-----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, FPJKsYJevMR1OaMB3hyHshFpJmo6B+jn7lhq8kvql2Yge/OdaBNuMf+b2R4K67zW 0uBW1aUf5Lp0345qnoAm0w== 0000950129-98-003369.txt : 19980813 0000950129-98-003369.hdr.sgml : 19980813 ACCESSION NUMBER: 0000950129-98-003369 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19980630 FILED AS OF DATE: 19980812 SROS: AMEX FILER: COMPANY DATA: COMPANY CONFORMED NAME: ADAMS RESOURCES & ENERGY INC CENTRAL INDEX KEY: 0000002178 STANDARD INDUSTRIAL CLASSIFICATION: WHOLESALE-PETROLEUM & PETROLEUM PRODUCTS (NO BULK STATIONS) [5172] IRS NUMBER: 741753147 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 001-07908 FILM NUMBER: 98684086 BUSINESS ADDRESS: STREET 1: 6603 KIRBYVILLE STREET 2: P O BOX 844 CITY: HOUSTON STATE: TX ZIP: 77033 BUSINESS PHONE: 7136400100 MAIL ADDRESS: STREET 1: P O BOX 844 CITY: HOUSTON STATE: TX ZIP: 77001 FORMER COMPANY: FORMER CONFORMED NAME: ADA RESOURCES INC DATE OF NAME CHANGE: 19790620 10-Q 1 ADAMS RESOURCES & ENERGY, INC. - DATED 6/30/98 1 SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D. C. 20549 FORM 10-Q (Mark One) [X] Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the quarterly period ended June 30, 1998 or [ ] Transition report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the transition period from to ------------------ ------------------ Commission File Number 1-7908 ------------------ ADAMS RESOURCES & ENERGY, INC. (Exact name of Registrant as specified in its charter) Delaware 74-1753147 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 5 Post Oak Park, Houston, Texas 77027 (Address of principal executive office & Zip Code) Registrant's telephone number, including area code (713) 881-3600 ------------------ 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 ------ ------ The number of shares of Common Stock of the Registrant, par value $.10 per share, outstanding at July 31, 1998 was 4,217,596. ------------- --------- 2 ADAMS RESOURCES & ENERGY, INC. AND SUBSIDIARIES UNAUDITED CONSOLIDATED STATEMENT OF OPERATIONS (IN THOUSANDS, EXCEPT PER SHARE DATA)
Six Months Ended Three Months Ended June 30, June 30, ----------------------- ----------------------- 1998 1997 1998 1997 --------- --------- --------- --------- REVENUE: Marketing $ 860,706 $ 917,467 $ 454,329 $ 432,855 Transportation 16,992 14,271 8,329 7,581 Oil & Gas 3,516 4,422 1,920 1,579 --------- --------- --------- --------- 881,214 936,160 464,578 442,015 --------- --------- --------- --------- COSTS AND EXPENSES: Operating Marketing 856,572 916,434 452,099 432,887 Transportation 14,890 11,446 7,356 6,153 Oil & Gas 1,939 794 1,637 359 Corporate general and administrative 1,157 1,077 614 541 Depreciation, depletion and amortization 4,252 2,752 2,059 1,139 --------- --------- --------- --------- 878,810 932,503 463,765 441,079 --------- --------- --------- --------- Operating earnings 2,404 3,657 813 936 OTHER INCOME (EXPENSE): Property sales and other 108 615 -- 261 Interest (146) (128) (81) (41) --------- --------- --------- --------- (38) 487 (81) 220 --------- --------- --------- --------- Earnings before income taxes 2,366 4,144 732 1,156 Income tax provision Current 702 171 208 40 Deferred 200 1,375 100 400 --------- --------- --------- --------- 902 1,546 308 440 --------- --------- --------- --------- NET EARNINGS $ 1,464 $ 2,598 $ 424 $ 716 ========= ========= ========= ========= PER COMMON SHARE DATA: Basic and diluted net earnings $ .35 $ .62 $ .10 $ .17 ========= ========= ========= ========= Dividends $ -- $ -- $ -- $ -- ========= ========= ========= =========
The accompanying notes are an integral part of these financial statements. - 2 - 3 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Results of Operations Six Months Comparison - Marketing Marketing division revenues and operating earnings were as follows (in thousands):
Six Months Ended Three Months Ended June 30, June 30, ---------------------- ---------------------- 1998 1997 1998 1997 --------- --------- --------- --------- Revenues $ 860,706 $ 917,467 $ 454,329 $ 432,855 Operating earnings (loss) $ 2,577 $ 540 $ 1,452 $ (282)
Gross revenues for the Company's Marketing operations were reduced by $56,761,000 or 6%, in the comparative current period as a result of reduced average crude oil prices partially offset by greater volumes of crude oil purchased at the wellhead. Compared to last year's first half, average crude oil sales prices were reduced by approximately 38% in 1998 as crude oil fell to the $13 per barrel range. Average wellhead purchases were 105,000 barrels per day in 1998 versus 60,000 barrels per day in 1997. Marketing division operating margins for the first six months of 1998 increased to $2,577,000 because of the reversal of the unusually unfavorable market conditions that existed in 1997. - Transportation Transportation revenues and operating earnings were as follows (in thousands):
