-----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, BfNtOpfNVUsHtGYxphlXUde3MeI0PKEZjfB9vKiIL022YR9bmvwAzTkqEJbDhHVV Q3R6KvOG5FjENwBiD8Pb4Q== 0000077242-97-000004.txt : 19970514 0000077242-97-000004.hdr.sgml : 19970514 ACCESSION NUMBER: 0000077242-97-000004 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19970331 FILED AS OF DATE: 19970513 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: PG ENERGY INC CENTRAL INDEX KEY: 0000077242 STANDARD INDUSTRIAL CLASSIFICATION: ELECTRIC & OTHER SERVICES COMBINED [4931] IRS NUMBER: 240717235 STATE OF INCORPORATION: PA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-03490 FILM NUMBER: 97601608 BUSINESS ADDRESS: STREET 1: 39 PUBLIC SQ STREET 2: WILKES BARRE CTR CITY: WILKES-BARRE STATE: PA ZIP: 18711-0601 BUSINESS PHONE: 7178298843 FORMER COMPANY: FORMER CONFORMED NAME: PENNSYLVANIA GAS & WATER CO DATE OF NAME CHANGE: 19920703 FORMER COMPANY: FORMER CONFORMED NAME: SCRANTON SPRING BROOK WATER SERVICE CO DATE OF NAME CHANGE: 19660908 10-Q 1 PG ENERGY INC. TABLE OF CONTENTS PAGE PART I. FINANCIAL INFORMATION Item 1. Financial Statements Consolidated Statements of Income for the three months ended March 31, 1997 and 1996. . . . . . . . . . . 2 Consolidated Balance Sheets as of March 31, 1997, and December 31, 1996 . . . . . . . . . . . . . . . . . . 3 Consolidated Statements of Cash Flows for the three months ended March 31, 1997 and 1996. . . . . . 5 Notes to Consolidated Financial Statements. . . . . . . . . 6 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations. . . . . . . . . . . . 8 PART II. OTHER INFORMATION Item 6. Exhibits and Reports on Form 8-K . . . . . . . . . . . . . . 13 -1- PART I. FINANCIAL INFORMATION PG ENERGY INC. CONSOLIDATED STATEMENTS OF INCOME
Three Months Ended March 31, 1997 1996 (Thousands of Dollars) OPERATING REVENUES $ 79,939 $ 69,415 Cost of gas 49,139 39,978 OPERATING MARGIN 30,800 29,437 OTHER OPERATING EXPENSES: Operation 6,462 6,557 Maintenance 1,126 1,214 Depreciation 2,211 1,899 Income taxes 5,831 5,927 Taxes other than income taxes 4,306 3,807 Total other operating expenses 19,936 19,404 OPERATING INCOME 10,864 10,033 OTHER INCOME, NET 239 150 INCOME BEFORE INTEREST CHARGES 11,103 10,183 INTEREST CHARGES: Interest on long-term debt 2,191 1,772 Other interest 204 335 Allowance for borrowed funds used during construction (66) (46) Total interest charges 2,329 2,061 INCOME FROM CONTINUING OPERATIONS 8,774 8,122 LOSS WITH RESPECT TO DISCONTINUED OPERATIONS - (365) NET INCOME 8,774 7,757 DIVIDENDS ON PREFERRED STOCK 353 637 EARNINGS APPLICABLE TO COMMON STOCK $ 8,421 $ 7,120 COMMON STOCK: Earnings per share of common stock: Continuing operations $ 2.54 $ 1.67 Discontinued operations - (.08) Total $ 2.54 $ 1.59 Weighted average number of shares outstanding 3,314,155 4,468,130 Cash dividends per share $ - $ 10.217 The accompanying notes are an integral part of the consolidated financial statements.
