-----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, Iuo3LGxuA6SWkp8Fsfi8ZTkT1zNZhFBgzJ/VJKzD+pfOdmm35Urf9dK9OQH2Y9PR +ZpVi0ptkBQqUKEoXDtoHw== 0000893220-96-000841.txt : 19960517 0000893220-96-000841.hdr.sgml : 19960517 ACCESSION NUMBER: 0000893220-96-000841 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19960331 FILED AS OF DATE: 19960515 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: PENN VIRGINIA CORP CENTRAL INDEX KEY: 0000077159 STANDARD INDUSTRIAL CLASSIFICATION: CRUDE PETROLEUM & NATURAL GAS [1311] 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: 96567462 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 PENN VIRGINIA CORPORATION 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 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 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 May 9, 1996: 4,334,264 2 PENN VIRGINIA CORPORATION INDEX ________________________________________________________________________________ PAGE ---- PART I FINANCIAL INFORMATION: Item 1. Financial Statements Condensed Consolidated Statements of Income for 1 the three months ended March 31, 1996 and 1995 Condensed Consolidated Statements of Cash Flows for 2 the three months ended March 31, 1996 and 1995 Condensed Consolidated Balance Sheets as of 3 March 31, 1996 and December 31, 1996 Notes to Condensed Consolidated Financial Statements 5 Item 2. Management's Discussion and Analysis of Financial 6 and Results of Operations PART II OTHER INFORMATION Item 6. Exhibits and Reports on Form 8-K 13 3 PENN VIRGINIA CORPORATION AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF INCOME THREE MONTHS ENDED MARCH 31, 1996 AND 1995 (DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS) (UNAUDITED)
Three Months Ended March 31, --------------------- 1996 1995 ---- ---- REVENUES: Timber & land sales $ 74 $ 220 Oil sales 167 231 Natural gas sales 5,362 3,109 Royalties-coal 1,719 3,168 Royalties-oil & gas 546 348 Dividends 617 625 Other income 385 146 ----- ----- TOTAL REVENUES $8,870 $7,847 EXPENSES: Operating expenses $ 726 $ 724 Exploration and development 81 118 Taxes other than income 647 441 General and administrative 1,695 1,843 Depreciation, depletion, amortization 1,626 1,886 ----- ----- TOTAL EXPENSES $4,775 $5,012 OPERATING INCOME $4,095 $2,835 OTHER (INCOME) EXPENSE: Interest expense $ 274 $ 386 Gain on sale of property (17) (51) Other income (809) (445) ------ ------ Income before income tax $4,647 $2,945 Income tax expense 390 303 ----- ----- NET INCOME $4,257 $2,642 ====== ====== NET INCOME PER SHARE 1.00 0.62 ===== ===== WEIGHTED AVERAGE SHARES OUTSTANDING (IN THOUSANDS) 4,265 4,276
See accompanying notes to condensed consolidated financial statements. 1 4 PENN VIRGINIA CORPORATION AND SUBSIDIARIES CONDENSED CONSOLIDATED CASH FLOW STATEMENTS (DOLLARS IN THOUSANDS)
Three Months Ended March 31, --------------- 1996 1995 ---- ---- (Unaudited) CASH FLOW FROM OPERATING ACTIVITIES: Net Income $4,257 $2,642 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation, depletion, and amortization 1,626 1,886 Gain on sale of property, plant and equipment (17) (50) Deferred income taxes (709) (286) Other (517) (221) Decrease in current assets 510 315 Increase (Decrease) in current liabilities 19 (1,869) (Increase) Decrease in other assets 1 (61) Increase (Decrease) in other liabilities 358 (145) Decrease in minority interest (4) (2) ------ -------- NET CASH PROVIDED BY OPERATING ACTIVITIES $5,524 $2,209 CASH FLOWS FROM INVESTING ACTIVITIES: Proceeds from notes $1,348 $ 952 Proceeds from sale of fixed assets 20 0 Capital expenditures (73) (20,195) ------ -------- NET CASH PROVIDED, (USED) BY INVESTING ACTIVITIES $1,295 $(19,243) CASH FLOWS FROM FINANCING ACTIVITIES: Dividends paid $(1,918) $(1,920) Proceeds from debt borrowings 0 16,500 Repayment of long-term debt (3,950) (1,050) Purchase of treasury stock 0 (230) Proceeds from exercise of stock options 323 0 Reduction in guaranteed debt to ESOP 0 150 ------ ------- NET CASH PROVIDED, (USED) BY FINANCING ACTIVITIES $(5,545) $13,450 -------- -------- NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 1,274 (3,584) CASH AND CASH EQUIVALENTS-BEGINNING BALANCE 2,993 7,039 ----- ------ CASH AND CASH EQUIVALENTS-ENDING BALANCE $4,267 $3,455 ====== ====== SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION: Cash paid to date for: Interest $123 $80 Income taxes 833 200
