-----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, OQb2cRvsWwRN7TsTf3sixF7535tKcRdAVaCSPOEWG+pUaUnylLYAsMOvRsBA3rlQ 5enzz0q+wg/Rf4ChY78Agg== 0000077159-94-000003.txt : 19940516 0000077159-94-000003.hdr.sgml : 19940516 ACCESSION NUMBER: 0000077159-94-000003 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19940331 FILED AS OF DATE: 19940513 FILER: COMPANY DATA: COMPANY CONFORMED NAME: PENN VIRGINIA CORP CENTRAL INDEX KEY: 0000077159 STANDARD INDUSTRIAL CLASSIFICATION: 6795 IRS NUMBER: 231184320 STATE OF INCORPORATION: VA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-00753 FILM NUMBER: 94527869 BUSINESS ADDRESS: STREET 1: 800 BELLEVUE STREET 2: 200 S BROAD ST CITY: PHILADELPHIA STATE: PA ZIP: 19102 BUSINESS PHONE: 2155456600 MAIL ADDRESS: STREET 1: 800 BELLEVUE, 200 S. BROAD ST CITY: PHILADELPHIA STATE: PA ZIP: 19102 FORMER COMPANY: FORMER CONFORMED NAME: VIRGINIA COAL & IRON CO DATE OF NAME CHANGE: 19670501 10-Q 1 FORM 10-Q SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 QUARTERLY REPORT UNDER SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934 For Quarter Ended March 31, 1994 Commission File No. 0-753 PENN VIRGINIA CORPORATION (exact name of registrant as specified in its charter) VIRGINIA 23-1184320 (State or other jurisdiction of (I.R.S. Employer's incorporation or organization) Identification No.) 800 The Bellevue, 200 South Broad Street, Philadelphia, PA 19102 (Address of principal executive offices) (Zip Code) (215) 545-6600 (Registrant's telephone number, including area code) 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 at March 31, 1994 Common Stock, $6.25 par value 4,279,540 Shares PENN VIRGINIA CORPORATION CONDENSED CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED) Three Months Ended March 31
1994 1993 (In thousands, except per share data) Operating revenues: Sales $ 121 $ 123 Coal royalties 3,528 3,143 Oil and gas sales and royalties 4,341 4,020 Dividends 577 541 Other income, net 578 371 Total 9,145 8,198 Expenses: Cost of sales 640 641 Selling, general and administrative 1,682 1,605 Exploration and development 69 243 Depreciation, depletion and amortization 1,551 1,365 Taxes other than on income 409 433 Interest 454 481 Total 4,805 4,768 Income from operations 4,340 3,430 Income taxes 1,100 832 Net income $ 3,240 $ 2,598 Income per common share (based on 4,279,540 weighted average shares outstanding in 1994 and 1993): $ .76 $ .61 See accompanying notes to condensed consolidated financial statements.
PENN VIRGINIA CORPORATION CONDENSED CONSOLIDATED BALANCE SHEETS (Thousands of Dollars)
(UNAUDITED) March 31, 1994 December 31,1993 ASSETS Current assets Cash and cash equivalents $ 23,342 $ 23,869 Receivables 3,069 3,880 Current portion of long-term notes receivable 3,571 3,571 Inventory 552 438 Current deferred tax benefit 669 669 Other 411 514 Total current assets 31,614 32,941 Investments 87,498 94,562 Long-term notes receivable, net of current portion 11,120 11,841 Property, plant and equipment (net) 73,480 74,093 Other assets 813 822 Total assets $ 204,525 $ 214,259
LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities Current installments on long-term debt $ 7,625 $ 7,625 Accounts payable 1,643 4,456 Accrued expenses 4,977 4,535 Deferred income 210 214 Taxes on income 100 587 Total current liabilities 14,555 17,417 Other liabilities 7,578 7,669 Deferred taxes 32,209 34,821 Long-term debt, net of current installments 15,525 16,575 Shareholders' Equity Preferred stock of $100 par value - authorized 100,000 shares; issued none - - Common stock of $6.25 par value - authorized 8,000,000 shares; issued 4,437,517 shares in 1994 and 1993 27,734 27,734 Other paid-in capital 34,685 34,685 Retained earnings 31,925 30,603 94,344 93,022 Less: 157,977 shares in 1994 and 1993 of common stock held in treasury 7,435 7,435 Guaranteed debt to Employee Stock Ownership Plan 750 900 Add: Unrealized holding gain - investments 48,499 53,090 Total shareholders' equity 134,658 137,777 Total liabilities and shareholders' equity $ 204,525 $ 214,259 See accompanying notes to condensed consolidated financial statements.