-2- PG ENERGY INC. CONSOLIDATED BALANCE SHEETS
March 31, December 31, 1997 1996 (Thousands of Dollars) ASSETS UTILITY PLANT: At original cost $ 329,179 $ 319,205 Accumulated depreciation (82,961) (79,783) 246,218 239,422 OTHER PROPERTY AND INVESTMENTS 4,644 4,894 CURRENT ASSETS: Cash and cash equivalents 968 690 Accounts receivable - Customers 29,250 17,183 Affiliates, net 7 58 Others 854 565 Reserve for uncollectible accounts (1,436) (1,140) Accrued utility revenues 10,414 11,830 Materials and supplies, at average cost 2,705 2,460 Gas held by suppliers, at average cost 2,874 20,265 Natural gas transition costs collectible 1,637 2,525 Deferred cost of gas and supplier refunds, net 10,744 19,316 Prepaid expenses and other 4,048 1,313 62,065 75,065 DEFERRED CHARGES: Regulatory assets - Deferred taxes collectible 30,293 29,771 Other 4,460 4,274 Unamortized debt expense 1,118 1,153 Other 612 - 36,483 35,198 TOTAL ASSETS $ 349,410 $ 354,579 The accompanying notes are an integral part of the consolidated financial statements.
-3- PG ENERGY INC. CONSOLIDATED BALANCE SHEETS
March 31, December 31, 1997 1996 (Thousands of Dollars) CAPITALIZATION AND LIABILITIES CAPITALIZATION: Common shareholder's investment $ 104,461 $ 96,005 Preferred stock of PGE - Not subject to mandatory redemption, net 18,804 18,851 Subject to mandatory redemption 739 739 Long-term debt 65,392 55,000 189,396 170,595 CURRENT LIABILITIES: Current portion of long-term debt - Parent 28,600 31,400 Other 29,679 38,721 Preferred stock subject to repurchase or mandatory redemption 80 115 Note payable - 10,000 Accounts payable - Suppliers 10,088 17,831 Parent 752 348 Accrued general business and realty taxes 1,264 2,239 Accrued income taxes 19,845 14,559 Accrued interest 2,351 1,936 Accrued natural gas transition costs 1,506 2,095 Other 3,097 3,375 97,262 122,619 DEFERRED CREDITS: Deferred income taxes 50,322 49,119 Unamortized investment tax credits 4,725 4,767 Operating reserves 3,046 3,086 Other 4,659 4,393 62,752 61,365 COMMITMENTS AND CONTINGENCIES (Note 3) TOTAL CAPITALIZATION AND LIABILITIES $ 349,410 $ 354,579 The accompanying notes are an integral part of the consolidated financial statements.
-4- PG ENERGY INC. CONSOLIDATED STATEMENTS OF CASH FLOWS
Three Months Ended March 31, 1997 1996 (Thousands of Dollars) CASH FLOW FROM OPERATING ACTIVITIES: Income from continuing operations $ 8,774 $ 8,122 Effects of noncash charges to income - Depreciation 2,225 1,912 Deferred income taxes, net 351 92 Provisions for self insurance 140 241 Other, net 350 530 Changes in working capital, exclusive of cash and current portion of long-term debt - Receivables and accrued utility revenues (9,903) (5,037) Gas held by suppliers 17,391 13,414 Accounts payable (9,181) (1,885) Deferred cost of gas and supplier refunds, net 8,751 (2,955) Other current assets and liabilities, net 1,295 4,995 Other operating items, net (585) (2,895) Net cash provided by continuing operations 19,608 16,534 Net cash provided by discontinued operations - 2,133 Net cash provided by operating activities 19,608 18,667 CASH FLOW FROM INVESTING ACTIVITIES: Additions to utility plant (6,529) (2,973) Proceeds from the sale of discontinued operations - 261,752 Acquisition of regulated business (2,009) - Other, net 423 68 Net cash provided by (used for) investing activities (8,115) 258,847 CASH FLOW FROM FINANCING ACTIVITIES: Issuance of common stock - 339 Repurchase of common stock - (85,000) Repurchase of preferred stock (82) - Dividends on common and preferred stock (356) (34,407) Repayment of long-term debt (2,941) (50,000) Net decrease in bank borrowings (7,874) (76,443) Other, net 38 (80) Net cash used for financing activities (11,215) (245,591) NET INCREASE IN CASH AND CASH EQUIVALENTS 278 31,923 CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR 690 328 CASH AND CASH EQUIVALENTS AT END OF YEAR $ 968 $ 32,251 SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION: Cash paid during the period for: Interest (net of amount capitalized) $ 1,716 $ 3,082 Income taxes $ 610 $ 445 The accompanying notes are an integral part of the consolidated financial statements.
