-----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, D9yNUD9BY4YZXJTHaWw8Vmzk8NsDgHbgGuO71zdQvEIbKj9Zk62Fjvz5hqEosF21 B8f96Ody9spg8jmymejO1g== 0000068589-96-000006.txt : 19960515 0000068589-96-000006.hdr.sgml : 19960515 ACCESSION NUMBER: 0000068589-96-000006 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19960331 FILED AS OF DATE: 19960514 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: MOUNTAIN FUEL SUPPLY CO CENTRAL INDEX KEY: 0000068589 STANDARD INDUSTRIAL CLASSIFICATION: NATURAL GAS TRANSMISSION & DISTRIBUTION [4923] IRS NUMBER: 870155877 STATE OF INCORPORATION: UT FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 033-55866 FILM NUMBER: 96562785 BUSINESS ADDRESS: STREET 1: 180 E FIRST SOUTH STREET 2: PO BOX 11368 CITY: SALT LAKE CITY STATE: UT ZIP: 84147 BUSINESS PHONE: 8015345555 MAIL ADDRESS: STREET 1: 180 EAST FIRST SOUTH ST STREET 2: P O BOX 11150 CITY: SALT LAKE CITY STATE: UT ZIP: 84147 10-Q 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 MARCH 31, 1996 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 No. 1-935 MOUNTAIN FUEL SUPPLY COMPANY (Exact name of registrant as specified in its charter) STATE OF UTAH 87-0155877 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) P.O. Box 45360, 180 East First South, Salt Lake City, Utah 84145-0360 (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code: (801) 534-5555 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 practicable date. Class Outstanding as of April 30, 1996 Common Stock, $2.50 par value 9,189,626 shares MOUNTAIN FUEL SUPPLY COMPANY STATEMENTS OF INCOME (Unaudited)
3 Months Ended 12 Months Ended March 31, March 31, 1996 1995 1996 1995 (In Thousands) REVENUES $144,903 $140,815 $366,857 $370,060 OPERATING EXPENSES Natural gas purchases 75,465 81,345 184,726 203,823 Operating and maintenance 25,421 24,763 94,042 95,116 Depreciation 7,101 6,873 25,697 25,663 Other taxes 3,119 3,357 9,350 9,436 TOTAL OPERATING EXPENSES 111,106 116,338 313,815 334,038 OPERATING INCOME 33,797 24,477 53,042 36,022 INTEREST AND OTHER INCOME 709 701 4,240 7,888 DEBT EXPENSE (4,272) (4,167) (16,685) (15,832) INCOME BEFORE INCOME TAXES 30,234 21,011 40,597 28,078 INCOME TAXES 11,383 7,950 11,139 6,763 NET INCOME $18,851 $13,061 $29,458 $21,315
MOUNTAIN FUEL SUPPLY COMPANY CONDENSED BALANCE SHEETS (Unaudited)
March 31, December 31, 1996 1995 1995 (In Thousands) ASSETS Current assets Cash and short-term investments $1,466 Accounts receivable $76,251 $69,993 67,642 Inventories 7,129 21,769 20,915 Other current assets 3,520 4,463 3,843 Total current assets 86,900 96,225 93,866 Property, plant and equipment 787,646 745,361 784,466 Less allowances for depreciation 309,748 287,332 302,619 Net property, plant and equipment 477,898 458,029 481,847 Other assets 22,079 22,327 24,548 $586,877 $576,581 $600,261 LIABILITIES AND SHAREHOLDER'S EQUITY Current liabilities Checks outstanding in excess of cash balances $3,613 $1,539 Notes payable to Questar Corporation 27,100 12,300 $56,100 Accounts payable and accrued expenses 52,742 54,892 61,800 Purchased-gas adjustments 21,792 37,082 9,182 Total current liabilities 105,247 105,813 127,082 Long-term debt 175,000 175,000 175,000 Other liabilities and deferred credits 16,053 21,296 16,029 Deferred income taxes and investment tax credits 63,473 54,754 68,548 Redeemable cumulative preferred stock 4,957 6,324 4,957 Common shareholder's equity Common stock 22,974 22,974 22,974 Additional paid-in capital 41,875 41,875 41,875 Retained earnings 157,298 148,545 143,796 Total common shareholder's equity 222,147 213,394 208,645 $586,877 $576,581 $600,261
MOUNTAIN FUEL SUPPLY COMPANY CONDENSED STATEMENTS OF CASH FLOWS (Unaudited)