PENN VIRGINIA CORPORATION CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) Three Months Ended March 31 (In thousands)
1994 1993 Cash flows from operating activities: Net cash flows from operating activities $ 2,290 $ 2,881 Cash flows from (used in) investing activities: Payment received on long-term notes 934 979 Proceeds from the sale of fixed assets - 34 Purchases of fixed assets (933) (612) Net cash flows provided by investing activities 1 401 Cash flows from (used in) financing activities: Dividends paid (1,918) (1,912) Repayment of long-term debt principal (1,050) (150) Reduction in Guaranteed debt to ESOP 150 150 Net cash flows (used) by financing activities (2,818) (1,912) Net increase (decrease) in cash and cash equivalents (527) 1,370 Cash and cash equivalents - beginning balance 23,869 4,153 Cash and cash equivalents - ending balance $ 23,342 $ 5,523 Supplemental disclosures of cash flow information: Cash paid to date for: Interest $ 295 $ 78 Income taxes $ 1,755 $ 184 See accompanying notes to condensed consolidated financial statements.
PENN VIRGINIA CORPORATION NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS 1. In the opinion of the Company, the accompanying condensed consolidated financial statements contain all adjustments (consisting of only normal recurring accruals) necessary to present fairly the financial position as of March 31, 1994, and the results of operations and cash flows for the three months ended March 31, 1994 and 1993. At December 31, 1993, the Company adopted Statement of Financial Accounting Standards No. 115, "Accounting for Certain Investments in Debt and Equity Securities". 2. Property, plant and equipment consist of the following: March 31, 1994 December 31, 1993 (In thousands) Property, plant and equipment $ 102,822 $ 101,940 Less: Accumulated depreciation and depletion (29,342) (27,847) Net property, plant and equipment $ 73,480 $ 74,093 3. The amortized cost, gross unrealized holding gains and fair value for available-for-sale securities at March 31, 1994 were as follows: Gross Unrealized Amortized Holding Fair Cost Gain Value (In thousands) Available-for-sale Westmoreland Coal Company $ 5,263 $ - $ 5,263 Westmoreland Resources, Inc. 4,530 - 4,530 Norfolk Southern Corporation 3,096 74,609 77,705 $ 12,889 $ 74,609 $ 87,498 The amortized cost and fair value of notes receivable which are classified as held-to-maturity securities was $14,691,000 at March 31, 1994. MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION Results of operations for the quarter ended March 31, 1994 as compared to the quarter ended March 31, 1993: Income from operations before income taxes increased $910,000 or 27% for the first quarter of 1994 compared to the first quarter of 1993. This increase is composed of a $359,000 increase in the coal and land segment, a $154,000 increase in the investment segment, a $257,000 increase in the oil and gas segment and a $140,000 decrease in general corporate expenses and interest. Income taxes increased as a result of an increase in book taxable income for the first quarter of 1994. Coal and Land 1994 1993 (Thousands of dollars) Revenues: Sales $ 121 $ 123 Royalties 3,528 3,143 Other 290 275 Total 3,939 3,541 Expenses: Cost of sales 26 5 Selling, general and administrative 309 278 Exploration and development 39 43 Depreciation, depletion and amortization 43 37 Taxes other than on income 41 56 Total 458 419 Operating Profit $ 3,481 $ 3,122 The increase in the coal and land segment operating profit of $359,000 or 12% is mainly attributable to increased coal royalties from independent coal lessees due to increased tonnage. Investments 1994 1994 (Thousands of dollars) Revenues: Dividends $ 577 $ 541 Other 125 - Total 702 541 Expenses: Selling, general and administrative 16 10 Depreciation 2 2 Taxes other than on income 1 - Total 19 12 Operating Profit $ 683 $ 529 The increase in the investment segment of $154,000 or 29% is mainly attributable to increased dividend income of $36,000 and interest income earned on short-term investments of $125,000 offset in part by an increase of $6,000 in salary expense. Oil and Gas 1994 1993 (Thousands of dollars) Revenues: Sales $ 3,720 $ 3,571 Royalties 621 