-5- PG ENERGY INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Nature of the Business. PG Energy Inc. ("PGE") a wholly-owned subsidiary of Pennsylvania Enterprises, Inc. ("PEI"), and Honesdale Gas Company ("Honesdale") a wholly-owned subsidiary of PGE acquired on February 14, 1997, are regulated public utilities. Together PGE and Honesdale distribute natural gas to a twelve-county area in northeastern Pennsylvania, a territory that includes 129 municipalities, in addition to the cities of Scranton, Wilkes-Barre and Williamsport. Principles of Consolidation. The consolidated financial statements include the accounts of PGE and its subsidiary, Honesdale, beginning February 14, 1997, the date Honesdale was acquired by PGE. All material intercompany accounts have been eliminated in consolidation. Both PGE and Honesdale are subject to the jurisdiction of the Pennsylvania Public Utility Commission ("PPUC") for rate and accounting purposes. The financial statements of PGE and Honesdale that are incorporated in these consolidated financial statements have been prepared in accordance with generally accepted accounting principles, including the provisions of Financial Accounting Standards Board ("FASB") Statement 71, "Accounting for the Effects of Certain Types of Regulation," which give recognition to the rates and accounting practices of regulatory agencies such as the PPUC. Interim Financial Statements. The interim consolidated financial statements included herein have been prepared by PGE without audit, pursuant to the rules and regulations of the Securities and Exchange Commission. Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted pursuant to such rules and regulations, although PGE believes that the disclosures are adequate to make the information presented not misleading. The results for the interim periods are not indicative of the results to be expected for the year, primarily due to the effect of seasonal variations in weather on the sale of natural gas. However, in the opinion of management, all adjustments, consisting of only normal recurring accruals, necessary to present fairly the results for the interim periods have been reflected in the consolidated financial statements. It is suggested that these consolidated financial statements be read in conjunction with the consolidated financial statements and the notes thereto included in PGE's latest annual report on Form 10-K. Use of Accounting Estimates. The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. These estimates involve judgments with respect to, among other things, various future economic factors and regulatory matters which are difficult to predict and are beyond the control of PEI. Therefore, actual amounts could differ from these estimates. -6- (2) RATE MATTERS
>c? Rate Increase. By Order adopted December 19, 1996, the PPUC approved an overall 5.3% increase in PGE's base gas rates, designed to produce $7.5 million of additional annual revenue, effective January 15, 1997. Under the terms of the Order, the billing for the impact of the rate increase relative to PGE's residential heating customers (which it is estimated will total $6.6 million on an annual basis) is being deferred, without carrying charges, until July, 1997.
