-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: keymaster@town.hall.org Originator-Key-Asymmetric: MFkwCgYEVQgBAQICAgADSwAwSAJBALeWW4xDV4i7+b6+UyPn5RtObb1cJ7VkACDq pKb9/DClgTKIm08lCfoilvi9Wl4SODbR1+1waHhiGmeZO8OdgLUCAwEAAQ== MIC-Info: RSA-MD5,RSA, Hym/gsezT9aS2fv91MeE471sT3z0/hHOwUVgzcHaB/RVqg3EDbEyazvv1cWhBlan IenourMl1rs4ILOnrk5ZnA== 0000068589-94-000012.txt : 19941219 0000068589-94-000012.hdr.sgml : 19941219 ACCESSION NUMBER: 0000068589-94-000012 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19940930 FILED AS OF DATE: 19941110 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: MOUNTAIN FUEL SUPPLY CO CENTRAL INDEX KEY: 0000068589 STANDARD INDUSTRIAL CLASSIFICATION: 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: 001-00935 FILM NUMBER: 94558842 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 SEPTEMBER 30, 1994 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 October 31, 1994 Common Stock, $2.50 par value 9,189,626 shares MOUNTAIN FUEL SUPPLY COMPANY STATEMENTS OF INCOME (Unaudited)
3 Months Ended 9 Months Ended 12 Months Ended September 30, September 30, September 30, 1994 1993 1994 1993 1994 1993 (In Thousands) REVENUES $39,866 $40,440 $243,766 $289,500 $356,657 $397,915 OPERATING EXPENSES Natural gas purchases 17,816 18,314 132,395 165,270 197,264 229,630 Operating and maintenance 23,124 23,159 70,850 68,815 94,521 87,895 Depreciation 6,064 5,300 18,191 16,213 25,222 22,464 Other taxes 2,752 2,607 9,439 8,968 10,484 10,153 TOTAL OPERATING EXPENSES 49,756 49,380 230,875 259,266 327,491 350,142 OPERATING INCOME (LOSS) (9,890) (8,940) 12,891 30,234 29,166 47,773 INTEREST AND OTHER INCOME 757 125 2,033 626 3,099 1,365 DEBT EXPENSE (3,781) (3,808) (11,734) (11,526) (15,631) (15,171) INCOME (LOSS) BEFORE INCOME TAXES (12,914) (12,623) 3,190 19,334 16,634 33,967 INCOME TAXES (CREDITS) (7,166) (5,737) (2,311) 3,605 1,793 6,957 NET INCOME (LOSS) ($5,748) ($6,886) $5,501 $15,729 $14,841 $27,010
MOUNTAIN FUEL SUPPLY COMPANY CONDENSED BALANCE SHEETS (Unaudited)
September 30, December 31, 1994 1993 1993 (In Thousands) ASSETS Current assets Cash and short-term investments $624 $1,522 $2,312 Federal income taxes receivable 10,343 Accounts receivable 22,389 19,085 81,668 Inventories 27,489 19,497 23,972 Other current assets 5,170 5,831 4,739 Total current assets 66,015 45,935 112,691 Property, plant and equipment 722,467 687,976 710,100 Less allowances for depreciation 276,567 261,744 267,314 Net property, plant and equipment 445,900 426,232 442,786 Other assets 25,593 25,812 25,550 $537,508 $497,979 $581,027 LIABILITIES AND SHAREHOLDER'S EQUITY Current liabilities Notes payable to parent company $18,000 $12,500 $57,800 Accounts payable and accrued expenses 44,635 57,048 64,748 Purchased-gas adjustments 6,262 25,592 25,727 Total current liabilities 68,897 95,140 148,275 Long-term debt 175,000 158,000 158,000 Other liabilities and deferred credits 27,116 166 27,163 Deferred income taxes and investment tax credits 66,358 58,433 57,864 Redeemable cumulative preferred stock 7,524 8,725 7,525 Common shareholder's equity Common stock 22,974 22,974 22,974 Additional paid-in capital 41,875 21,875 21,875 Retained earnings 127,764 132,666 137,351 Total common shareholder's equity 192,613 177,515 182,200 $537,508 $497,979 $581,027
MOUNTAIN FUEL SUPPLY COMPANY CONDENSED STATEMENTS OF CASH FLOWS (Unaudited)
9 Months Ended September 30, 1994 1993 (In Thousands) OPERATING ACTIVITIES Net income $5,501 $15,729 Depreciation 20,073 17,862 Deferred income taxes and investment tax credits 8,494 (1,749) 34,068 31,842 Change in operating assets and liabilities 5,320 19,768 NET CASH PROVIDED FROM OPERATING ACTIVITIES 39,388 51,610 INVESTING ACTIVITIES Capital expenditures (33,072) (25,944) Proceeds from disposition of property, plant and equipment 9,885 461 CASH USED IN INVESTING ACTIVITIES (23,187) (25,483) FINANCING ACTIVITIES Capital contribution 20,000 Issuance of long-term debt 17,000 91,000 Repayment of long-term debt (99,126) Redemption of preferred stock (1) (1) Decrease in notes payable to parent company (39,800) (6,400) Payment of dividends (15,088) (14,040) CASH USED IN FINANCING ACTIVITIES (17,889) (28,567) DECREASE IN CASH AND SHORT-TERM INVESTMENTS ($1,688) ($2,440)