449 Other 106 29 Total 4,447 4,049 Expenses: Cost of sales 613 636 Selling, general and administrative 665 497 Exploration and development 30 199 Depreciation, depletion and amortization 1,497 1,314 Taxes other than on income 326 344 Total 3,131 2,990 Operating Profit $ 1,316 $ 1,059 Operating profit for the oil and gas segment increased $257,000 or 24% and is mainly attributable to increased gas pricing and gas royalties of $321,000, an increase in delay rental income of $77,000 and a decrease in exploration and development expense of $169,000 due to the timing of budgeted 1994 expenses. Offsetting this revenue increase is an increase in selling, general and administrative expense of $168,000 and an increase in depreciation, depletion and amortization expense of $183,000. The increase is selling, general and administrative expenses is mainly attributable to the expenses associated with relocating Company personnel. The increase in depreciation, depletion and amortization expenses is due primarily to increased gas sales volume and higher depletion rates. Corporate The decrease in general corporate expenses and interest of $140,000 or 11% was due to a decline in interest expense of $24,000 as a result of lower debt balances outstanding and a $116,000 decline in general and administrative expenses due mainly to reductions in salary, legal and consulting expenses. Financial Condition as of March 31, 1994: There were no material changes in the Company's financial condition from that reported as of December 31, 1993. Liquidity, Capital Resources and Other Financial Data at March 31,1994: Working capital at March 31, 1994 was $17.0 million compared to $15.5 million at December 31, 1993. See the Condensed Consolidated Statement of Cash Flows for details regarding the change. At March 31, 1994, there were $3.0 million in unused credit lines. There are two main factors that could influence future earnings and cash flow of the Company. One of these is gas prices. Since the majority of the Company's gas is sold in the spot market or under contracts less than one year in duration, future earnings will be directly related to the fluctuation of those prices. Any sustained decline in these prices could result in some impairment of oil and gas assets. The second factor is the performance of Westmoreland Coal Company, our largest coal lessee. In 1993, Westmoreland reported a loss from continuing operations of $99 million that was caused primarily by the writedown of the assets of various eastern operations. On April 18, 1994, Westmoreland Coal Company ("WCC") announced that its outside auditors had issued a qualified opinion on the Company's 1993 financial statements due to the uncertainty of its ability to continue as a going concern. The opinion was based on losses associated with WCC's eastern coal operations, a working capital deficiency caused by a reclassification of its revolving credit and insurance company debt to current liabilities, and violation of various covenants in the Company's principal credit arrangements. After the filing of its annual report, WCC announced an agreement in principle to sell the assets of its cogeneration subsidiary for an amount in excess of $50 million plus the assumption of certain equity commitments. WCC is negotiating with its lenders to restructure its credit facilities. On May 9, 1994, WCC announced that it had suspended the payment of its preferred stock dividend as a result of negotiations with its lenders. WCC reported that it expects to repay its lenders with the proceeds from the sale of its cogeneration facilities and plans to begin payment of preferred stock dividends again at that time. It is also continuing the process of reviewing its eastern properties with potential purchasers, but no decision nor binding agreements have been made. Westmoreland is burdened by a difficult coal price environment and significant costs for retirees and idle mines that must be borne by a shrinking production base. The Company is striving to redefine itself and establish a core of profitable operations upon which it can base its recovery. If Westmoreland cannot mine profitably, then Penn Virginia's cash flows would be adversely affected. A