Gas Cost Adjustments. The provisions of the Pennsylvania Public Utility Code require that the tariffs of local gas distribution companies ("LDCs") be adjusted on an annual basis, and, in the case of larger LDCs such as PGE, on an interim basis when circumstances dictate, to reflect changes in their purchased gas costs. The procedure includes a process for the reconciliation of actual gas costs incurred and actual revenues received and also provides for the refund of any overcollections, plus interest thereon, or the recoupment of any undercollections of gas costs. In accordance with these procedures, PGE has been permitted to make the following changes since January 1, 1996, to the gas costs contained in its gas tariff rates: [CAPTION] Change in Calculated Effective Rate per MCF Increase (Decrease) Date From To in Annual Revenue [S] [C] [C] [C] March 1, 1997 $4.18 $4.49 $ 8,300,000 December 1, 1996 3.01 4.18 32,400,000 September 1, 1996 2.88 3.01 3,600,000 June 1, 1996 2.75 2.88 3,400,000 The changes in gas rates on account of purchased gas costs have no effect on earnings since the change in revenue is offset by a corresponding change in the cost of gas. (3) COMMITMENTS AND CONTINGENCIES Environmental Matters. PGE, like many gas distribution companies, once utilized manufactured gas plants in connection with providing gas service to its customers. None of these plants has been in operation since 1960, and several of the plant sites are no longer owned by PGE. Pursuant to the Comprehensive Environmental Response, Compensation and Liability Act of 1980 ("CERCLA"), PGE filed notices with the United States Environmental Protection Agency (the "EPA") with respect to the former plant sites. None of the sites is or was formerly on the proposed or final National Priorities List. The EPA has conducted site inspections and made preliminary assessments of each site and has concluded that no further remedial action is planned. While this conclusion does not constitute a legal prohibition against further regulatory action under CERCLA or other applicable federal or state law, PGE does not believe that additional costs, if any, related to these manufactured gas plant sites would be material to its financial position or results of operations since environmental remediation costs generally are recoverable through rates over a period of time. -7- PG ENERGY INC. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS RESULTS OF CONTINUING OPERATIONS The following table expresses certain items in PGE's consolidated statements of income as percentages of operating revenues for each of the three-month period ended March 31, 1997 and 1996: [CAPTION] Three Months Ended March 31, 1997 1996 [S] [C] [C] OPERATING REVENUES.................................... 100.0% 100.0% Cost of gas......................................... 61.5 57.6 OPERATING MARGIN...................................... 38.5 42.4 OTHER OPERATING EXPENSES: Operation........................................... 8.1 9.4 Maintenance......................................... 1.4 1.8 Depreciation........................................ 2.7 2.7 Income taxes........................................ 7.3 8.5 Taxes other than income taxes....................... 5.4 5.5 Total operating expenses.......................... 24.9 27.9 OPERATING INCOME...................................... 13.6 14.5 OTHER INCOME, NET..................................... 0.3 0.2 INTEREST CHARGES...................................... (2.9) (3.0) INCOME FROM CONTINUING OPERATIONS..................... 11.0 11.7 LOSS WITH RESPECT TO DISCONTINUED OPERATIONS.......... - (0.5) NET INCOME ........................................... 11.0 11.2 DIVIDENDS ON PREFERRED STOCK (1)...................... (0.5) (0.9) EARNINGS APPLICABLE TO COMMON STOCK................... 10.5% 10.3% (1) None of the dividends on preferred stock was allocated to the discontinued operations. o Three Months Ended March 31, 1997, Compared With Three Months Ended March 31, 1996 Operating Revenues. Operating revenues increased $10.5 million (15.2%) from $69.4 million for the quarter ended March 31, 1996, to $79.9 million for the quarter ended March 31, 1997, primarily as a result of higher levels in PG Energy Inc.'s ("PGE") gas cost rate and the effect of the rate increase granted PGE by the Pennsylvania Public Utility Commission (the "PPUC") which became effective on January 15, 1997 (see "Rate Matters"). The effect of the increase in rates was partially offset by a 1.2 billion cubic feet (9.3%) decrease in -8- sales to PGE's residential and commercial heating customers. There was a 331 (10.0%) decrease in heating degree days from 3,321 (104.1% of normal) during the first quarter of 1996 to 2,990 (93.7% of normal) during the first quarter of 1997. Operating revenues of Honesdale Gas Company ("Honesdale") totaling $834,000 from Honesdale's February 14, 1997, acquisition date through March 31, 1997, also contributed to the increased operating revenues. Cost of Gas. The cost of gas increased $9.2 million (22.9%) from $40.0 million for the first quarter of 1996 to $49.1 million for the first quarter of 1997, primarily because of higher levels in PGE's gas cost rate (see "-Rate Matters") and the inclusion in the first quarter of 1997 of $574,000 of gas costs with respect to Honesdale from its February 14, 1997, acquisition date through March 31, 1997. Operating Margin. The