-----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, IyVi2QLG4/fO7/dECKj9MTG4XyNRq3bUEWzHrILAmmwmZwM8gfxllX1XZm3jPYfm BF/l36Fv6x4EIZ7M/Fyueg== 0001047469-99-020636.txt : 19990517 0001047469-99-020636.hdr.sgml : 19990517 ACCESSION NUMBER: 0001047469-99-020636 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19990331 FILED AS OF DATE: 19990514 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: 99623973 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 March 31, 1999 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) Identification 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 March 31,1999 - ------------------------------------------------------------------------------- Common stock,par value of $.83 1\3 2,194,362 shares FALL RIVER GAS COMPANY INDEX
Page No. -------- Part. I. Financial Position Consolidated Condensed Balance Sheets - March 31, 1999 and September 30, 1998 1 Consolidated Condensed Statements of Income - and Retained Earnings Three and Six Months Ended March 31, 1999 and 1998 2 Consolidated Statements of Cash Flows - Six Months Ended March 31, 1999 and 1998 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 -----------------------------------------------------------------------------
Unaudited MARCH 31, SEPTEMBER 30, ASSETS 1999 1998 -------------- -------------------------- -------------------------- Gas Plant, at original cost $61,301,857 $60,448,647 less accumulated depreciation 22,180,321 20,798,948 -------------------------- -------------------------- 39,121,536 39,649,699 -------------------------- -------------------------- Rental Property 6,239,101 6,288,100 less accumulated depreciation 1,987,314 2,040,105 -------------------------- -------------------------- 4,251,787 4,247,995 -------------------------- -------------------------- Current Assets: Cash 420,595 356,005 Accounts receivable, less allowance for doubtful accounts of $1,482,275 as of 3/31/99 and $957,149 as of 9/30/98 7,205,654 1,807,487 Inventories, at average cost Liquefied natural gas and propane 2,354,730 3,148,311 Materials and Supplies 1,250,197 1,273,772 Purchased gas costs deferred 785,509 3,617,512 Prepaid and Deferred Taxes 0 401,160 Prepayments and Other 722,993 665,243 -------------------------- -------------------------- 12,739,678 11,269,490 -------------------------- -------------------------- Deferred Charges: Regulatory Asset 397,662 453,471 Other 0 18,885 -------------------------- -------------------------- 397,662 472,356 -------------------------- -------------------------- $56,510,663 $55,639,540 -------------------------- -------------------------- -------------------------- --------------------------
STOCKHOLDERS' INVESTMENT AND LIABILITIES ----------------------------------------------------------------------------- CAPITALIZATION: Stockholders' investment-- Common stock, par value $.83-1/3 par, 2,951,334 authorized and 2,201,334 shares issued $1,834,445 $1,834,445 Premium paid in on common stock 5,024,758 4,954,532 Retained earnings ($6,865,648 restricted against payment of cash dividends as of 3/31/99 and as of 9/30/98) 12,230,447 10,672,783 -------------------------- -------------------------- 19,089,650 17,461,760 Less Treasury stock, at cost (4,051 shares as of 3/31/99 and 9,326 shares as of 9/30/98) 13,659 31,443 -------------------------- -------------------------- 19,075,991 17,430,317 -------------------------- -------------------------- 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 6,000,000 -------------------------- -------------------------- 19,500,000 19,500,000 -------------------------- -------------------------- Total capitalization 38,575,991 36,930,317 -------------------------- -------------------------- CURRENT LIABILITIES: Notes payable to banks 4,300,000 5,100,000 Dividends Payable 0 526,173 Accounts Payable 2,288,586 3,074,673 Accrued taxes 521,586 0 Other 2,613,070 2,214,022 -------------------------- -------------------------- 9,723,242 10,914,868 -------------------------- -------------------------- DEFERRED CREDITS: Accumulated deferred income taxes 4,462,626 4,462,626 Unamortized investment tax credits 463,311 485,453 Regulatory Liability 455,560 455,560 Other 2,829,933 2,390,716 -------------------------- -------------------------- 8,211,430 7,794,355 -------------------------- -------------------------- $56,510,663 $55,639,540 -------------------------- -------------------------- -------------------------- -------------------------- 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 - -------------------------------------------------------------------------------
