-----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, DjvckI+SE9tIC2doTRybTrpt+Fd1IFc2ku6Wo4NQO0yMj0862oyjDaOMkuAMs7y5 L0q/hZ1lnHEsALv8FBdqYA== 0000068589-95-000015.txt : 19951119 0000068589-95-000015.hdr.sgml : 19951119 ACCESSION NUMBER: 0000068589-95-000015 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19950930 FILED AS OF DATE: 19951113 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: 95589842 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, 1995 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, 1995 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, 1995 1994 1995 1994 1995 1994 (In Thousands) REVENUES $39,831 $39,866 $247,942 $243,766 $382,436 $356,657 OPERATING EXPENSES Natural gas purchases 16,524 17,816 131,799 132,395 209,911 197,264 Operating and maintenance 22,763 23,124 71,333 70,850 94,577 94,521 Depreciation 5,847 6,064 18,644 18,191 25,202 25,222 Other taxes 2,191 2,752 8,369 9,439 8,519 10,484 TOTAL OPERATING EXPENSES 47,325 49,756 230,145 230,875 338,209 327,491 OPERATING INCOME (LOSS) (7,494) (9,890) 17,797 12,891 44,227 29,166 INTEREST AND OTHER INCOME 1,853 757 3,573 2,033 9,360 3,099 DEBT EXPENSE (3,998) (3,781) (12,157) (11,734) (16,309) (15,631) INCOME (LOSS) BEFORE INCOME TAXES (9,639) (12,914) 9,213 3,190 37,278 16,634 INCOME TAXES (CREDITS) (4,714) (7,166) 925 (2,311) 11,139 1,793 NET INCOME (LOSS) ($4,925) ($5,748) $8,288 $5,501 $26,139 $14,841
MOUNTAIN FUEL SUPPLY COMPANY CONDENSED BALANCE SHEETS (Unaudited)
September 30, December 31, 1995 1994 1994 (In Thousands) ASSETS Current assets Cash and short-term investments $295 $624 $2,529 Federal income taxes receivable 4,510 10,343 Accounts receivable 23,829 22,389 74,220 Inventories 24,698 27,489 24,941 Other current assets 4,662 5,170 4,279 Total current assets 57,994 66,015 105,969 Property, plant and equipment 769,398 722,467 739,945 Less allowances for depreciation 300,028 276,567 280,162 Net property, plant and equipment 469,370 445,900 459,783 Other assets 23,982 25,593 24,523 $551,346 $537,508 $590,275 LIABILITIES AND SHAREHOLDER'S EQUITY Current liabilities Notes payable to Questar Corporation $32,700 $18,000 $53,500 Accounts payable and accrued expenses 36,686 44,635 49,070 Purchased-gas adjustments 16,537 6,262 17,071 Total current liabilities 85,923 68,897 119,641 Long-term debt 175,000 175,000 175,000 Other liabilities and deferred credits 21,169 27,116 21,283 Deferred income taxes and investment tax credits 64,678 66,358 62,566 Redeemable cumulative preferred stock 6,211 7,524 6,324 Common shareholder's equity Common stock 22,974 22,974 22,974 Additional paid-in capital 41,875 41,875 41,875 Retained earnings 133,516 127,764 140,612 Total common shareholder's equity 198,365 192,613 205,461 $551,346 $537,508 $590,275
MOUNTAIN FUEL SUPPLY COMPANY CONDENSED STATEMENTS OF CASH FLOWS (Unaudited)
9 Months Ended September 30, 1995 1994 (In Thousands) OPERATING ACTIVITIES Net income $8,288 $5,501 Depreciation 20,709 20,073 Deferred income taxes and investment tax credits 2,112 8,494 31,109 34,068 Change in operating assets and liabilities 33,249 5,320 NET CASH PROVIDED FROM OPERATING ACTIVITIES 64,358 39,388 INVESTING ACTIVITIES Capital expenditures (30,505) (33,072) Proceeds from the disposition of property, plant and equipment 209 9,885 CASH USED IN INVESTING ACTIVITIES (30,296) (23,187) FINANCING ACTIVITIES Capital contribution 20,000 Issuance of long-term debt 17,000 Redemption of preferred stock (113) (1) Decrease in notes payable to Questar Corporation (20,800) (39,800) Payment of dividends (15,383) (15,088) CASH USED IN FINANCING ACTIVITIES (36,296) (17,889) DECREASE IN CASH AND SHORT-TERM INVESTMENTS ($2,234) ($1,688)
MOUNTAIN FUEL SUPPLY COMPANY NOTES TO CONDENSED FINANCIAL STATEMENTS September 30, 1995 (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, 1995, are not necessarily indicative of the results that may be expected for the year ending December 31, 1995. 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, 1994. MOUNTAIN FUEL SUPPLY COMPANY MANAGEMENT'S ANALYSIS September 30, 1995 Operating Results -- Following is a summary of financial results and operating information for the Company:
