-----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, JNPYF2XDoLzFEXN8dc1rVtiqxLlI/TVt5Cknbs7eIEqc2S8WtIyX04c9DoZzARI/ LCdPoj5QFVc/FaNg8kPPdw== 0001047469-98-004259.txt : 19980210 0001047469-98-004259.hdr.sgml : 19980210 ACCESSION NUMBER: 0001047469-98-004259 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19971231 FILED AS OF DATE: 19980209 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: FALL RIVER GAS CO CENTRAL INDEX KEY: 0000034371 STANDARD INDUSTRIAL CLASSIFICATION: NATURAL GAS DISTRIBUTION [4924] IRS NUMBER: 041298780 STATE OF INCORPORATION: MA FISCAL YEAR END: 0930 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 001-13517 FILM NUMBER: 98525438 BUSINESS ADDRESS: STREET 1: 155 N MAIN ST STREET 2: P O BOX 911 CITY: FALL RIVER STATE: MA ZIP: 02722-0911 BUSINESS PHONE: 5086757811 MAIL ADDRESS: STREET 1: 155 NO MAIN ST STREET 2: 155 NO MAIN ST CITY: FALL RIVER STATE: MA ZIP: 02720 10-Q 1 10-Q SECURITIES AND EXCHANGE COMMISSION Washington, D. C. 20549 FORM 10-Q QUARTERLY REPORT UNDER SECTION 13 or 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934 For Quarter Ended December 31, 1997 Commission file number 0-449 - -------------------------------------------------------------------------------- FALL RIVER GAS COMPANY - -------------------------------------------------------------------------------- (Exact name of registrant as specified in its charter) Massachusetts 04-1298780 - -------------------------------------------------------------------------------- (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Indentification No.) 155 North Main Street, Fall River, Massachusetts 02722 - -------------------------------------------------------------------------------- (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code 508-675-7811 - -------------------------------------------------------------------------------- "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 close of the period covered by this report. Class Outstanding at December 31,1997 - -------------------------------------- ---------------------------------------- Common stock,par value of $.83 1\3 2,022,359 shares FALL RIVER GAS COMPANY INDEX
Page No. -------- Part. I. Financial Position Consolidated Condensed Balance Sheets - December 31, 1997 and September 30, 1997 1 Consolidated Condensed Statements of Income - Three Months Ended December 31, 1997 and 1996 2 Consolidated Statements of Cash Flows - Three Months Ended December 31, 1997 and 1996 3 Management's discussion and Analysis of the Consolidated Condensed Statements of Income 4,5,6 Notes to Consolidated Condensed Financial Statements 7 Part II. Other Information 7
PART I. FINANCIAL INFORMATION FALL RIVER GAS COMPANY AND SUBSIDIARY CONSOLIDATED CONDENSED BALANCE SHEETS
DECEMBER 31, SEPTEMBER 30, ASSETS 1997 1997 ------- ---------------- --------------- Gas Plant, at original cost................................................... $ 58,902,117 $ 58,413,337 less accumulated depreciation............................................... 19,372,528 19,073,197 ---------------- --------------- 39,529,589 39,340,140 ---------------- --------------- Rental Property............................................................... 6,377,304 6,287,417 less accumulated depreciation............................................... 2,088,514 2,078,911 ---------------- --------------- 4,288,790 4,208,506 ---------------- --------------- Other Investments............................................................. 436,568 425,765 ---------------- --------------- Current Assets: Cash........................................................................ 818,261 329,400 Accounts receivable, less allowance for doubtful accounts of $1,241,818 as of 12/31/97 and $907,357 as of 9/30/97................................................................... 5,397,771 1,972,301 Inventories, at average cost Liquefied natural gas and propane........................................... 3,083,789 3,108,887 Materials and Supplies...................................................... 1,292,204 1,341,567 Purchased gas costs deferred................................................ 3,771,587 1,780,798 Prepaid and Deferred Taxes.................................................. 722,084 990,515 Prepayments and Other....................................................... 364,605 204,815 ---------------- --------------- 15,450,301 9,728,283 ---------------- --------------- Deferred Charges: Regulatory Asset............................................................ 730,927 758,832 Other....................................................................... 216,755 473,901 ---------------- --------------- 947,682 1,232,733 ---------------- --------------- $ 60,652,930 $ 54,935,427 ---------------- --------------- ---------------- --------------- STOCKHOLDERS' INVESTMENT AND LIABILITIES ---------------------------------------- CAPITALIZATION: Stockholders' investment-- Common stock, par value $.83-1/3 per share, 2,201,334 shares authorized and issued.................................................... $ 1,834,445 $ 1,834,445 Premium paid in on common stock............................................ 