Unaudited Unaudited Three Months Ended Six Months Ended March 31 March 31 ------------------------------- --------------------------------- 1999 1998 1999 1998 -------------- -------------- ---------------- -------------- GAS OPERATING REVENUES $20,259,752 $18,513,220 $30,754,820 $29,785,997 -------------- -------------- ---------------- -------------- OPERATING EXPENSES Cost of gas sold 11,866,472 10,514,532 17,511,411 16,551,218 Other operation 3,410,617 3,351,671 6,546,307 6,477,695 Maintenance 384,151 379,783 733,449 764,237 Depreciation 1,081,876 1,046,360 1,548,446 1,494,474 Local Property and Other 656,439 614,553 1,003,780 929,320 Federal and State income taxes 925,576 815,617 967,768 987,049 -------------- -------------- ---------------- -------------- Total operating expenses 18,325,131 16,722,516 28,311,161 27,203,993 -------------- -------------- ---------------- -------------- OPERATING INCOME $1,934,621 $1,790,704 $2,443,659 $2,582,004 OTHER INCOME: Earnings of Fall River Gas Appliance Company, Inc. (a wholly-owned subsidiary) 226,394 170,614 467,494 411,335 Other 135 2,068 5,140 6,551 -------------- -------------- ---------------- -------------- INCOME BEFORE INTEREST EXPENSE 2,161,150 1,963,386 2,916,293 2,999,890 -------------- -------------- ---------------- -------------- INTEREST EXPENSE AND OTHER: Long-term debt 401,825 401,825 803,650 731,250 Other 15,965 49,998 28,260 209,210 -------------- -------------- ---------------- -------------- 417,790 451,823 831,910 940,460 -------------- -------------- ---------------- -------------- NET INCOME $1,743,360 $1,511,563 $2,084,383 $2,059,430 RETAINED EARNINGS - BEGINNING OF PERIOD $11,013,808 $11,241,176 $10,672,783 $10,693,309 ADD - Dividends declared 0 0 526,173 511,656 DEDUCT - Dividends paid 526,721 524,154 1,052,892 1,035,810 -------------- -------------- ---------------- -------------- RETAINED EARNINGS - END OF PERIOD ($6,865,648 restricted against payment of cash dividends as of 3/31/99 and 3/31/98 $12,230,447 $12,228,585 $12,230,447 $12,228,585 -------------- -------------- ---------------- -------------- -------------- -------------- ---------------- -------------- BASIC EARNINGS PER SHARE 0.79 0.69 0.95 0.98 -------------- -------------- ---------------- -------------- -------------- -------------- ---------------- -------------- AVERAGE NUMBER OF COMMON SHARES OUTSTANDING 2,195,585 2,184,947 2,194,362 2,102,760 CASH DIVIDEND PAID PER COMMON SHARE 0.24 0.24 0.48 0.48 -------------- -------------- ---------------- -------------- -------------- -------------- ---------------- --------------
See accompanying notes to consolidated condensed financial statements. 2 FALL RIVER GAS COMPANY AND SUBSIDIARY CONSOLIDATED STATEMENT OF CASH FLOWS
Unaudited Six Months Ended March 31 ---------------------- 1999 1998 Cash Provided by (used for) Operating Activities: Net income $2,084,383 $2,059,430 Items not requiring (providing) cash: Depreciation 1,785,775 1,722,011 Amortization of Investment Tax Credit (22,142) (22,142) Change in working capital (1,252,997) (1,690,506) Other sources, net 467,187 582,506 -------------- -------------- Net cash provided by operating activities 3,062,206 2,651,299 -------------- -------------- Investing Activities: Additions to utility property, plant and equipment (1,001,884) (1,146,983) Additions to nonutility property (230,850) (353,609) -------------- -------------- Net cash used by investing activities (1,232,734) (1,500,592) -------------- -------------- Financing activities: Cash dividends on common stock (1,052,892) (1,035,810) Common stock transactions 88,010 4,739,879 Proceeds from long-term debt issue 0 6,000,000 Decrease in notes payable to banks, net (800,000) (10,600,000) -------------- -------------- Net cash used for financing activities (1,764,882) (895,931) -------------- -------------- Increase (Decrease) in cash 64,590 254,776 Cash, beginning of period 356,005 329,400 -------------- -------------- Cash, end of period $420,595 $584,176 -------------- -------------- -------------- -------------- Changes in Components of Working Capital (excluding cash) (Increase) decrease in current assets: Accounts receivable (5,398,167) (4,565,661) Inventories 817,156 1,407,606 Prepayments and other (39,697) (55,052) Deferred gas cost 2,832,003 685,263 Prepaid and Deferred Taxes 401,160 990,515 Increase (decrease) in current liabilities: Accounts payable (786,087) (958,608) Accrued taxes 521,586 333,434 Other 399,049 471,997 -------------- -------------- Change in Working Capital ($1,252,997) ($1,690,506) -------------- -------------- -------------- -------------- Supplemental disclosure of cash flow information: Cash paid during year for: Interest 950,442 883,135 Income taxes 620,792 478,765
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 second quarter of fiscal 1999 was $1,743,400 or $0.79 per average share as compared with earnings of $1,511,600 or $0.69 for the second quarter in fiscal 1998. Earnings for this period was positively impacted by colder temperatures compared to the identical period in 1998. Net income for the six months ended March 31, 1999 was $2,084,383 with earnings per average share at $0.95 compared to net income of $2,059,430 and earnings per average share of $0.98 for the same period in 1998. For the six month comparison, the Company experienced warmer temperatures. During the second quarter of 1999 colder weather in which effective degree days rose 8.8% from 2,724 in 1998 to 2,964 in 1999 positively impacted firm sales. Firm sales volumes increased 