-----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, T1/Jk4kFw0gTko77+hnj0voqjsOcOZSlpj2bPAjczY0rIWeLwALQYO5UMXOw8F9h Z0ULYcqhvMUODw/hQx2uNA== 0000893220-95-000759.txt : 19951119 0000893220-95-000759.hdr.sgml : 19951119 ACCESSION NUMBER: 0000893220-95-000759 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19950930 FILED AS OF DATE: 19951114 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: PENN VIRGINIA CORP CENTRAL INDEX KEY: 0000077159 STANDARD INDUSTRIAL CLASSIFICATION: MINERAL ROYALTY TRADERS [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: 95592640 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 PENN VIRGINIA CORPORATION FORM 10-Q 9/30/95 1 UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON D.C. 20549 FORM 10-Q (X) QUARTERLY REPORT UNDER 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 Commission File Number 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 incorporation or organization) identification no.) 100 MATSONFORD ROAD SUITE 200 RADNOR, PA 19807 (Address of principal executive offices) (Zip code) (610)687-8900 (Registrant's telephone number; including area code) (Former name, former address and former fiscal year, if changed since last report.) 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 ----- ----- Number of shares of common stock of registrant outstanding at November 14, 1995: 4,262,240 2 PENN VIRGINIA CORPORATION AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF INCOME (Dollars in thousands except for share amounts) (Unaudited)
Three Months Nine Months Ended September 30, Ended September 30, - ------------------------------------------------------------------------------------ 1995 1994* 1995 1994* - ------------------------------------------------------------------------------------ Revenues: Natural gas sales $ 2,801 $ 2,960 $ 8,818 $ 9,606 Coal royalties 1,706 3,990 7,835 11,366 Gain on sale of securities 2,285 - 6,391 - Dividends 573 577 1,790 2,011 Oil and gas royalties 219 325 909 1,406 Oil and condensate 214 311 676 803 Timber and land sales 131 163 503 385 Other income 84 128 345 359 ------- ------- -------- ------- $ 8,013 $ 8,454 $ 27,267 $25,936 Expenses: Operating expenses $ 867 $ 832 $ 2,319 $ 2,274 Exploration and development 119 265 361 519 Taxes other than income 489 377 1,388 1,141 General and administrative 1,659 2,305 5,110 5,676 Depreciation, depletion and amortization 2,178 1,535 5,896 4,566 ------- ------- -------- ------- $ 5,312 $ 5,314 $ 15,074 $14,176 Operating Income $ 2,701 $ 3,140 $ 12,193 $11,760 Other (Income) Expense: Interest expense $ 470 $ 373 $ 1,480 $ 1,247 (Gain) loss on sale of property 1,579 (109) 1,467 (108) Other (income) `(451) (421) (1,616) (1,411) ------- ------- -------- ------- Income before income tax $ 1,103 $ 3,297 $ 10,862 $12,032 Income tax expense (benefit) 12 (190) 1,780 2,028 ------- ------- -------- ------- Net Income $ 1,091 $ 3,487 $ 9,082 $10,004 ------- ------- -------- ------- Net Income per share $ 0.26 $ 0.82 $ 2.13 $ 2.34 ======= ======= ======== ======= Weighted average shares outstanding (in thousands) 4,265 4,280 4,271 4,280 ======= ======= ======== =======
*Certain amounts have been reclassified to conform to the current year's presentation. See accompanying notes to condensed consolidated financial statements. 3 PENN VIRGINIA CORPORATION AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS (Thousands of dollars)
(Unaudited) September 30, December 31, Assets 1995 1994 ------ -------- -------- Current assets Cash and cash equivalents $ 3,056 $ 7,039 Receivables 2,150 3,286 Current portion of long-term notes receivable 3,646 3,646 Current deferred tax benefit 1,451 1,451 Recoverable income taxes - 1,646 Inventory 623 599 Prepaid expenses 267 249 -------- -------- Total current assets $ 11,193 $ 17,916 -------- -------- Investments in affiliated companies $ 9,793 $ 12,425 Other investments 82,404 72,896 Long-term notes receivable, net of current portion 6,952 8,881 Property, plant and equipment (net) 102,776 86,246 Intangible assets, net of amortization 807 781 Other assets 176 114 -------- -------- Total assets $214,101 $199,259 ======== ======== Liabilities and Shareholders' Equity ------------------------------------ Current liabilities Current installments on long-term debt $ 2,000 $ 7,325 Accounts payable 961 4,409 Accrued expenses 4,135 3,913 Deferred liabilities 211 220 Taxes on income 563 - -------- -------- Total current liabilities $ 7,870 $ 15,867 -------- -------- Other liabilities $ 7,571 $ 8,031 Deferred taxes 30,747 28,459 Long-term debt, net of current installments 22,500 9,250 Minority interest 194 206 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 1995 and 1994 27,734 27,734 Other paid-in capital 34,793 34,793 Retained earnings 38,895 35,571 -------- -------- $101,422 $ 98,098 Less: 175,277 and 157,977 shares in 1995 and 1994 of common stock held in treasury 7,928 7,435 Guaranteed debt to Employee Stock Ownership Plan - 300 Add: Unrealized holding gain, net of tax - investments 51,725 47,083 -------- -------- Total shareholders' equity $145,219 $137,446 -------- -------- Total liabilities and shareholders' equity $214,101 $199,259 ======== ========