3 Months Ended 9 Months Ended 12 Months Ended September 30, September 30, September 30, 1995 1994 1995 1994 1995 1994 (Dollars in Thousands) FINANCIAL RESULTS Revenues From unaffiliated customers $38,842 $38,594 $244,649 $240,294 $378,595 $352,477 From affiliates 989 1,272 3,293 3,472 3,841 4,180 Total revenues $39,831 $39,866 $247,942 $243,766 $382,436 $356,657 Operating income (loss) ($7,494) ($9,890) $17,797 $12,891 $44,227 $29,166 Net income (loss) (4,925) (5,748) 8,288 5,501 26,139 14,841 OPERATING STATISTICS Natural gas volumes (in thousands of decatherms) Natural gas volumes (in Mdth) Residential and commercial sales 6,826 5,969 50,339 45,875 78,697 68,331 Industrial sales 1,736 1,743 6,989 5,652 10,219 7,744 Transportation for industrial customers 13,585 12,031 45,146 35,322 61,206 49,457 Total deliveries 22,147 19,743 102,474 86,849 150,122 125,532 Natural gas revenue (per dth) Residential and commercial sales $4.57 $4.92 $4.25 $4.59 $4.20 $4.55 Industrial sales 2.27 2.56 2.48 2.85 2.50 2.91 Transportation for industrial customers 0.10 0.12 0.10 0.12 0.10 0.12 Heating degree days Actual 77 24 3,189 2,854 5,625 4,720 Normal 110 110 3,594 3,594 5,801 5,332 Warmer than normal 30% 78% 11% 21% 3% 11% Number of customers at end of period 579,352 558,734
Revenues were higher in the 9- and 12-month periods of 1995 when compared with the 1994 periods because of colder temperatures, a 3.7% increase in the number of customers, and increased sales and transportation to industrial customers. The colder temperatures, although warmer than normal for the 1995 periods ended September 30, 1995, caused an increase in the volumes of gas sold to residential and commercial customers, primarily for space heating purposes. Revenues were flat in a comparison of third quarter 1995 with the third quarter of 1994 as lower gas costs in rates offset an 11% increase in the volumes sold. Volumes of gas delivered to industrial customers increased 27% in the first nine months of 1995 compared with the same period of 1994 resulting in $1,717,000 more revenues. Natural gas demand was higher for customers in the chemical, metals and electric generation industries. 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 9-month periods of 1995 when compared to the 1994 periods because the effect of lower gas prices more than offset the effect of increased volumes purchased. A comparison of natural gas purchases for the 12 months ended September 30, 1995 with the same period in 1994 includes the fourth quarter of 1994 which posted temperatures that were 10% colder than normal. Operating and maintenance expenses were 2% lower in the third quarter of 1995 compared to the third quarter of 1994 primarily due to lower labor costs as a result of an early retirement program. Operating and maintenance expenses were 1% higher in the first nine months of 1995 compared to the same period in 1994 because of the costs of serving more customers and inflation more than offset lower labor cost savings from the early retirement program, which occurred April 30, 1995. Depreciation expense was 4% lower in the third quarter of 1995, primarily as the result of transferring an office building to an affiliated company. Depreciation expense was 2% higher in the nine-month period of 1995 when compared to the same period in the prior year primarily because of increased spending for distribution assets. Interest and other income increased in the 3- and 9-month periods of 1995 as a result of recording a regulatory asset for the health and salary costs of long-term disabled employees that amounted to about $1 million and carrying charges earned on an increasing volume of stored gas. Interest and other income for the 12-month period ended September 30, 1995, includes a $5,589,000 one-time reduction of gas costs recorded in the fourth quarter of 1994. The effective income tax rate was 10% for the first nine months of 1995, primarily because of tight-sands income tax credits. Income taxes were a credit in the first nine months of 1994 because