See accompanying notes to condensed consolidated financial statements. 2 5 PENN VIRGINIA CORPORATION AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS (DOLLARS IN THOUSANDS)
MARCH 31, DECEMBER 31, 1996 1995 ---- ---- (UNAUDITED) ASSETS CURRENT ASSETS Cash and cash equivalents $4,267 $2,993 Receivables 3,844 3,924 Current portion of long-term notes receivable 4,321 4,321 Current deferred tax benefit 865 865 Recoverable income taxes 0 375 Inventory 187 187 Prepaid expenses 174 229 TOTAL CURRENT ASSETS 13,658 12,894 Investments 103,203 96,645 Long-term notes receivable-net of current portion 3,745 4,582 Property, plant and equipment (net) 89,455 91,016 Intangible assets, net of amortization 738 740 Other assets 123 124 TOTAL ASSETS $210,922 $206,001 ======== ========
See accompanying notes to condensed consolidated financial statements. 3 6 PENN VIRGINIA CORPORATION AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS (DOLLARS IN THOUSANDS)
MARCH 31, DECEMBER 31, 1996 1995 ---- ---- (UNAUDITED) LIABILITIES AND SHAREHOLDERS' EQUITY CURRENT LIABILITIES Current installments on long-term debt $2,000 $2,000 Accounts payable 1,010 2,094 Accrued expenses 5,920 4,670 Deferred liabilities 164 188 Taxes on income 622 358 ------ ------ TOTAL CURRENT LIABILITIES 9,716 9,310 ------ ------ Other liabilities 6,883 7,402 Deferred taxes 30,626 29,040 Long-term debt, net of current installments 9,199 12,700 Minority interest 188 192 SHAREHOLDERS' EQUITY Preferred stock of $100 par value- authorized 100,000 shares; none issued Common stock of $6.25 par value- authorized 8,000,000 shares, issued 4,447,517 shares and 4,437,517 shares, respectively 27,797 27,735 Other paid in capital 36,144 35,856 Retained earnings 40,319 37,979 ------- ------- 104,260 101,570 Less: 175,277 shares of common stock held in treasury 7,928 7,928 Pensions-additional liability 899 899 Add: unrealized investment holding gain, net of tax 58,877 54,614 ------ ------ TOTAL SHAREHOLDERS' EQUITY 154,310 147,357 ------- ------- TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $210,922 $206,001 ======== ========
See accompanying notes to condensed consolidated financial statements. 4 7 PENN VIRGINIA CORPORATION NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS MARCH 31, 1996 - -------------------------------------------------------------------------------- (1) ACCOUNTING POLICIES The accompanying unaudited consolidated financial statements of Penn Virginia Corporation and its subsidiaries (the "Company") have been prepared in accordance with generally accepted accounting principles for interim financial reporting and SEC regulations. These statements involve the use of estimates and judgments where appropriate. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. These financial statements should be read in conjunction with the Company's consolidated financial statements and footnotes included in the Company's December 31, 1995 annual report on Form 10-K. Operating results for the three months ended March 31, 1996 are not necessarily indicative of the results that may be expected for the year ended December 31, 1996. (2) SECURITIES The amortized cost, gross unrealized holding gains or losses and market value for available-for-sale securities at March 31, 1996 were as follows:
Gross Unrealized Amortized Holding Gain Market Cost (Loss) Value ---- ----- ----- Availlable-for-sale: Westmoreland Coal Company $5,263 $(438) $4,825 Westmoreland Resources, Inc. 4,530 0 4,530 Norfolk Southern Corporation 2,839 91,003 93,842 Blue Diamond Coal Company 3 4 7 ---------- ---------- ----------- $12,635 $90,569 $103,204
The amortized cost and fair value of notes receivable which are classified as held-to maturity securities were $8,066,000 at March 31, 1996. (3) OTHER TRANSACTIONS In January 1996, the Company entered into three lease agreements with an operator covering approximately eighty percent of its coal reserves in West Virginia. The leases have a fifteen-year initial term with the option to renew for an additional five-year term. The operator is in the permitting phase and should begin operations in late 1996 or early 1997. 