See accompanying notes to condensed consolidated financial statements. 4 PENN VIRGINIA CORPORATION AND SUBSIDIARIES CONDENSED CONSOLIDATED CASH FLOW STATEMENTS (Thousands of dollars) (Unaudited)
Nine Months Ended September 30, ---------------------------- 1995 1994 * --------- -------- Cash flows from operating activities: Net income $ 9,082 $ 10,004 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation, depletion and amortization 5,896 4,566 (Gain) on sale of securities (6,391) - (Gain) loss on sale of property, plant and equipment 1,467 (108) Deferred income taxes (211) 38 Dry hole expense (84) 105 Other 123 102 (Increase) decrease in current assets 2,740 (2,362) Decrease in current liabilities (2,917) (4,305) (Increase) decrease in other assets (102) 3 Increase (decrease) in other liabilities (460) 81 Decrease in minority interest (12) (12) -------- -------- Net cash provided by operating activities $ 9,131 $ 8,112 -------- -------- Cash flows from investing activities: Proceeds from the sale of securities $ 6,656 - Proceeds from notes 2,728 2,337 Proceeds from the sale of property, plant and equipment 883 283 Capital expenditures (24,533) (14,398) Notes purchased (800) - -------- -------- Net cash used in investing activities $(15,066) (11,778) -------- -------- Cash flows from financing activities: Dividends paid $ (5,759) (5,757) Proceeds from debt borrowings 20,300 - Payment of debt (12,375) (6,575) Purchase of treasury stock (514) - Reduction in guaranteed debt to ESOP 300 450 -------- -------- Net cash provided, (used) by financing activities $ 1,952 (11,882) -------- -------- Net decrease in cash and cash equivalents $ (3,983) (15,548) Cash and cash equivalents - beginning balance 7,039 23,869 -------- -------- Cash and cash equivalents - ending balance $ 3,056 $ 8,321 ======== ======== Supplemental disclosures of cash flow information: Cash paid to date for: Interest $ 1,417 $ 1,066 ======== ======== Income Taxes $ 448 $ 3,496 ======== ========
* Certain amounts have been reclassified to conform to the current year's presentation. See accompanying notes to condensed consolidated financial statements. 5 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 September 30, 1995, and the results of operations for the three and nine months ended September 30, 1995 and 1994 and cash flows for the nine months ended September 30, 1995 and 1994. Property, plant and equipment consist of the following:
September 30, 1995 December 31, 1994 ------------------ ----------------- (In thousands) Property, plant and equipment $ 141,439 $ 120,251 Less: Accumulated depreciation and depletion (38,663) (34,005) --------- --------- Net property, plant and equipment $ 102,776 $ 86,246 --------- ---------
2. During the first quarter of 1995, the Company completed two significant asset transactions. The first transaction consisted of the relinquishment of the West Virginia Hampton lease by Westmoreland Coal Company. The second transaction consisted of the acquisition of an oil and gas property located in West Virginia ("Loup Creek") that increased the Company's proven oil and gas reserves by approximately 42 billion cubic feet (Bcf) at a cost of approximately $17 million. This oil and gas property is contiguous to an oil and gas property acquired in 1992 and will allow access to an additional gas pipeline transmission system thereby increasing the marketability of the Company's natural gas reserves. 3. The amortized cost, gross unrealized holding gains and fair value for available- for-sale securities at September 30, 1995 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 2,839 79,565 82,404 ------- -------- ------- $ 12,632 $ 79,565 $ 92,197 ======== ======== ========