4.0%, from 2,416,500 MCF in 1998 to 2,506,400 MCF in 1999. Operating revenues for the three months ended March 31, 1999 increased $1,746,500 to $20,259,700 from $18,513,200 in 1998. Of this increase of $1,746,500, $1,419,900 was attributable to the Company's application of its Cost of Gas Adjustment Clause (CGA). This clause, as approved by the Massachusetts Department of Telecommunications and Energy (MDTE), allows the Company to collect from or return to customers, changes in gas cost. Though the application of this clause has positively impacted operating revenues, the matching of gas cost has negated any affect on net income. Gas operating revenues for the six months ended March 31, 1999 increased $968,800, 3.3%, from $29,786,000 in 1998 to $30,754,800 in 1999. With the warmer weather that the Company experienced during this period, in which effective degree days fell 1.4% from 4,983 in 1998 to 4,911 in 1999, total sales volumes decreased by 1.2% from 4,728,800 Mcf to 4,680,800 Mcf in 1999. The increase of operating revenues is attributable to increased CGA revenues and conservation program revenues, offset by slightly lower base revenues due to warmer weather. Total operating expenses, excluding federal and state income taxes, for the six month comparisons reflected a 4.3% increase from $26,217,000 to $27,343,400 an increase of $1,126,400. The most significant operation expense - cost of gas sold - increased by $960,200 for the six month comparison mainly due to the higher CGA decimal being charged to our firm customers. Other operation expenses including health benefits, payroll, and materials and supplies have increased by $68,600, 1.1% higher than the comparable period in 1998. Operating expenses, excluding federal and state income taxes, for the three month comparison increased 9.4% from $15,906,900 in 1998 to $17,399,600 in 1999, an increase of $1,492,700. The most significant operation expense - cost of gas sold - increased by $1,351,900 for the three month comparison mainly due to the higher CGA decimal being charged to our firm customers and increased volumes of purchased gas. Other operation expenses including health benefits, payroll, and materials and supplies have increased by $58,900, 1.8% higher than the comparable period in 1998. Interest expense decreased by $108,600, 11.5%, for the six month comparison and $34,000, 7.5% for the three month comparison as a result of decreased short term borrowing due to an equity and debt financing. As reported, on October 31, 1997 the Company issued 340,000 4 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 was also 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 six months ended March 31, 1999, capital expenditures totaled approximately $1,081,000. 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. 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. The company had no factors that would create diluted earnings per share. The "Year 2000" Issue 5 The Company has evaluated its principal computer systems and noninformation technology systems including, but not limited to, telecommunications systems, automated meter reading systems, SCADA, regulator stations, plant remote control systems and security systems to determine readiness for the year 2000. These systems are currently capable of processing the year 2000, or are in the process of being upgraded or replaced by systems that are similarly capable. All necessary program modifications and system upgrades and testing are expected to be completed by the year 2000. Costs incurred to date and costs expected to be incurred to complete the year 2000 readiness are not significant and will not have a material impact on the Company's financial position or results of operations. The Company is currently assessing year 2000 issues with material third parties. Except for the Company's major pipeline supplier, who has provided assurance of compliance, the Company has not determined the level of third-party risk. Preparation of a contingency plan is in process and is expected to be finalized during fiscal year 1999. 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 six month periods ending March 31, 1999 and 1998 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 March 31, 1999 and 1998, and the results of operations for the six months ended and changes in financial position for the six 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 March 31, 1999. 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 May 12, 1999 Peter H. Thanas, Treasurer, ------------- Chief Financial and Accounting Officer 7 EX-27 2 EX-27
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE BALANCE SHEET, INCOME STATEMENT AND CASH FLOW STATEMENT FOR THE MONTH ENDED MARCH 31, 1999 6-MOS SEP-30-1999 OCT-01-1998 MAR-31-1999 420,595 0 8,687,929 (1,482,275) 3,604,927 1,906,164 67,540,958 (24,167,635) 56,510,663 17,921,013 19,500,000 0 0 1,834,445 17,255,205 56,510,663 30,754,820 31,227,454 17,511,411 8,828,202 1,003,780 0 831,910 4,055,931 967,768 0 0 0 0 2,084,383 .95 .95
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