operating margin increased $1.4 million (4.6%) from $29.4 million in the first quarter of 1996 to $30.8 million in the first quarter of 1997, primarily because of the aforementioned increase in PGE's gas rates effective January 15, 1997 (see "-Rate Matters") and the inclusion of Honesdale's operating margin from its February 14, 1997, acquisition date. As a percentage of operating revenues, the margin decreased from 42.4% in the first quarter of 1996 to 38.5% in the first quarter of 1997 as a result of the proportionately higher cost of gas during the period. Other Operating Expenses. Other operating expenses increased $532,000 (2.7%) from $19.4 million for the quarter ended March 31, 1996, to $19.9 million for the quarter ended March 31, 1997. This increase was primarily attributable to a $312,000 (16.4%) increase in depreciation expense, as a result of additions to PGE's utility plant, and a $499,000 (13.1%) increase in taxes other than income taxes resulting from a higher level of gross receipts tax because of the increased sales by PGE and the sales by Honesdale from its acquisition date. The effects of these increases were partially offset by lower levels of operation and maintenance expense. As a percentage of operating revenues, other operating expenses decreased from 27.9% during the quarter ended March 31, 1996, to 24.9% during the quarter ended March 31, 1997, primarily as a result of the significantly greater increase in operating revenues during the period. Operating Income. As a result of the above, operating income increased by $831,000 (8.3%) from $10.0 million for the first quarter of 1996 to $10.9 million for the first quarter of 1997. However, as a percentage of total operating revenues, operating income decreased for such periods from 14.5% in the first quarter of 1996 to 13.6% in the first quarter of 1997, primarily because of the proportionately higher cost of gas in 1997. Other Income, Net. Other income, net increased $89,000 (59.3%) from $150,000 for the three-month period ended March 31, 1996, to $239,000 for the three-month period ended March 31, 1997, largely as a result of a gain on the condemnation of certain property of PGE for highway construction. Interest Charges. Interest charges increased by $268,000 (13.0%) from $2.1 million for the first quarter of 1996 to $2.3 million for the first quarter of 1997. This increase was largely attributable to bank borrowings by PGE to finance construction expenditures and for other working capital needs and the reduction in PGE's interest expense in the first quarter of 1996 resulting from the repayment of its $50.0 million term loan and all of its then outstanding bank borrowings on February 16, 1996, with proceeds from the sale of its regulated water utility operations on such date. -9- Income From Continuing Operations. Income from continuing operations increased $652,000 (8.0%) from $8.1 million for the quarter ended March 31, 1996, to $8.8 million for the quarter ended March 31, 1997. This increase was largely the result of the matters discussed above, principally the increase in operating margin, the effects of which were partially offset by the higher levels of other operating expenses and interest charges. Net Income. The increase in net income of $1.0 million (13.1%) from $7.8 million for the first quarter of 1996 to $8.8 million for the first quarter of 1997, was largely the result of the higher income from continuing operations, as discussed above, and the absence of any loss with respect to discontinued operations. Dividends on Preferred Stock. Dividends on preferred stock decreased $284,000 (44.6%) from $637,000 for the first quarter of 1996 to $353,000 for the first quarter of 1997, primarily as a result of the repurchase by PGE in 1996 of 134,359 shares of its 9% cumulative preferred stock, 9,408 shares of its 5.75% cumulative preferred stock and 20,330 shares of its 4.10% cumulative preferred stock, largely during the second quarter of the year. Earnings Applicable to Common Stock. The increase in earnings applicable to common stock of $1.3 million (18.3%) from $7.1 million for the three-month period ended March 31, 1996, to $8.4 million for the three-month period ended March 31, 1997, as well as the increase in earnings per share of common stock of $.95 (59.7%) from $1.59 per share for the three-month period ended March 31, 1996, to $2.54 per share for the three-month period ended March 31, 1997, were the result of the higher income from continuing operations and reduced dividends on preferred stock, as discussed above, and the absence of any loss with respect to discontinued operations. The increase in earnings applicable to common stock also reflected a 25.8% decrease in the weighted average number of shares outstanding as a result of the repurchase by PGE of shares of its common stock on February 16, 1996, with proceeds from the sale of its regulated water utility operations. RATE MATTERS
Rate Increase. By Order adopted December 19, 1996, the PPUC approved an overall 5.3% increase in PGE's base gas rates, designed to produce $7.5 million of additional annual revenue, effective January 15, 1997. Under the terms of the Order, the billing for the impact of the rate increase relative to PGE's residential heating customers (which it is estimated will total $6.6 million on an annual basis) is being deferred, without carrying charges, until July, 1997.