4,970,728 1,474,850 Retained earnings ($6,693,309 restricted against payment of cash dividends as of 12/31/97 and $7,149,260 as of 9/30/97).................... 11,241,177 10,693,309 ---------------- --------------- 18,046,350 14,002,604 Less Treasury stock, at cost (17,454 shares as of 12/31/97 and 410,511 shares as of 9/30/97)..................................................... 58,849 1,384,079 ---------------- --------------- 17,987,501 12,618,525 ---------------- --------------- Long-term debt, less current sinking fund requirements First Mortgage Bonds--9.44% due 2020........................................ 6,500,000 6,500,000 First Mortgage Bonds--7.99% due 2026........................................ 7,000,000 7,000,000 First Mortgage Bonds--7.24% due 2027........................................ 6,000,000 0 ---------------- --------------- 19,500,000 13,500,000 ---------------- --------------- Total capitalization.................................................... 37,487,501 26,118,525 ---------------- --------------- CURRENT LIABILITIES: Notes payable to banks...................................................... 10,400,000 15,400,000 Dividends Payable........................................................... 0 511,655 Accounts Payable............................................................ 2,931,871 3,545,644 Other....................................................................... 2,367,574 1,932,403 ---------------- --------------- 15,699,445 21,389,702 ---------------- --------------- ---------------- --------------- DEFERRED CREDITS: Accumulated deferred income taxes........................................... 4,273,840 4,273,840 Unamortized investment tax credits.......................................... 518,666 529,737 Regulatory Liability........................................................ 494,566 494,566 Other....................................................................... 2,178,912 2,129,057 ---------------- --------------- 7,465,984 7,427,200 ---------------- --------------- $ 60,652,930 $ 54,935,427 ---------------- --------------- ---------------- ---------------
See accompanying notes to consolidated condensed financial statements. 1 SUMMARIZED FINANCIAL INFORMATION FALL RIVER GAS COMPANY AND SUBSIDIARY CONSOLIDATED CONDENSED STATEMENTS OF INCOME AND RETAINED EARNINGS
Three Months Ended December 31 -------------------------------- 1997 1996 ------------- ------------- GAS OPERATING REVENUES.................................... 11,272,777 11,163,872 ------------- ------------- OPERATING EXPENSES Cost of gas sold........................................ 6,036,686 6,437,726 Other operation......................................... 3,126,024 3,014,635 Maintenance............................................. 384,454 576,532 Depreciation............................................ 448,114 446,226 General taxes........................................... 345,748 287,178 Federal income taxes.................................... 140,451 (50,989) ------------- ------------- Total operating expenses.............................. 10,481,477 10,711,308 ------------- ------------- OPERATING INCOME.......................................... 791,300 452,564 OTHER INCOME: Net income of Fall River Gas Appliance Company, Inc. (a wholly-owned subsidiary)............ 240,721 198,817 Other.................................................. 4,483 3,840 ------------- ------------- GROSS INCOME............................................. 1,036,504 655,221 ------------- ------------- INTEREST EXPENSE AND OTHER: Interest on long-term debt............................. 329,425 293,225 Other interest......................................... 159,212 233,238 ------------- ------------- 488,637 526,463 ------------- ------------- NET INCOME............................................... 547,867 128,758 RETAINED EARNINGS - BEGINNING OF PERIOD.................. 10,693,309 10,865,648 DEDUCT - Dividends declared.............................. 0 0 ------------- ------------- RETAINED EARNINGS - END OF PERIOD ($6,693,309 restricted against payment of cash dividends as of 12/31/97 and $7,149,260 as of 12/31/96)..................................... 11,241,176 10,994,406 ------------- ------------- ------------- ------------- BASIC EARNINGS PER SHARE................................ 0.27 0.07 ------------- ------------- ------------- ------------- WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING DURING THE PERIOD......................... 2,022,359 1,781,211 CASH DIVIDEND PER COMMON SHARE.......................... 0 0 ------------- ------------- ------------- -------------
See accompanying notes to consolidated condensed financial statements. 2 FALL RIVER GAS COMPANY AND SUBSIDIARY CONSOLIDATED STATEMENT OF CASH FLOWS