On April 21, 1995 the Company sold 65,000 shares of its Norfolk Southern Corporation common stock investment for approximately $4.3 million. On July 7, 1995 the Company sold an additional 35,000 shares of its Norfolk Southern Corporation common stock investment for approximately $2.4 million. The proceeds from these sales were used for general corporate purposes as well as for working capital and debt service requirements. The amortized cost and fair value of notes receivable which are classified as held-to-maturity securities was $10,598,000 at September 30, 1995. 4. During the first quarter of 1995 the Company executed a new $20 million loan and agency agreement with First Fidelity Bank as the lead lender and two other commercial bank lenders. Proceeds from this facility were used to finance the acquisition of the Loup Creek oil and gas property and the relinquishment of the Hampton lease by Westmoreland Coal Company. As of September 30, 1995, $18.5 million was outstanding under this 6 facility and is included with long-term debt on the Company's balance sheet. The remaining $1.5 million is available for future borrowings as deemed necessary by the Company. 7 Management's Discussion and Analysis of Results of Operations and Financial Condition Results of operations for the quarter ended September 30, 1995 as compared with the quarter ended September 30, 1994: Operating income decreased $439,000 or 14%, for the third quarter of 1995 compared to the third quarter of 1994. This decrease is composed of a $2,173,000 decrease in the coal and land segment, a $1,024,000 decrease in the oil and gas segment, a $2,292,000 increase in the investment segment and a $466,000 decrease in general corporate expenses. Income before income taxes decreased $2,194,000 primarily due to the recognition of a $1.4 million loss on the sale of certain Pennsylvania oil and gas properties that occurred in the third quarter of 1995 in addition to the operating income decrease mentioned above. Interest expense increased $97,000 or 26% due to increased bank borrowings during the third quarter of 1995. Income taxes increased $202,000 or 106% primarily because 1994 included a tax accrual reversal resulting from the finalization of certain tax audits and, lower projected 1995 State income tax expense. Coal and Land
Three Months Ended September 30, ------------------- 1995 1994 ---- ---- (Thousands of dollars) Revenues: Coal royalties $ 1,706 $ 3,990 Timber and land sales 131 163 Other income 17 38 ------- ------- Total $ 1,854 $ 4,191 Expenses: Operating expenses $ 23 $ 22 Exploration and development 26 57 Taxes other than income 55 33 General and administrative 253 396 Depreciation and depletion 30 43 ------- ------- Total $ 387 $ 551 ------- ------- Operating income $ 1,467 $ 3,640 ======= =======
Operating income decreased by $2,173,000 or 60% primarily due to decreased coal royalties from the Company's mineral fee properties located in Virginia and West Virginia. Coal royalties decreased by $2,284,000 or 57% primarily due to the Westmoreland Coal Company shutdown of its Virginia mining operations in late July 1995. In addition, timber and land sales decreased $32,000 or 20% primarily due to differences in timber grades sold in 1995 compared with 1994. General and administrative expenses decreased $143,000 or 36% primarily due to lower salary, contributions and employee benefits expenses. Taxes other than income increased $22,000 or 67% due to increased property taxes relating to the relinquishment of the West Virginia Hampton lease by Westmoreland Coal Company in the first quarter of 1995. Depletion expense decreased due to the decline in coal production associated with the shutdown of Westmoreland Coal Company's Virginia operations during the third quarter of 1995. Penn Virginia Corporation received coal royalties from Westmoreland Coal Company totalling $727,000 and $3,018,000 for the three months ending September 30, 1995 and 1994, respectively. 8 Oil and Gas
Three Months Ended September 30, ------------------- 1995 1994 ---- ---- (Thousands of dollars) Revenues: Natural gas sales $ 2,801 $ 2,960 Oil and gas royalties 219 325 Oil and condensate 214 311 Other income 67 90 ------- ------- Total $ 3,301 $ 3,686 Expenses: Operating expenses $ 844 $ 810 Exploration and development 93 208 Taxes other than income 391 301 General and administrative 725 752 Depreciation and depletion 2,139 1,482 ------- ------- Total $ 4,192 $ 3,553 ------- ------- Operating income, (loss) $ (891) $ 133 ======= =======
Operating income decreased $1,024,000 primarily due to the effects of lower natural gas pricing and higher 1995 depletion rates. Natural gas prices have declined by approximately 23% which has driven down natural gas sales $159,000 or 5%. Oil and gas royalties decreased $106,000 or 32% primarily due to the gas curtailment. Oil sales decreased $97,000 or 31% due to lower production volumes and oil prices in 1995. Depreciation and depletion expense increased $657,000 or 44% primarily due to higher 1995 production and depletion rates. Exploration and development expense decreased $115,000 or 55% due to lower dry hole expense. Taxes other than income increased $91,000 or 30% due to additional severance, ad valorem and property taxes associated with the first quarter of 1995 Loup Creek property acquisition. Investments