Gas Cost Adjustments. The provisions of the Pennsylvania Public Utility Code require that the tariffs of local gas distribution companies ("LDCs") be adjusted on an annual basis, and, in the case of larger LDCs such as PGE, on an interim basis when circumstances dictate, to reflect changes in their purchased gas costs. The procedure includes a process for the reconciliation of actual gas costs incurred and actual revenues received and also provides for the refund of any overcollections, plus interest thereon, or the recoupment of any undercollections of gas costs. -10- In accordance with these procedures, PGE has been permitted to make the following changes since January 1, 1996, to the gas costs contained in its gas tariff rates: [CAPTION] Change in Calculated Effective Rate per MCF Increase (Decrease) Date From To in Annual Revenue [S] [C] [C] [C] March 1, 1997 $4.18 $4.49 $ 8,300,000 December 1, 1996 3.01 4.18 32,400,000 September 1, 1996 2.88 3.01 3,600,000 June 1, 1996 2.75 2.88 3,400,000 The changes in gas rates on account of purchased gas costs have no effect on earnings since the change in revenue is offset by a corresponding change in the cost of gas. Recovery of FERC Order 636 Transition Costs. By Order of the PPUC entered August 26, 1994, PGE began recovering the Non-Gas Transition Costs (i.e. Gas Supply Realignment and Stranded Costs) that it estimates it will ultimately be billed pursuant to Federal Energy Regulatory Commission Order 636 through the billing of a surcharge to its customers effective September 12, 1994. It is currently estimated that $10.2 million of Non-Gas Transition Costs will be billed to PGE, generally over a six-year period extending through January 1, 1999, of which $8.7 million had been billed to PGE and $8.5 million had been recovered from its customers as of March 31, 1997. PGE has recorded the estimated Non-Gas Transition Costs that remain to be billed to it and the amounts remaining to be recovered from its customers. LIQUIDITY AND CAPITAL RESOURCES Liquidity The primary capital needs of PGE continue to be the funding of its construction program and the seasonal funding of its gas purchases and increases in its customer accounts receivable. PGE's revenues are highly seasonal and weather-sensitive, with approximately 75% of its revenues normally being realized in the first and fourth quarters of the calendar year when the temperatures in its service area are the coldest. The cash flow from PGE's operations is generally sufficient to fund a portion of its construction expenditures. However, to the extent external financing is required, it is the practice of PGE to use bank borrowings to fund such expenditures, pending the periodic issuance of stock and long-term debt. Bank borrowings are also used by PGE for the seasonal funding of its gas purchases and increases in customer accounts receivable. In order to finance construction expenditures and to meet its seasonal borrowing requirements, PGE has made arrangements for a total of $70.5 million of unsecured revolving bank credit, which is deemed adequate for its immediate needs. Specifically, PGE currently has six bank lines of credit with an aggregate borrowing capacity of $70.5 million which provide for borrowings at interest rates generally less than prime and which mature at various times during 1997 and 1998. As of May 1, 1997, PGE had $39.4 million of borrowings outstanding under these bank lines of credit. -11- In addition, as of March 31, 1997, PGE had borrowed $28.6 million from PEI. The terms and conditions regarding such borrowing provide for the payment of interest at rates generally less than prime and the repayment of principal on December 31, 1997. PGE plans to arrange new and replacement bank lines of credit when the funds that are available for borrowing from PEI are no longer available and as it requires