Three Months Ended December 31 -------------------------------- 1997 1996 ------------- ------------- Cash Provided by (used for) Operating Activities: Net income.......................................... $ 547,868 $ 128,758 Items not requiring (providing) cash: Depreciation...................................... 548,757 538,153 Amortization of Investment Tax Credit............. (11,071) (9,490) Change in working capital......................... (5,923,416) (2,818,432) Other sources, net................................ 5,100,892 (22,490) ------------ ------------ Net cash provided by (used for) operating activities.......................... 263,030 (2,183,501) ------------ ------------ Investing Activities: Additions to utility property, plant and equipment.... (601,476) (862,438) Additions to nonutility property...................... (172,694) (161,187) ------------ ------------ Net cash used by investing activities........... (774,170) (1,023,625) ------------ ------------ Financing activities: Cash dividends on common stock........................ 0 0 Addition of long-term debt First Mortgage Bond........ 6,000,000 0 Increase (decrease) in notes payable to banks, net.... (5,000,000) 3,400,000 ------------ ------------ Net cash provided by financing activities....... 1,000,000 3,400,000 ------------ ------------ Increase in cash........................................ $ 488,860 $ 192,874 ------------ ------------ ------------ ------------ Changes in Components of Working Capital (excluding cash) (Increase) decrease in current assets: Accounts receivable............................... $(3,425,470) $ (3,134,023) Inventories....................................... 74,460 (240,784) Prepayments and other............................. (159,790) (214,272) Deferred gas cost................................. (1,990,789) (1,147,654) Prepaid and Deferred Taxes........................ 268,431 (272,658) Increase (decrease) in current liabilities: Accounts payable.................................. (613,774) 2,269,028 Other............................................. (76,484) (78,069) ------------ ------------ Change in Working Capital....................... $(5,923,416) $ (2,818,432) ------------ ------------ ------------ ------------ Supplemental disclosure of cash flow information: Cash paid during year for: Interest............................................ $ 187,188 $ 217,668 Income taxes........................................ $ 53,325 $ 65,650
See accompanying notes to consolidated condensed financial statements. 3 FALL RIVER GAS COMPANY AND SUBSIDIARY MANAGEMENT'S DISCUSSION AND ANALYSIS Results of Operations Net income for the first quarter of fiscal 1998 rose to $548,000 compared to $129,000 for the first quarter in fiscal 1997. Basic earnings per share rose to $.27 compared to $.07 for the first quarter of 1997. Rate relief of $3.2 million annually granted in December 1996, as described below, was the primary reason for this increase. The quarter ended December 31, 1996 contains a bare half month of additional revenues, while the quarter ending December 31, 1997 fully reflects the impact of this relief. On May 17, 1996 the Company filed with the MDPU a request to increase its firm rates. After responding to interrogatories and presenting witnesses in support of the Company's filing, the Company was able to reach a settlement agreement with all parties. Contained in this settlement was an increase in revenues of $3,200,000 along with the "unbundling" of its commercial and industrial tariffs. With unbundled rates our customers can now choose to buy gas from the Company or purchase its own gas supply from a third party and have it transported up to and into the Company's distribution system. These new rates were effective for gas sold on or after December 1, 1996. Gas operating revenues for the three months ended December 31, 1997 reflect an increase of 1.0% or $109,000. Revenues increased from $11,164,000 recorded in 1996 to $11,273,000, mainly due to a 8.9% increase in CGA revenues as discussed below. Firm sales volume for three months ended December 31, 1997 is 1,452,329 MCF as compared to the 1,415,439 MCF reported in 1996. Unlike the increase in firm sales, total sales for the three month period which include Special Contract, Interruptible, Interruptible Transportation and Transportation customers, decreased 3.5% from 1,918,745 MCF to 1,851,427 MCF in 1997. During the quarter, cost of gas (CGA) revenues increased by $602,000 due to the net differences in our CGA decimal in the three months ended December 1997 and 1996 respectively. The 1997 and 1996 CGA revenues, referred to above, have been computed on the current rate structure. In accordance with the Company's approved CGAC increases or decreases in the cost of gas sold continue to be passed directly to our Firm customers, dollar for 4 dollar. Colder weather has had an impact on both operating revenues and firm sales volume. Degree Days in the three month comparison increased 6.3% from 2,126 to 2,259. Total operating expenses, excluding federal and state income taxes, for the three month comparisons reflected a 4.3% decrease from $10,771,000 to $10,310,000 a decrease of $461,000. The most significant operation expense - cost of gas