Six Months Ended Three Months Ended June 30, June 30, ------------------ ------------------ 1998 1997 1998 1997 ------- ------- ------- ------- Revenues $16,992 $14,271 $ 8,329 $ 7,581 Operating earnings $ 1,659 $ 2,518 $ 740 $ 1,266
Transportation revenues increased in 1998 because recent equipment additions enabled the Company to handle a larger volume of business. Operating earnings were reduced, however, when - 3 - 4 sales volumes did not grow as fast as anticipated due to an apparent general slowing of the United States economy. As noted, in order to service a larger volume of business, the Company expanded capacity which necessitated increased fixed costs. When the rate of sales volume growth slowed, the new higher level of fixed cost caused the earnings decline. - Oil and Gas Oil and gas division revenues and operating earnings were as follows (in thousands):
Six Months Ended Three Months Ended June 30, June 30, ------------------- ------------------- 1998 1997 1998 1997 ------- ------- ------- ------- Revenues $ 3,516 $ 4,422 $ 1,920 $ 1,579 Operating earnings (loss) $ (675) $ 1,676 $ (765) $ 493
Oil and gas revenues decreased for the comparative six month period as a result of reduced crude oil and natural gas prices. For the comparative current quarter revenues were improved primarily as a result of increased crude oil sales volumes. Volumes and prices compare as follows:
Six Months Ended Three Months Ended ---------------------------------- ------------------------------------- 1998 1997 1998 1997 ---- ---- ---- ---- Crude oil Volume 36,200 Bbls. 31,500 Bbls. 19,200 Bbls. 11,300 Bbls. Average price $13.75/ Bbl $21.14/ Bbl. $ 13.03/ Bbl. $ 19.28/ Bbl. Natural gas Volume 1,625,000 Mcf 1,700,000 Mcf 825,000 Mcf 810,000 Mcf Average price $1.95/ Mcf $2.24/ Mcf $1.99/ Mcf $ 1.78/ Mcf
Oil and gas operating earnings decreased in 1998 in part because of the reduced pricing scenario. In addition, during the second quarter of 1998, the Company incurred and expensed $1,044,000 of 3D seismic geophysical costs. The Company continues to participate in the seismic study and expects to incur and expense approximately $320,000 of additional 3D seismic costs during the third quarter of 1998. The Company currently anticipates participating in the drilling of the first test well on the prospective acreage during the fourth quarter of 1998. - Other The provision for depreciation, depletion and amortization is increased in 1998 because of a larger capitalized cost base. Recently included in the depreciable cost base is the Company's offshore Louisiana crude oil pipeline completed at a cost of $4.2 million and placed in service in - 4 - 5 January 1998. Property sales and other income for 1998 resulted primarily from the sale of a former gasoline service station location while 1997 included a $401,000 recovery from an insurance carrier for prior year overcharges and a $215,000 gain realized on the sale of twenty-one truck tractors. - Three Months Comparisons Comparisons for the three month period ended June 30, 1998 are consistent with the discussions provided above. Liquidity and Capital Resources During the first six months of 1998, the Company invested $4,462,000 in property additions with $1,256,000 going towards oil and gas drilling efforts and the remainder for various marketing and transportation equipment items. Funding for these investments was derived from the Company generating $5,479,000 of working capital funds. The $1,193,000 of excess cash flow was applied to general working capital needs. During the second quarter of 1998, the Company's primary lending bank increased the Company's borrowing availability under its oil and gas working capital line to $5 million. As of June 30, 1998, total available working capital borrowing capacity was $9.2 million with $6.7 million outstanding. Refer to the "Liquidity and Capital Resources" section of the Company's Annual Report on Form 10-K for the year ended December 31, 1997 for additional discussion of the Company's bank relationships, tax carryforwards and other matters. - 5 - 6 ADAMS RESOURCES & ENERGY, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEET (IN THOUSANDS)