Three Months Ended September 30, ------------------- 1995 1994 ---- ---- (Thousands of dollars) Revenues: Gain on sale of securities $ 2,285 $ - Dividends 573 577 ------- ------- Total $ 2,858 $ 577 Expenses: Taxes other than income - 1 General and administrative 3 13 Depreciation - - ------- ------- Total $ 3 $ 14 ------- ------- Operating income $ 2,855 $ 563 ======= =======
Operating income increased $2,292,000 due to the gain recognized on the sale of an additional 35,000 shares of Norfolk Southern Corporation common stock held by the Company. 9 Corporate General corporate expenses decreased $466,000 or 39% primarily because of a 1994 charge for personnel realignment expenses for $466,000 that was recorded in the third quarter of 1994. Results of operations for the nine months ended September 30, 1995 as compared to the nine months ended September 30, 1994: Operating income increased $433,000 or 4%. This increase is comprised of a $3,395,000 decrease in the coal and land segment, a $2,989,000 decrease in the oil and gas segment, a $6,209,000 increase in the investment segment and a decrease of $608,000 in general corporate expenses. Income before income taxes decreased $1,170,000 or 10% primarily due to the recognition of a $1.4 million loss on the sale of certain Pennsylvania oil and gas properties that occurred in the third quarter of 1995 in addition to the operating income increase mentioned above. Interest expense increased $233,000 or 19% primarily due to increased bank borrowings during the third quarter of 1995. Income taxes decreased $248,000 or 12%. The decrease is primarily due to the estimated decrease in the effective Federal tax rate due to lower projected 1995 pre-tax earnings, a smaller deduction for 1995 State income tax expense and the 1994 inclusion of a tax accrual reversal resulting from the finalization of certain tax audits. Coal and Land
Nine Months Ended September 30, ------------------- 1995 1994 ---- ---- (Thousands of dollars) Revenues: Coal royalties $ 7,835 $ 11,366 Timber and land sales 503 385 Other income 64 107 ------- -------- Total $ 8,402 $ 11,858 Expenses: Operating expenses $ 55 $ 63 Exploration and development 121 147 Taxes other than income 201 107 General and administrative 903 990 Depreciation and depletion 95 $ 129 ------- -------- Total $ 1,375 $ 1,436 ------- -------- Operating income $ 7,027 $ 10,422 ======= ========
Operating income decreased $3,395,000 or 33% primarily due to decreased coal royalties received from Westmoreland Coal Company's (WCX) Virginia operations following the WCX shutdown of its Virginia mining operations in late July 1995. Coal royalties decreased by $3,531,000 or 31% of which WCX Virginia royalties amounted to $2,693,000 or a 39% decline from 1994 royalties earned. The remaining decrease in coal royalties represents reduced coal mining activity by non-WCX operators of $735,000 or 27% and lower royalties from the West Virginia properties of $103,000 or 6%. Timber and land sales increased $118,000 or 31% due to increased timber parcel sales. The decrease in exploration and development expense of $26,000 or 18% is due to a reduction in the level of coal core drilling in 1995 compared with 1994. Taxes other than income increased $94,000 or 88% due to increased property taxes relating to the relinquishment of the West Virginia Hampton lease by WCX in the first quarter of 1995. Depletion decreased $34,000 or 26% due to the decline in coal production associated with the WCX shutdown of its Virginia operations. Penn Virginia Corporation received coal royalties from Westmoreland Coal Company 10 totalling $4,337,000 and $8,561,000 for the nine months ending September 30, 1995 and 1994. Oil and Gas
Nine Months Ended September 30, ------------------- 1995 1994 ---- ---- (Thousands of dollars) Revenues: Natural gas sales $ 8,818 $ 9,606 Oil and gas royalties 909 1,406 Oil and condensate 676 803 Other income $ 281 $ 252 -------- -------- Total $ 10,684 $ 12,067 Expenses: Operating expenses $ 2,265 $ 2,211 Exploration and development 239 372 Taxes other than income 1,050 914 General and administrative 2,259 2,078 Depreciation and depletion 5,773 4,405 -------- -------- Total $ 11,586 $ 9,980 -------- -------- Operating income (loss) $ (902) $ 2,087 ======== ========