3 Months Ended March 31, 1996 1995 (In Thousands) OPERATING ACTIVITIES Net income $18,851 $13,061 Depreciation 7,790 7,504 Deferred income taxes and investment tax credits (5,075) (7,812) 21,566 12,753 Change in operating assets and liabilities 11,545 35,257 NET CASH PROVIDED FROM OPERATING ACTIVITIES 33,111 48,010 INVESTING ACTIVITIES Capital expenditures (3,837) (6,843) Proceeds from (costs of) disposition of property, plant and equipment (4) 1,093 NET CASH USED IN INVESTING ACTIVITIES (3,841) (5,750) FINANCING ACTIVITIES Decrease in notes payable to Questar Corporation (29,000) (41,200) Checks outstanding in excess of cash balances 3,613 1,539 Payment of dividends (5,349) (5,128) NET CASH USED IN FINANCING ACTIVITIES (30,736) (44,789) DECREASE IN CASH AND SHORT-TERM INVESTMENTS ($1,466) ($2,529)
MOUNTAIN FUEL SUPPLY COMPANY NOTES TO CONDENSED FINANCIAL STATEMENTS March 31, 1996 (Unaudited) Note A - Basis of Presentation The interim financial statements furnished reflect all adjustments which are, in the opinion of management, necessary for a fair presentation of the results for the interim periods presented. All such adjustments are of a normal recurring nature. Due to the seasonal nature of the business, the results of operations for the three-month period ended March 31, 1996, are not necessarily indicative of the results that may be expected for the year ending December 31, 1996. For further information refer to the financial statements and footnotes thereto included in the Company's annual report on Form 10-K for the year ended December 31, 1995. MOUNTAIN FUEL SUPPLY COMPANY MANAGEMENT'S ANALYSIS March 31, 1996 Operating Results -- Following is a summary of financial and operating information for the Company:
3 Months Ended 12 Months Ended March 31, March 31, 1996 1995 1996 1995 (Dollars in Thousands) FINANCIAL RESULTS Revenues From unaffiliated customers $144,567 $139,823 $363,502 $365,745 From affiliates 336 992 3,355 4,315 Total revenues $144,903 $140,815 $366,857 $370,060 Operating income $33,797 $24,477 $53,042 $36,022 Net income 18,851 13,061 29,458 21,315 OPERATING STATISTICS Natural gas volumes (in thousands of decatherms) Residential and commercial sales 34,417 29,578 78,789 73,673 Industrial sales 2,494 3,185 8,519 9,850 Transportation for industrial customers 13,729 17,609 55,689 55,720 Total deliveries 50,640 50,372 142,997 139,243 Natural gas revenue (per decatherm) Residential and commercial $3.93 $4.31 $4.11 $4.35 Industrial sales 2.14 2.59 2.30 2.59 Transportation for industrial customers 0.11 0.10 0.11 0.10 Heating degree days Actual 2,596 2,217 5,426 5,200 Normal 2,743 2,743 5,801 5,801 Warmer than normal 5% 19% 6% 10% Number of customers at end of period 597,234 575,424
Revenues, net of gas costs, increased $9,968,000 or 17% in the first quarter and $15,894,000 or 10% in the 12 months ended March 31, 1996 when compared with the same periods in 1995. The increase resulted from colder temperatures, the benefits of a rate case settlement reached in the third quarter of 1995 and a 3.8% customer growth rate. Temperatures in the first quarter of 1996 were 5% warmer than normal but 17% colder than was reported in the first quarter of 1995. Temperatures were 4% colder in the 12-month period ended March 31, 1996 when compared with the same period in the prior year. The effect of the warmer-than-normal weather in 1996 was partially offset by a weather-normalization adjustment. In addition, the rate case settlement could add about $3.7 million in annual revenues from a new-premises fee and the sharing of capacity-release credits. Mountain Fuel's allowed return on rate base increased from 10.08% to between 10.22% and 10.34%. Volumes delivered to industrial customers decreased 22% in the first quarter of 1996 when compared with the same quarter of 1995 due to an abundance of low-cost hydroelectric power. Margins from gas delivered to industrial customers are substantially lower than from gas sold to residential and commercial customers. Mountain Fuel's natural gas purchases were lower in the 3- and 12-month periods of 1996 compared with the same periods of 1995 primarily due to lower natural gas purchase prices allowed in rates. The lower gas purchase prices were reflected