June 30, December 31, 1998 1997 --------- --------- (Unaudited) ASSETS Current assets: Cash and cash equivalents ................................. $ 3,250 $ 6,496 Accounts receivable, net .................................. 51,606 73,806 Inventories ............................................... 6,047 5,092 Prepaid and other ......................................... 1,188 1,675 --------- --------- Total current assets ........................ 62,091 87,069 --------- --------- Property and equipment ...................................... 60,588 56,298 Less - accumulated depreciation, depletion and amortization ......................... (34,475) (30,361) --------- --------- 26,113 25,937 --------- --------- Other assets ................................................ 1,342 1,277 --------- --------- $ 89,546 $ 114,283 ========= ========= LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities: Accounts payable .......................................... $ 49,486 $ 74,829 Accrued and other liabilities ............................. 2,963 3,475 Current maturities of long-term debt ...................... 36 71 --------- --------- Total current liabilities .......................... 52,485 78,375 Long-term debt, less current maturities ..................... 6,700 6,900 Other liabilities ........................................... 759 870 --------- --------- 59,944 86,145 Shareholders' equity: Preferred stock - $1.00 par value, 960,000 shares authorized, none outstanding .......................... -- -- Common stock - $.10 par value, 7,500,000 shares authorized, 4,217,596 shares outstanding, respectively ............................. 422 422 Contributed capital ....................................... 11,693 11,693 Retained earnings since December 31, 1992 ................. 17,487 16,023 --------- --------- Total shareholders' equity ......................... 29,602 28,138 --------- --------- $ 89,546 $ 114,283 ========= =========
The accompanying notes are an integral part of these financial statements. - 6 - 7 ADAMS RESOURCES & ENERGY, INC. AND SUBSIDIARIES UNAUDITED CONSOLIDATED STATEMENT OF CASH FLOWS (IN THOUSANDS)
Six Months Ended June 30, --------------------- 1998 1997 -------- -------- CASH PROVIDED (USED) BY OPERATIONS: Net earnings .................................................. $ 1,464 $ 2,598 Items of income not requiring (providing) cash - Depreciation, depletion and amortization .................... 4,252 2,752 Deferred income tax provision ............................... -- 725 Gain on sale of properties .................................. (61) (215) Other, net .................................................. (176) (218) Decrease (increase) in accounts receivable .................... 22,200 16,716 Decrease (increase) in inventories ............................ (955) 761 Decrease (increase) in prepaid and other ...................... 487 198 Increase (decrease) in accounts payable ....................... (25,343) (15,574) Increase (decrease) in accrued liabilities .................... (512) (709) -------- -------- Net cash provided (required) by operating activities ........ 1,356 7,034 -------- -------- INVESTING ACTIVITIES: Property and equipment additions .............................. (4,462) (4,156) Proceeds from property sales .................................. 95 425 -------- -------- Net cash provided by (used in) investing activities ......... (4,367) (3,731) -------- -------- FINANCING ACTIVITIES: Repayment of debt ............................................. (235) (3,331) Sales of stock ................................................ -- 43 -------- -------- Net cash provided by (used in) financing activities ......... (235) (3,288) -------- -------- Increase (decrease) in cash and cash equivalents ................ (3,246) 15 Cash at beginning of period ..................................... 6,496 3,782 -------- -------- Cash at end of period ........................................... $ 3,250 $ 3,797 ======== ======== Supplemental disclosure of cash flow information: Interest paid during the period ............................... $ 146 $ 87 ======== -------- Income taxes paid during the period ........................... $ 513 $ 867 ======== ========
The accompanying notes are an integral part of these financial statements. - 7 - 8 ADAMS RESOURCES & ENERGY, INC. AND SUBSIDIARIES NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS Note 1 - Basis of Presentation The accompanying condensed financial statements are unaudited but, in the opinion of the Company's management, include all adjustments (consisting of normal recurring accruals) necessary for a fair presentation of financial position at June 30, 1998 and December 31, 1997 and results of operations and cash flows for the six months ended June 30, 1998 and 1997. Certain information and note disclosures normally included in annual financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted pursuant to Securities and Exchange Commission rules and regulations, although the Company believes the disclosures made are adequate to make the information presented not misleading. It is suggested these condensed financial statements be read in conjunction with the financial statements, and the notes thereto, included in the Company's latest annual report on Form 10-K. The interim statement of operations is not necessarily indicative of results to be expected for a full year. When used in this document, the words "anticipate", "believe", "expect", "estimate", "project", and similar expressions are intended to identify forward-looking statements. Such statements are subject to certain risks, uncertainties and assumptions. Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual results may vary materially from those anticipated, believed, expected or projected. In February 1997, the Financial Accounting Standards Board ("FASB") issued Statement of Financial Accounting Standards ("SFAS") No. 128, "Earnings Per Share", which established new standards for computing and presenting earnings per share. The provisions of the statement are effective for fiscal years ending after December 15, 1997, and accordingly, have been adopted in the accompanying financial statements. Under the provisions of SFAS No. 128, the presentation of primary earnings per share has been replaced with basic earnings per share, and fully diluted earnings per share presentations have been replaced with diluted earnings per share for potentially dilutive securities. Prior period earnings per share data have been restated. Earnings per share are based on the weighted average number of shares of common stock and common stock equivalents outstanding during the period. Such shares outstanding averaged 4,217,596 shares for 1998 and 4,213,596 shares for 1997. Note 2 - New Accounting Standards In June 1997, the FASB issued SFAS No. 130, "Reporting Comprehensive Income", which establishes standards for reporting and display of comprehensive income and its components in a full set of general-purpose financial statements. The statement requires (a) - 8 - 9 ADAMS RESOURCES & ENERGY, INC. AND SUBSIDIARIES classification of items of other comprehensive income by their nature in a financial statement and (b) display of the accumulated balance of other comprehensive income separate from retained earnings and additional paid-in capital in the equity section of a statement of financial position. SFAS No. 130 is effective for interim periods beginning after December 15, 1997. For the six month period and for the quarters ended June 30, 1998, and 1997, there are no differences between the Company's "traditional" and "comprehensive" net income. In June 1997, the FASB also issued SFAS No. 131, "Disclosure about Segments of an Enterprise and Related Information", which establishes standards for reporting information about operating segments in annual financial statements and requires that selected information be reported about the operating segments in interim financial reports issued to the shareholders. It also establishes standards for related disclosure about products and services, geographic areas, and major customers. The Company has concluded that its segment information as currently reported is in compliance with SFAS No. 131 and as such, adoption has no effect on current or prior period presentations. In June 1998, the FASB issued SFAS No. 133, "Accounting for Derivative Instruments and Hedging Activities". The Statement establishes accounting and reporting standards requiring that every derivative instrument (including certain derivative instruments embedded in other contracts) be recorded in the balance sheet as either an asset or liability measured at its fair value. The Statement requires that changes in the derivatives fair value be recognized currently in earnings unless specific hedge accounting criteria are met. Special accounting for qualifying hedges allows a derivative's gains and losses to offset related results on the hedged item in the income statement, and requires that a company must formally document, designate, and assess the effectiveness of transactions that receive hedge accounting. SFAS 133 is required to be effective for fiscal years beginning after June 15, 1999 and may be adopted early. The Company has not yet quantified the impact (if any) of adopting SFAS 133. PART II. OTHER INFORMATION Item 1. - None Item 2. - None Item 3. - None Item 4. - None Item 6. Exhibits and Reports on Form 8-K a. Exhibits - None. b. Reports on Form 8-K - None. - 9 - 10 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 undersigned thereunto duly authorized. ADAMS RESOURCES & ENERGY, INC. (Registrant) Date: August 12, 1998 By /s/ K. S. Adams, Jr. ------------------------------------ K. S. Adams, Jr. Chief Executive Officer By /s/ Richard B. Abshire ------------------------------------ Richard B. Abshire Chief Financial Officer - 10 - 11 EXHIBIT INDEX
Exhibit Number Description - ------- ----------- 27* - Financial Data Schedule
- ---------- * - Filed herewith EX-27 2 FINANCIAL DATA SCHEDULE
5 6-MOS DEC-31-1998 JUN-30-1998 3,250 0 51,757 (151) 6,047 62,091 60,588 (34,475) 89,546 52,485 6,700 0 0 422 29,180 89,546 881,214 881,214 877,653 878,702 0 0 146 2,366 902 1,464 0 0 0 1,464 .35 .35
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