Operating income decreased $2,989,000 or 143% primarily due to the effects of lower natural gas pricing and higher 1995 depletion rates. Natural gas prices have declined by approximately 30% which has driven down natural gas sales $788,000 or 8%. Oil and gas royalties decreased $497,000 or 35% primarily due to the gas curtailment. Oil sales decreased $127,000 or 16% due to lower production volumes and oil prices in 1995. General and administrative expenses increased $181,000 or 9% primarily due to higher 1995 office space costs and the reclassification of gas marketing costs previously netted against natural gas sales. Taxes other than income increased $136,000 or 15% due to additional severance, ad valorem and property taxes associated with the first quarter of 1995 Loup Creek property acquisition. Depreciation and depletion expense increased $1,368,000 or 31% primarily due to higher 1995 production and depletion rates. Exploration and development expenses decreased $133,000 or 36% due to lower dry hole expense. 11 Investments
Nine Months Ended September 30, --------------------- 1995 1994 ------- ------- (Thousands of dollars) Revenues: Gain on sale of securities $ 6,391 $ - Dividends 1,790 2,011 ------- ------- Total $ 8,181 $ 2,011 Expenses: Taxes other than income $ - $ 2 General and administrative 12 45 Depreciation - 4 ------- ------- Total $ 12 $ 51 ------- ------- Operating income $ 8,169 $ 1,960 ======= =======
Operating income increased $6,209,000 due to the gain recognized on the sale of 100,000 shares of Norfolk Southern Corporation common stock held by the Company. Partially offsetting this increase is a decrease in dividend income of $221,000 or 11% primarily due to the timing of dividend receipts from other investments. Corporate General corporate expenses decreased $608,000 or 22% in 1995 versus 1994. The Company was able to reverse $225,000 of its previously recorded relocation reserve no longer required. In addition, 1994 expenses included a charge of $466,000 for personnel realignment expenses. Partially offsetting these decreases was an increase in office-related and outside consulting expenses. Financial Condition, Liquidity, Capital Resources and Other Financial Data at September 30, 1995: Working capital at September 30, 1995 was $3.3 million compared to $2 million at December 31, 1994. See the Condensed Consolidated Statement of Cash Flows for details regarding the change. On July 7, 1995 the Company sold an additional 35,000 shares of Norfolk Southern Corporation common stock for approximately $2.4 million. The proceeds from this sale were used for general corporate purposes. Presently, the Company has $1.5 million of available debt capacity. Three factors that could influence future earnings and cash flow of the Company are coal tonnages mined, natural gas prices and natural gas production. The first factor is the number of tons of coal mined from the Company's mineral fee properties. Westmoreland Coal Company (WCX), our largest lessee, announced July 31, 1995 that it had reached an agreement with Duke Power Company whereby Duke would buy out the remaining term of a WCX coal supply agreement originally entered into on January 1, 1986. The coal shipped to Duke under this agreement was being mined from the Company's Virginia mineral fee properties. To date, WCX has been unsuccessful in finding an operator to purchase its remaining Virginia assets. WCX completed its announced shutdown of its Virginia mining operations at the end of July 1995. The shutdown of the Virginia coal properties will have a significant impact on Penn Virginia Corporation's 1995 and 1996 earnings and cash flows. The Company estimates a potential decrease in its total 1995 coal royalties of $2.3 million if the Virginia coal properties were to remain idle for the remainder of 1995. In an effort to diversify the risks associated with having one principal lessee on the Company's West Virginia coal properties and more fully exploit the mineable coal reserves, the Company obtained the relinquishment of the WCX Hampton lease in 12 February, 1995. It is the Company's intent to have several lessees mining coal on this property. In West Virginia, the Company is currently entering into a lease with Ashland Coal for an estimated 250,000 tons of mined coal per year. Production is expected to begin in late 1996 on this lease. In addition, the Company has currently entered into final negotiations with a potential major new lessee that could result in a forecasted annualized rate of production of nearly 2 million tons per year by late 1997 or early 1998. The initial production by this