in semiannual gas cost adjustments filed in February each year, which included gas costs of $1.04 per decatherm in 1996 compared with $1.43 in 1995. Operating and maintenance expenses were 3% higher in the first quarter of 1996 because of the costs of serving more customers and inflation. Operating and maintenance expenses decreased by 1% in the 12-month period of 1996 compared with the same period in 1995. Mountain Fuel continues to streamline and consolidate operations announcing recently the closing of two more regional business offices. The Company is able to make productivity improvement gains by investing in technology. Depreciation expense was 3% higher in the first quarter of 1996 when compared to the same period in the prior year as a result of increased property, plant and equipment caused by spending for capital projects. The effective income tax rate was 37.6% in the first quarter of 1996 compared with 37.8% in the first quarter of 1995. The Company recognized $937,000 of tight-sands gas-production credits in the first quarter of 1996 and $902,000 in the first quarter of 1995. Questar Corporation (Questar) announced plans of becoming more of an energy-services company that can operate effectively in the new energy market place. Mountain Fuel and affiliated company, Questar Pipeline, make up the regulated services group of Questar. To improve efficiency and coordination, various financial, technical, administrative and other support functions of these two companies will be consolidated. The regulated services group also is creating a new planning and business development area to focus on new business opportunities in gas distribution, transmission and storage, both foreign and domestic. Liquidity and Capital Resources - Operating Activities: Net cash provided from operating activities was $33,111,000 in the first three months of 1996 compared with $48,010,000 for the same period of 1995. A lower gas cost collected in rates and a first quarter refund of gas costs were the primary reasons for a reduction in net cash flow from operating activities in 1996. Investing Activities: Capital expenditures were $3,837,000 in the first three months of 1996, compared with $6,843,000 in the corresponding 1995 period. Capital expenditures for calendar year 1996 are estimated at $55,000,000. Financing Activities: The Company has short-term line-of-credit arrangements with banks totaling $500,000. In addition, its parent company, Questar, loans funds to the Company under a short-term borrowing arrangement. As of March 31, Mountain Fuel had loans outstanding of $27,100,000 in 1996 and $12,300,000 in 1995 payable to Questar. No amounts were borrowed under the short-term line-of-credit arrangements at March 31, 1996. Financing activities in the first quarters of 1996 and 1995 included payment of dividends and a partial repayment of loans to Questar from net cash provided from operations. 1996 capital expenditures will be financed with net cash flow from operating activities and borrowings from Questar. PART II OTHER INFORMATION Mountain Fuel Supply Company has nothing to disclose in this section of the report. 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. MOUNTAIN FUEL SUPPLY COMPANY (Registrant) May 10, 1996 /s/D. N. Rose (Date) D. N. Rose President and Chief Executive Officer May 10, 1996 /s/S. E. Parks (Date) S. E. Parks Vice President, Treasurer and Chief Financial Officer EX-27 2
5 The following schedule contains summarized financail information extracted from the Mountain Fuel Supply Company Statements of Income and Balance Sheet for the period ended March 31, 1996, and is qualified in its entirety by reference to such unaudited financial statement. 1,000 3-MOS DEC-31-1995 MAR-31-1996 0 0 76,251 0 7,129 86,900 787,646 309,748 586,877 105,247 175,000 4,957 0 22,974 199,173 586,877 0 144,903 0 100,886 10,220 0 4,272 30,234 11,383 18,851 0 0 0 18,851 0 0
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