prolonged period of depressed prices for coal would affect the merchantability of the reserves leased to Westmoreland and could ultimately result in a curtailment of production from Penn Virginia's reserves. The Company continues to evaluate its investment in Westmoreland and any deterioration in their financial condition that results in the carrying value for that investment being in excess of fair value could result in additional losses. Except for matters discussed above, management is not presently aware of any trends or demands which exist or uncertainties which are reasonably likely to result in the Company's liquidity increasing or decreasing in any material way. REVIEW BY INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS The accompanying condensed consolidated financial statements have been reviewed by the Company's independent certified public accountants, KPMG Peat Marwick, in accordance with the established professional standards and procedures for such a limited review. PART II. OTHER INFORMATION ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K. (a) Exhibits Exhibit 15: Letter Re: Unaudited interim financial information. (b) Reports on Form 8-K: No reports on Form 8-K were filed for the quarter ended March 31, 1994. 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. PENN VIRGINIA CORPORATION (Registrant) Date: May 13, 1994 Robert J. Jaeger (Robert J. Jaeger, Vice President, Treasurer & Controller) (Principal Financial and Accounting Officer) INDEPENDENT ACCOUNTANT'S REPORT The Board of Directors Penn Virginia Corporation: We have reviewed the accompanying condensed consolidated balance sheet of Penn Virginia Corporation and subsidiaries as of March 31, 1994 and the related condensed consolidated statements of income and cash flows for the three month periods ended March 31, 1994 and 1993. These financial statements are the responsibility of the Company's management. We conducted our review in accordance with standards established by the American Institute of Certified Public Accountants. A review of interim financial information consists principally of applying analytical review procedures to financial data and making inquiries of persons responsible for financial and accounting matters. It is substantially less in scope than an audit conducted in accordance with generally accepted auditing standards, the objective of which is the expression of an opinion regarding the financial statements taken as a whole. Accordingly, we do not express such an opinion. Based on our review, we are not aware of any material modifications that should be made to the accompanying condensed consolidated financial statements for them to be in conformity with generally accepted accounting principles. We have previously audited, in accordance with generally accepted auditing standards, the consolidated balance sheet of Penn Virginia Corporation and subsidiaries as of December 31, 1993, and the related consolidated statements of income, shareholders' equity and cash flows for the year then ended (not presented herein); and in our report dated March 1, 1994, we expressed an unqualified opinion on those consolidated financial statements. In our opinion, the information set forth in the accompanying condensed consolidated balance sheet as of December 31, 1993, is fairly presented, in all material respects in relation to the consolidated balance sheet from which it has been derived. KPMG PEAT MARWICK KPMG Peat Marwick Philadelphia, PA May 10, 1994 EX-15 2 Exhibit 15 Penn Virginia Corporation 200 S. Broad Street 800 The Bellevue Philadelphia, PA 19102 Re: Registration Statement Nos. 2-67355, 2-77500 and 33-40430 Gentlemen: With respect to the subject Registration Statements, we acknowledge our awareness of the use therein of our report dated May 10, 1994 related to our review of interim financial information. Pursuant to Rule 436(c) under the Securities Act, such report is not considered a part of a Registration Statement prepared or certified by an accountant or a report prepared or certified by an accountant within the meaning of Sections 7 and 11 of the Act. Very truly yours, KPMG Peat Marwick KPMG PEAT MARWICK May 10, 1994 -----END PRIVACY-ENHANCED MESSAGE-----