additional funding for working capital and other purposes. PGE, as well as Honesdale, believe that they will be able to raise in a timely manner such funds as are required for their future construction expenditures, refinancings and other working capital requirements. Long-Term Debt and Capital Stock Financings PGE periodically engages in long-term debt and capital stock financings in order to obtain funds required for construction expenditures, the refinancing of existing debt and various working capital purposes. No long-term debt or capital stock financings were consummated by PGE during the three-month period ended March 31, 1997. A $40.0-$50.0 million long-term debt financing, the proceeds from which will be used to repay bank borrowings is, however, planned by PGE for later in 1997. Construction Expenditures and Related Financings Expenditures for the construction of utility plant totaled $6.5 million during the first three months of 1997 and are currently estimated to be $27.2 million during the remainder of the year. It is anticipated that such expenditures will be financed with internally generated funds and bank borrowings, pending the periodic issuance of stock and long-term debt. Current Maturities of Long-Term Debt and Preferred Stock As of March 31, 1997, $29.7 million of PGE's long-term debt, and $80,000 of PGE's preferred stock was required to be repaid within twelve months. On April 18, 1997, PGE announced an offer to purchase any and all of the 78,853 outstanding shares of its 4.10% cumulative preferred stock at a price of $70.00 per share for an aggregate consideration of $5.5 million, exclusive of fees and other expenses. The offer, which is not conditioned upon any minimum number of shares being tendered by shareholders, will expire on May 16, 1997, unless extended at the option of PGE. Although PGE cannot presently determine the number of shares which will be tendered by shareholders pursuant to the offer, it is anticipated that payment for any shares tendered will be financed with borrowings under PGE's bank lines of credit. Forward-Looking Statements Certain statements made above relating to plans, conditions, objectives and economic performance go beyond historical information and may provide an indication of future results. To that extent, they are forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934, and each is subject to factors that could cause actual results to differ from those in the forward-looking statement, such as the nature of Pennsylvania legislation restructuring the natural gas industry and general economic conditions and uncertainties. -12- PART II. OTHER INFORMATION Item 6. Exhibits and Reports on Form 8-K (a) Exhibits 27-1 Financial Data Schedule -- filed herewith. (b) Reports on Form 8-K No reports on Form 8-K were filed during the quarter for which this report is filed. -13- PG ENERGY INC. 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. PG ENERGY INC. (Registrant) [CAPTION] [S] [C] [C] Date: May 13, 1997 By: /s/ Thomas J. Ward Thomas J. Ward Secretary Date: May 13, 1997 By: /s/ John F. Kell, Jr. John F. Kell, Jr. Vice President, Financial Services (Principal Financial Officer and Principal Accounting Officer) -14- EX-27 2
UT THIS STATEMENT CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE BALANCE SHEET, STATEMENTS OF INCOME AND CASH FLOW, AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH STATEMENTS. 0000077242 PG ENERGY INC. 3-MOS DEC-31-1996 MAR-31-1997 PER-BOOK 246,218,000 4,644,000 62,065,000 36,483,000 0 349,410,000 33,142,000 32,678,000 38,641,000 104,461,000 739,000 18,804,000 65,392,000 0 0 0 58,279,000 80,000 0 0 101,655,000 349,410,000 79,939,000 5,831,000 63,244,000 69,075,000 10,864,000 239,000 11,103,000 2,329,000 8,774,000 353,000 8,421,000 3,000 4,837,000 19,608,000 2.54 2.54
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