MOUNTAIN FUEL SUPPLY COMPANY NOTES TO CONDENSED FINANCIAL STATEMENTS September 30, 1994 (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-and nine-month periods ended September 30, 1994, are not necessarily indicative of the results that may be expected for the year ending December 31, 1994. 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, 1993. Note B - Accounting for Postemployment Benefits Effective January 1, 1994, the Company recorded a liability for postemployment disability and health care benefits in compliance with the Statement of Financial Accounting Standards No. 112. This did not have an effect on net income since the $1,538,000 liability was offset with a regulatory asset because the Company expects to include these costs in future rates. Note C - Financing During the second quarter of 1994, Mountain Fuel borrowed $17,000,000 of 30-year notes with an interest rate of 8.12%. On July 1, 1994, Mountain Fuel received a $20,000,000 capital contribution from its parent company. The Company used the proceeds to fund capital expenditures and repay short-term debt borrowed from its parent company. MOUNTAIN FUEL SUPPLY COMPANY MANAGEMENT'S ANALYSIS September 30, 1994 Operating Results -- Following is a summary of operating information for the Company:
3 Months Ended 9 Months Ended 12 Months Ended September 30, September 30, September 30, 1994 1993 1994 1993 1994 1993 (Dollars in Thousands) FINANCIAL RESULTS Revenues From unaffiliated customers $38,594 $40,284 $240,294 $288,042 $352,477 $394,440 From affiliates 1,272 156 3,472 1,458 4,180 3,475 Total revenues $39,866 $40,440 $243,766 $289,500 $356,657 $397,915 Operating income (loss) ($9,890) ($8,940) $12,891 $30,234 $29,166 $47,773 Net income (loss) (5,748) (6,886) 5,501 15,729 14,841 27,010 OPERATING STATISTICS Natural gas volumes (in thousands of decatherms) Residential and commercial sales 5,969 6,478 45,875 56,913 68,331 77,588 Industrial sales 1,743 1,320 5,652 4,422 7,744 6,055 Transportation for industrial customers 12,031 10,132 35,322 38,970 49,457 53,499 Total deliveries 19,743 17,930 86,849 100,305 125,532 137,142 Natural gas revenue (per decatherm) Residential and commercial $4.92 $4.96 $4.59 $4.57 $4.55 $4.59 Industrial sales 2.56 3.00 2.85 3.45 2.91 3.44 Transportation for industrial customers 0.12 0.11 0.12 0.11 0.12 0.11 Heating degree days Actual 24 90 2,854 4,207 4,720 6,078 Normal 110 62 3,594 4,065 5,332 5,803 Actual as a percentage of normal 22% 145% 79% 103% 89% 105% Customer count at end of period 558,734 537,174
Natural gas volumes sold to residential and commercial customers decreased in the 3-, 9- and 12-month periods of 1994 as a result of unseasonably warm weather and a change in the method of recording revenues from the retail sale of natural gas. These two factors were also largely responsible for the significantly lower earnings reported in the first nine months of 1994. Temperatures in the first nine months of 1994 were 21% warmer than normal compared with 3% colder than normal weather in the same period of 1993. The effects of warmer weather and the change in recording revenues was partially offset by a 4.0% increase in the number of customers. Mountain Fuel's allowed return on equity for Utah operations was reduced from 12.1% to 11% effective January 1, 1994, by the Public Service Commission of Utah (PSCU) in a general rate case order. Also as a result of actions taken by the PSCU, the Company changed the way that revenues for residential and commercial customers are recorded from an "as-billed" to an "as-delivered" basis. This had the effect of shifting approximately $5 million of net income from the first half of 1994 to the fourth quarter. The PSCU has not issued an order with respect to the issues raised by Mountain Fuel on rehearing of the 11% rate of return and the proper handling of unbilled revenues for ratemaking purposes. Volumes delivered to industrial customers decreased 6% in the first nine months of 1994 compared with the same period of 1993. Natural gas usage by several major metal and chemical customers was lower during 1994. Mountain Fuel's natural gas purchases