new lessee could begin in late 1996. The second factor is natural gas prices. Since the majority of the Company's natural 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. As previously disclosed, lower natural gas prices continue to have a negative impact on revenues, which are down 14% in spite of a 22% increase in gas volumes produced to date in 1995. In addition, the Company continues to experience temporary partial curtailments of its natural gas production due to pipeline repairs on the Columbia Gas System. Part of the originally scheduled pipeline repair was completed in late October and the entire repair is scheduled to be completed by December 1, 1995. This curtailment reduced natural gas production an estimated .75 billion cubic feet (Bcf) in the third quarter and will also impact fourth quarter production. The anticipated economic impact of these curtailments is estimated to be a decrease in 1995 natural gas volumes sold of .8 Bcf. Based on current pricing natural gas revenues are expected to decrease by approximately $1.4 million. In a continuing effort to mitigate the recent decline in natural gas prices and the scheduled curtailments by Columbia Gas, the Company has undertaken several steps. The current year's remaining drilling program has been reduced and management continues to evaluate ways to further reduce expenses. Subject to final approval by the bankruptcy court, Penn Virginia has settled its take-or-pay claims with Columbia Gas Transmission and expects to receive in excess of $10 million in late 1995 or early 1996. The Company continues to evaluate its investment in WCX and any deterioration in WCX's 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. 13 PART II. OTHER INFORMATION ITEM 4. EXHIBITS AND REPORTS ON FORM 8-K. (a) Exhibits Exhibit 15: Letter Re: Unaudited interim financial information. Exhibit 27: Financial data schedule. (b) Reports on Form 8-K: No reports on Form 8-K were filed for the quarter ended September 30, 1995. 14 REVIEW BY INDEPENDENT CERTIFIED PUBLIC ACCOUNTANT The accompanying condensed consolidated financial statements have been reviewed by the Company's independent certified public accountants, KPMG Peat Marwick LLP in accordance with the established professional standards and procedures for such a limited review. 15 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: November 14, 1995 STEVEN W. THOLEN --------------------------------------------- (Steven W. Tholen, Vice President,Chief Financial Officer) (Principal Financial Officer) Date: November 14, 1995 WILLIAM M. SWENSON --------------------------------------------- (William M. Swenson, Asst. Controller) (Principal Accounting Officer) 16 KPMG Peat Marwick LLP Certified Public Accountants 1600 Market Street Philadelphia, PA 19103 INDEPENDENT ACCOUNTANTS' 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 September 30, 1995 and the related condensed consolidated statements of income for the three and nine month periods ended September 30, 1995 and 1994, and condensed consolidated statement of cash flows for the nine month periods ended September 30, 1995 and 1994. 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, 1994, 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, 1995, 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, 1994, is fairly presented, in all material respects in relation to the consolidated balance sheet from which it has been derived. KPMG Peat Marwick LLP KPMG Peat Marwick LLP Philadelphia, PA October 30, 1995 EX-15 2 LETTER TO PENN VIRGINIA FROM KPMG PEAT MARWICK LLP 1 KPMG Peat Marwick LLP Certified Public Accountants 1600 Market Street Philadelphia, PA 19103 Exhibit 15 Penn Virginia Corporation Suite 200 100 Matsonford Road Radnor, PA 19807 RE: Registration Statement Nos. 2-67355, 2-77500, 33-40430, 33-59647 and 33-59651 Gentlemen: With respect to the subject Registration Statements, we acknowledge our awareness of the use therein of our report dated October 30, 1995 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 LLP KPMG Peat Marwick LLP November 14, 1995 EX-27 3 FINANCIAL DATA SCHEDULE
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE CONDENSED CONSOLIDATED BALANCE SHEET AT SEPTEMBER 30, 1995 AND THE CONDENSED CONSOLIDATED STATEMENT OF INCOME FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1995 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 1,000 9-MOS DEC-31-1994 SEP-30-1995 3,056 0 5,796 0 623 11,193 141,439 38,663 214,101 7,870 0 27,734 0 0 117,485 214,101 9,997 27,267 2,319 2,319 12,606 0 1,480 10,862 1,780 9,082 0 0 0 9,082 2.13 2.13
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