, as compared to $610,000 at December 31, 1995. The $3,967,000 increase in working capital is primarily due to higher accounts receivables resulting from the higher price received by the Company for gas sales in the first quarter of 1996 as compared to that received in the fourth quarter of 1995. Because the Bank One credit facility agreement requires the payment of interest only until July 1, 1998, current liabilities on the Company's March 31, 1996 balance sheet do not include any principal payments for this credit facility. Cash and cash equivalents totalled $3,243,000 at March 31, 1996. Of this amount, approximately $2,694,000 was available for general corporate purposes and the balance was held for third parties. Operating activities used a net $645,000 which was negatively impacted by $1.9 million due to the payout of proceeds to outside owners from the Columbia settlement. Investing activities used a net $2,492,000 including $2,566,000 in capital expenditures, and financing activities provided a net $3,083,000. Revolving Credit Facility. The Company has in place a $30.0 million revolving credit facility with Bank One. Currently $13.2 million is available for borrowing by the Company. Interest accrues and is paid monthly at a rate of Bank One's prime rate plus one-fourth of one percent. Capital Expenditures and Commitments. In the first quarter of 1996, the Company's capital expenditures totalled $2,566,000, including approximately $1,454,000 spent on gas and oil exploration, development and acquisition activities. The Company's executive offices, approximately 20,000 square feet, were purchased on January 5, and February 7, 1996 for $568,000 using funds borrowed from the Bank One credit facility. The remaining capital expenditures were spent on other property and equipment. Most of the Company's capital spending is discretionary and the ultimate level of spending will be dependent, among other things, on the Company's assessment of the gas and oil business environment, the number of gas and oil prospects, and gas and oil business opportunities in general. The level of the Company's 1996 capital expenditures will to a great extent depend upon the gas prices received by the Company. As of May 6, 1996, the Company has drilled 9 wells this year, 7 of which have been successful, 1 dry hole and 1 well is still being evaluated. Based on current gas futures prices, Alamco currently plans to drill up to 30 wells in 1996. Alamco will continue with its enhancement program on existing wells. The Company plans to continue with its acreage acquisition strategy and will position itself to increase both exploratory and development drilling. The Company remains committed to the acquisition of producing properties at favorable prices. On April 18, 1996, the Company agreed with the United States Environmental Protection Agency ("EPA") to settle its outstanding administrative complaint issued by the EPA for an amount significantly less than the initial proposed penalty of nearly $124,000. The EPA issued the complaint on May 23, 1994 for alleged violations of the Clean Water Act resulting from an oil discharge at Alamco's Days Chapel Field in Claiborne County, Tennessee. The incident occurred in December 1993 when vandals severed locks securing the valves on the Alamco storage tanks and discharged approximately 174 barrels of oil into a local creek. The Company expects that the consent decree finalizing this matter will be completed and signed before year-end. Other. Some of the statements contained in this Form 10-Q may be "forward- looking" statements. Refer to the Company's 1995 10-K for a discussion of factors that may affect forward-looking statements. Item 6. Exhibits and Reports on Form 8-K. (a) Exhibits. Exhibit No. Description Filing ---------- ----------- ------ 27 Financial Data Schedule Filed herewith (b) No current reports on Form 8-K were filed during the quarter ended March 31, 1996. Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the under- signed thereunto duly authorized. January 15, 1997 /s/ John L. Schwager ----------------------------------- John L. Schwager, President, Chief Executive Officer, and Principal Financial Officer EX-27 2
5 This summary contains financial information extracted from the statement of income and balance sheet and is qualified in its entirety by reference to such financial statements. 1,000 3-MOS DEC-31-1996 JAN-01-1996 MAR-31-1996 3,243 0 5,527 59 79 9,258 86,285 33,153 63,607 4,681 16,857 0 0 477 31,881 63,607 6,187 6,624 2,073 1,078 0 0 341 1,884 586 1,298 0 0 0 1,298 0.27 0.27
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