5 8 ITEM 2 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS RESULTS OF OPERATIONS - FIRST QUARTERS 1996 AND 1995 COMPARED Consolidated net income for the first quarter of 1996 is $4.3 million compared with $2.6 million for the first quarter of 1995. The discussion of the segmented financial information included in this report will detail the specifics of this increase. Corporate and other non-operating income or expenses consist primarily of general and administrative expense, other non-operating income, interest expense and income taxes. Corporate general and administrative expenses were $0.8 million, which is unchanged for the same period of 1995. Interest expense was down $0.1 million due to the repayment of long-term debt. Other non-operating income increased from $0.4 million in the first quarter of 1995 to $0.8 million in the first quarter of 1996. This increase was a result of damages received on coal reserves in Virginia and an increase of interest income on various long-term notes receivable. Income taxes increased $0.1 million due to the increase in consolidated revenues. The table below will be used to discuss the variances related to operating activities within the Company for comparison of the first quarters of 1996 and 1995, respectively. OPERATIONS SUMMARY
Three Months Ended March 31 -------------------- PRODUCTION 1996 1995 ---- ---- Natural gas (Mmcf)-WI 1,697 1,644 Natural gas (MMcf)-RI 166 155 Oil and condensate (MBbls) 10 15 Timber (Mbf) 465 1,072 Coal tons (000) 790 1,347 PRICES Natural gas ($/Mcf)-WI $ 3.16 $ 1.89 Natural gas ($/Mcf)-RI 3.29 2.25 Oil and condensate ($/Bbl) 16.70 15.40 Timber ($/Mbf) 142.00 187.00 Coal royalties ($/ton) 2.18 2.35
The Company operates three business segments, oil and gas, coal and land and investments. The segmented financial information on operating income with explanations regarding variances in each segment is presented below. 6 9 OIL AND GAS Operating income for the oil and gas segment was $3.0 million for the first quarter of 1996 compared with $.1 million in the first quarter of 1995. OIL AND GAS
Three Months Ended March 31, --------------- 1996 1995 ----- ----- (Dollars in thousands) REVENUES: Natural gas sales $5,362 $3,109 Oil and gas royalties 546 348 Oil and condensate 167 231 Other income 350 110 ----- --- TOTAL REVENUES 6,425 3,798 ----- ----- EXPENSES: Operating expenses 700 705 Exploration and development 61 64 Taxes other than income 542 312 General and administrative 581 734 Depreciation and depletion 1,587 1,855 ----- ----- TOTAL EXPENSES 3,471 3,670 ----- ----- OPERATING INCOME $2,954 $ 128 ====== ======
NATURAL GAS SALES. Natural gas sales increased $2.3 million (72 PERCENT) in the first quarter of 1996 compared with the same period of 1995. This was accomplished primarily on the strength of pricing, with volume remaining virtually unchanged between the two comparison periods. The average price received by the Company for its working interest gas was $3.16 per thousand cubic feet (Mcf) compared with $1.89 per Mcf for the same period of 1995. Penn Virginia has entered into several short-term contracts with prices ranging from $2.46 per Mcf to $2.65 per Mcf from April, 1996 thru March, 1997. These contracts cover approximately 25 percent of the Company's estimated production during this period. The company also entered into two short-term contracts for the period May, 1996 thru November, 1996, with prices ranging from $2.65 per Mcf to $2.78 per Mcf. These contracts cover approximately 25 percent of the Company's estimated production during this period. OIL AND CONDENSATE SALES. Oil sales decreased $64,000 (28 PERCENT) in the first quarter of 1996 compared with the same period of 1995. Prices per barrel were higher, averaging $16.70 per barrel (Bbl) for 1996 compared with $15.40 per Bbl for 1995. Production was lower for 1996 by approximately 5,000 Bbls. The primary field affected by this decrease was Cutshin. OIL AND GAS ROYALTIES. Oil and gas royalties increased $198,000 (57 PERCENT) in the first quarter of 1996 compared with the same period of 1995. This variance resulted from an increase in volume of 11 million cubic feet (MMcf) and an upturn in average prices from $2.25 per Mcf in the first quarter 1995 to $3.29 per Mcf in the first quarter 1996. OTHER INCOME. Other income increased $240,000 (218 PERCENT) in the first quarter of 1996 compared with the same period of 1995. This increase was primarily a result of additional funds 7 10 received from the Company's natural gas contract claim settlement against Columbia, which was reported in 1995. OPERATING EXPENSES. Operating expenses for the first quarter of 1996 were $700,000, which is consistent with the $705,000 reported in the first quarter of 1995. EXPLORATION AND DEVELOPMENT. Exploration