were lower in the 3-, 9- and 12-month periods of 1994 compared with the same periods of 1993 due to reduced volumes sold to residential and commercial customers. Operating and maintenance expenses were higher in the 9- and 12-month periods of 1994 because of additional customers and expanded service territory. Interest and other income was higher in the 1994 periods largely due to a working-gas carrying charge earned by the Company as allowed by the PSCU. Debt expense was lower in the third quarter of 1994 compared with the same period in 1993 because of a lower balances in the purchased-gas adjustments account. Debt expense was higher in the 9- and 12- month periods ended September 30, 1994, because of increasing short-term interest rates and increasing short- and long-term debt balances. Income taxes resulted in a credit amount for the nine months ended September 30, 1994, because of the combined effect of low pretax income and tights sands income tax credits. Tight sands income tax credits amounted to $4,224,000 in 1994 compared with $4,411,000 in 1993. Credits attributable to prior years' production totaled $1,742,000 in 1994 and $1,117,000 in 1993. The effective income tax rate for the nine-month period of 1993 was 18.6% Effective January 1, 1994, the Company recorded a liability for postemployment disability and health care benefits in compliance with the Statement of Financial Accounting Standards No. 112. This did not have an effect on net income since the $1,538,000 liability was offset with a regulatory asset because the Company expects to include these costs in future rates. Liquidity and Capital Resources - Operating Activities: Net cash provided from operating activities was $39,388,000 in the first nine months of 1994 compared with $51,610,000 for the same period of 1993. The decrease was due to lower net income and a $19,465,000 change in the purchased-gas adjustments account. Investing Activities: Capital expenditures were $33,072,000 in the first nine months of 1994, compared with $25,944,000 in the corresponding 1993 period. Capital expenditures for calendar year 1994 are estimated at $51,000,000. Mountain Fuel transferred a building with a net book value of $8,915,000 to an affiliate in the third quarter of 1994. Financing Activities: During the second quarter of 1994, Mountain Fuel borrowed $17,000,000 of 30-year notes with an interest rate of 8.12%. On July 1, 1994, Mountain Fuel received a $20,000,000 capital contribution from its parent company. The Company used the proceeds to fund capital expenditures and repay short-term debt borrowed from its parent company. The Company has short-term line-of-credit arrangements with banks totaling $500,000. In addition, its parent company loans funds to the Company under a short-term borrowing arrangement. As of September 30, 1994, Mountain Fuel had loans outstanding of $18,000,000 payable to its parent company. PART II OTHER INFORMATION Item 1. Legal Proceedings. As of the date of this report, the Public Service Commission of Utah (the PSCU) has not issued an order with respect to the issues that were raised by Mountain Fuel Supply Company (Mountain Fuel or the Company) on rehearing of the PSCU's decision in the Company's 1993 general rate case. The issues under review by the PSCU are the 11.0 percent return on equity authorized for Mountain Fuel and the proper handling of unbilled revenues for ratemaking purposes. 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) November 10, 1994 /s/ D. N. Rose (Date) D. N. Rose President and Chief Executive Officer November 10, 1994 /s/ W. F. Edwards (Date) W. F. Edwards Vice President and Chief Financial Officer EX-27 2
5 The schedule contains summarized financial information extracted from the Mountain Fuel Supply Company Statement of Income and Balance Sheet for the period ended September 30, 1994, and is qualified in its entirety by references to such unaudited financial statements. 1,000 9-MOS DEC-31-1994 SEP-30-1994 624 0 32,732 0 27,489 66,015 722,467 276,567 537,508 68,897 175,000 22,974 7,524 0 169,639 537,508 0 243,766 0 203,245 27,630 0 11,734 3,190 (2,311) 5,501 0 0 0 5,501 0 0
-----END PRIVACY-ENHANCED MESSAGE-----