of the combined effect of a low pretax income and tight-sands income tax credits. The Company recognized $3,227,000 of tight-sands income tax credits in the first nine months of 1995 and $4,224,000 in the first nine months of 1994. On August 11, 1995, the Public Service Commission of Utah approved a settlement of Mountain Fuel's general rate case. Mountain Fuel received a $3.7 million increase in revenues. The settlement, which became effective September 1, allows the Company to implement a weather normalization adjustment, provides about $2 million in additional revenues through a new-premise fee and adds about $1.7 million from sharing capacity-release revenues. The settlement does not specify an authorized return on equity, but Mountain Fuel's allowed return on rate base increased from 10.08% to between 10.22% and 10.34%. These rate changes did not have a material effect on year-to-date 1995 revenues. Mountain Fuel has closed four regional offices and reduced functions at six other offices in an effort to consolidate and restructure operations. In addition, the Company's offer of early retirement was accepted by 109 employees effective April 30, 1995. The labor savings are expected to average $400,000 per month. The Company predicts that its investment in customer information system technology will continue to enable it to increase efficiency in serving customers. Both Moody's and Standard & Poors plan to reevaluate debt ratings of Mountain Fuel's senior unsecured debt as a result of Questar Pipeline's bid for a 50% ownership in the Kern River pipeline. Liquidity and Capital Resources - Operating Activities: Net cash provided from operating activities was $64,358,000 in the first nine months of 1995 compared with $39,388,000 for the same period of 1994. The increase was due to the effect of lower gas costs on the purchased-gas-cost-adjustment account and higher net income. Instead of a normal third and fourth quarter amortization of the 1994 balance in the purchased-gas-cost-adjustment account, customers will receive a one-time credit early in 1996. Investing Activities: Capital expenditures were $30,505,000 in the first nine months of 1995, compared with $33,072,000 in the corresponding 1994 period. Capital expenditures are estimated at $50,000,000 for 1995 and $55,000,000 for 1996. 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: Financing activities in the first nine months of 1995 included the funding of capital expenditures and repayment of loans to Questar Corporation from the proceeds of net cash provided from operations. In the 1994 nine-month period, Mountain Fuel applied cash flow from operations, a capital contribution and an issuance of 30-year notes toward funding of capital expenditures and repayment of debt from Questar Corporation. Estimated 1995 capital expenditures of $50 million will be financed from cash flow from operations and borrowings from Questar Corporation. In October 1995, Mountain Fuel redeemed the remaining balance of $1.2 million of its 8.625% preferred stock. The Company has a short-term line-of-credit arrangement with a bank totaling $500,000. No amounts were borrowed under the short-term line-of-credit arrangement at September 30, 1995. In addition, its parent company loans funds to the Company under a short-term borrowing arrangement. 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) November 8, 1995 /s/D. N. Rose (Date) D. N. Rose President and Chief Executive Officer November 8, 1995 /s/W. F. Edwards (Date) W. F. Edwards Vice President and Chief Financial Officer EX-27 2
5 The following schedule contains summarized financial information extracted from the Mountain Fuel Supply Company Statements of Income and Balance Sheet for the nine-months ended September 30, 1995, and is qualified in its entirety by reference to such unauditied financial statements. 1,000 9-MOS DEC-31-1995 SEP-30-1995 295 0 28,339 0 24,698 57,994 769,398 300,028 23,982 85,923 175,000 22,974 0 6,211 175,391 551,346 0 247,942 0 203,132 27,013 0 12,157 9,213 925 8,288 0 0 0 8,288 0 0
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