sold - decreased by $401,000 for the three month comparison due to the increase in deferral of gas costs. Other operation expenses including health benefits, payroll, and materials and supplies have increased by $111,000, 3.7% higher than the comparable period in 1996. Interest expense decreased by $38,000, 7.2%, for the three month comparison as a result of decreased short term borrowing. As reported, on October 31, 1997 the Company issued 340,000 shares of common stock and began trading on the American Stock Exchange (AMEX) under the symbol "FAL". On November 26, 1997 the underwriter of this equity issue, First Albany Corporation, exercised its over-allotment option to sell an additional 50,000 shares of common stock. The net proceeds of this offering of approximately $4,700,000 were used to reduce short-term borrowings. The Company also issued $6,000,000 of long-term debt with a coupon rate of 7.24% on December 12, 1997 through a private placement. The net proceeds from this offering will also be used to reduce short-term borrowings. Capital Resources and Liquidity The Company's major capital requirement results from upgrading the efficiency of existing plant, as well as, to serve additional customers. For the three months ended December 31, 1997, capital expenditures totalled approximately $720,000. Cash flow patterns reflect the seasonality of the Company's business. The greatest demand for cash is in the late fall and winter as construction projects are brought to completion and accounts receivable balances rise. Capital expenditures and accounts receivable balances were financed by internally generated funds and supplemented by short- term borrowings. 5 Factors that May Affect Future Results The Private Securities Litigation Reform Act of 1995 encourages the use of cautionary statements accompanying forward-looking statements. The preceding Management's Discussion and Analysis of Financial Condition and Results of Operations includes forward-looking statements concerning the impact of changes in the cost of gas and of the CGA mechanism on total margin; projected capital expenditures and sources of cash to fund expenditures; and estimated costs of environmental remediation and anticipated regulatory approval of recovery mechanisms. The Company's future results, generally and with respect to such forward-looking statements, may be affected by many factors, among which are uncertainty as to the regulatory allowance of recovery of changes in the cost of gas; uncertain demands for capital expenditures and the availability of cash from various sources; uncertainty as to whether transportation rates will be reduced in future regulatory proceeding with resulting decreases in transportation margins; and uncertainty as to regulatory approval of the full recovery of environmental costs, transition costs and other regulatory assets. New Accounting Standards The Company has adopted Statement of Financial Accounting Standards No. 128, "Earnings per Share," effective quarter ended December 31, 1997 and has reflected basic earnings per share on the face of the statements of income. See accompanying notes to consolidated financial statements 6 FALL RIVER GAS COMPANY AND SUBSIDIARY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 1. The results of operation for the three month periods ending December 31, 1997 and 1996 are not necessarily indicative of the results to be expected for the full year. 2. In the opinion of the Company, the accompanying unaudited consolidated condensed financial statements contain all adjustments (consisting of only normal recurring accruals) necessary to present fairly the Company's financial position as of December 31, 1997 and 1996, and the results of operations for the three months ended and changes in financial position for the three months then ended. 3. The Company had no shares of its common stock reserved for officers and employees, options, warrants, conversions or other requirements at December 31, 1997. PART II. OTHER INFORMATION Not applicable. SIGNATURES 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. FALL RIVER GAS COMPANY ---------------------- (Registrant) Peter H. Thanas ----------------------- (Signature) Date January 29, 1998 Peter H. Thanas, Treasurer, ---------------- Chief Financial and Accounting Officer 7 EX-27 2 FINANCIAL DATA SCHEDULE EX-27
UT THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM (A)The Balance Sheet, Income Statement and Cash Flow Statement for the 3 months ended Dec. 31, 1997, (B)Notes to Consolidated Condensed Financial Statements appearing on page 7 of form 10-Q for the three months ended December 31, 1997 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 3-MOS SEP-30-1998 OCT-1-1997 DEC-31-1997 PER-BOOK 39,529,589 4,725,358 15,450,301 947,682 0 60,652,930 1,834,445 4,970,728 11,241,177 18,046,350 0 0 19,500,000 10,400,000 0 0 0 0 0 0 12,706,580 60,652,930 11,272,777 486,199 9,995,278 10,481,477 791,300 245,204 1,036,504 488,637 547,867 0 4,547,867 0 0 263,030 .27 .27
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