and development expenses for the first quarter of 1996 were $61,000, which is consistent with the $64,000 reported in the first quarter of 1995. TAXES OTHER THAN ON INCOME. Taxes other than on income increased $230,000 (74 PERCENT) in the first quarter of 1996 compared to the same period in 1995. Severance and ad valorem taxes represented the majority of the increase, which is a function of the increase in the sales price received for the Company's natural gas. GENERAL AND ADMINISTRATIVE. General and administrative expenses decreased $153,000 (21 PERCENT) in the first quarter of 1996 compared with the same period in 1995. The primary factor effecting the decrease was a reduction in personnel and their related benefit costs. DEPRECIATION AND DEPLETION. Depreciation and depletion expense decreased $268,000 (14 PERCENT) from $1,855,000 in the first quarter of 1995 to $1,587,000 in the first quarter 1996. This decrease was a result of lower depletion rates related to the implementation of the Statement of Financial Accounting Standards No. 121, Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed of. The implementation resulted in an impairment being recorded in the fourth quarter of 1995 on the Company's Pikeville field. 8 11 COAL AND LAND Operating income for the coal and land segment was $1.4 million for the first quarter of 1996 compared with $2.9 million for the first quarter of 1995. The segmented financial information and explanations for this decrease are presented below. COAL AND LAND
Three Months Ended March 31, --------------- 1996 1995 ----- ----- (Dollars in thousands) REVENUES: Coal royalties $1,719 $3,168 Timber and land sales 74 220 Other income 35 36 ------ ------ TOTAL REVENUES 1,828 3,424 ------ ------ EXPENSES: Operating expenses 26 19 Exploration and development 20 53 Taxes other than income 71 75 General and administrative 315 319 Depreciation and depletion 31 22 ------ ------ TOTAL EXPENSES 463 488 ------ ------ OPERATING INCOME $1,365 $2,936 ====== ======
COAL ROYALTIES. Coal royalties decreased $1.4 million (46 PERCENT) in the first quarter of 1996 compared with the same period in 1995. The largest single factor affecting this decrease was the idling of Westmoreland Coal Company operations on the Company's property located in Virginia. As earlier reported, this idling began in July, 1995. Presently, the two companies are negotiating to restructure the lease. Royalties from other lessees in the first quarter of 1996 were consistent with royalties from the first quarter of 1995. The Company also began to receive minimum royalty payments on the new leases in West Virginia signed in January, 1996 TIMBER AND LAND SALES. Timber and land sales decreased $146,000 (66 PERCENT) in the first quarter of 1996 compared with the same period of 1995. The primary reason for this decline is the timing of the sale of parcel tracts, the bulk of which are not scheduled until the second and third quarters of 1996. In the first quarter of 1996, the Company sold 465 thousand board feet (Mbf) of timber compared with 1,072 Mbf for the same period in 1995. OTHER INCOME. Other income was virtually unchanged for the first quarter of 1996 compared with the first quarter of 1995. 9 12 OPERATING EXPENSES. Operating expenses increased $7,800 (37 PERCENT) from $19,000 in the first quarter of 1995 to $26,000 in the first quarter of 1996 due to an increase in land rentals. EXPLORATION AND DEVELOPMENT. Exploration and development expenses decreased $33,000 (62 PERCENT) from $53,000 in the first quarter of 1995 to $20,000 in the first quarter of 1996. This decrease resulted from the timing of the Company's coal core drilling program. TAXES OTHER THAN INCOME. Taxes other than on income for the first quarter 1996 were consistent with the first quarter 1995. GENERAL AND ADMINISTRATIVE. General and administrative expenses for the first quarter 1996 were consistent with the first quarter 1995. DEPRECIATION AND DEPLETION. Depreciation and depletion increased $9,000 (41 PERCENT) from $22,000 in the first quarter of 1995 to $31,000 in the first quarter of 1996 due to an increase in depreciation on the rail asset. 10 13 INVESTMENTS Operating income for the investment segment was $0.6 million for the first quarter of 1996, which is unchanged when compared with the first quarter of 1995. The segmented financial information and a table detailing the Company's investments are presented below.
March 31, 1996 -------------- COMMON SHARES OWNED: Norfolk Southern Corporation 1,102,400 Westmoreland Coal Company 1,154,411 Westmoreland Resources, Inc 1,600 Blue Diamond Coal Company 287
INVESTMENTS
Three Months Ended March 31, --------------- 1996 1995 ---- ---- (Dollars in thousands) REVENUES: Dividends $ 617 $ 625 --- --- TOTAL REVENUES 617 625 --- --- EXPENSES: General and administrative 5 6 --- --- TOTAL EXPENSES 5 6 --- --- OPERATING INCOME $ 612 $ 619 === ===
DIVIDENDS. Dividend income from the Company's various investments in energy related companies is $617,000 for the first quarter 1996 which is consistent with first quarter of 1995. GENERAL AND ADMINISTRATIVE. General and administrative expenses remained virtually unchanged from the first quarter 1995 to the first quarter 1996. 11 14 CAPITAL EXPENDITURES, CAPITAL RESOURCES AND LIQUIDITY. CAPITAL EXPENDITURES. In the first quarter 1996, capital expenditures totaled $73,000, compared with $20,195,000 in the first quarter of 1995. In the first quarter of 1995, the Company acquired certain oil and gas properties in southern West Virginia for approximately $17.0 million in cash. This transaction included 58 wells and approximately 47 billion cubic (Bcf) of natural gas reserve. Also, in the first quarter of 1995, the Company regained control of its West Virginia coal reserves when Westmoreland Coal Company relinquished its lease in return for $3.0 million and other consideration. The majority of expenditures to date have been in the oil and gas segment. Drilling of the budgeted 30 to 40 development wells for 1996 began in the first quarter. The coal and land segment is in the process of reviewing several coal reserve acquisition opportunities within the industry. Property and leasehold acquisitions will be reviewed as opportunities arise to determine the strategic fit within the corporate structure, planning and business climate. As a result capital expenditures may increase or decrease as the operating environment changes. The capital expenditure program and proved property acquisitions will be funded by internally generated cash flow and additional debt. CAPITAL RESOURCES AND LIQUIDITY. Net cash provided by operating activities was the primary source of capital and liquidity in the first quarter of 1996. Net cash provided by operating activities increased from $2.2 million in the first quarter of 1995 to $5.5 million in the first quarter of 1996. The primary reason for this increase was the price the Company received for its oil and natural gas. As disclosed earlier, the Company has entered into short-term contracts for its natural gas to partially reduce volatility. In the coal segment the Company is negotiating to restructure the lease on its Virginia properties. If successful, the Company's operating income from this segment should gradually increase over the next one to three years. 12 15 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. PENN VIRGINIA CORPORATION Date: May 14, 1996 By: /s/ Steven Tholen --------------------------- ------------------------------------ Steven Tholen, Vice President, CFO Principal Financial Officer Date: May 14, 1996 By: /s/ Ann Horton --------------------------- ------------------------------------ Ann Horton, Controller 16 PART II OTHER INFORMATION Item 6. Exhibits and Reports on Form 8-K (a) Exhibits (15) Letter Re: Unaudited interim financial information (27) Financial Data Schedule (b) Reports on Form 8-K No reports on Form 8-K were filed for the quarter ended March 31, 1996 EX-27 2 FINANCIAL DATA SCHEDULE
5 3-MOS DEC-31-1996 MAR-31-1996 4,267 0 8,165 0 187 13,658 140,448 50,993 210,922 9,716 0 0 0 27,797 126,513 210,922 5,603 8,870 726 726 4,049 0 274 4,647 390 4,257 0 0 0 4,257 1.00 1.00
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