<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
FORM 10-Q
(Mark One)
[X] Quarterly report pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
For the quarterly period ended September 30, 1995 or
[ ] Transition report pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
For the transition period from __________________ to _________________
Commission File Number 1-7908
ADAMS RESOURCES & ENERGY, INC.
(Exact name of Registrant as specified in its charter)
Delaware 74-1753147
- ----------------------------------- -------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
6910 Fannin, Houston, Texas 77030
(Address of principal executive office & Zip Code)
Registrant's telephone number, including area code (713) 797-9966
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 ______
The number of shares of Common Stock of the Registrant, par value $.10 per
share, outstanding at November 4, 1995 was 4,197,597.
<PAGE> 2
ADAMS RESOURCES & ENERGY, INC. AND SUBSIDIARIES
UNAUDITED CONSOLIDATED STATEMENT OF OPERATIONS
In thousands, except per share data)
<TABLE>
<CAPTION>
Nine Months Ended Three Months Ended
September 30, September 30,
---------------------- -----------------------
1995 1994 1995 1994
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Revenues:
Marketing . . . . . . . . . . . . . . . . . . $541,163 $474,473 $201,921 $190,729
Transportation . . . . . . . . . . . . . . . . 16,059 15,423 5,056 5,432
Oil and gas . . . . . . . . . . . . . . . . . . 5,267 2,165 1,591 877
-------- -------- -------- --------
562,489 492,061 208,568 197,038
-------- -------- -------- --------
Costs and expenses:
Operating
Marketing . . . . . . . . . . . . . . . . . . 539,016 472,351 201,218 189,975
Transportation . . . . . . . . . . . . . . . 13,947 12,820 4,369 4,561
Oil and gas . . . . . . . . . . . . . . . . . 1,279 650 515 260
Corporate general and
administrative . . . . . . . . . . . . . . . 1,580 1,557 526 551
Depreciation, depletion and
amortization . . . . . . . . . . . . . . . . 5,791 1,296 3,071 464
-------- -------- -------- --------
561,613 488,674 209,699 195,811
-------- -------- -------- --------
Operating earnings (loss) . . . . . . . . . . . . 876 3,387 (1,131) 1,227
Other income (expense):
Discontinued coal operations . . . . . . . . . 372 660 372 -
Gain on sale of equipment . . . . . . . . . . 545 - 545 -
Interest . . . . . . . . . . . . . . . . . . . (339) (191) (123) (99)
-------- -------- -------- --------
578 469 794 (99)
-------- -------- -------- --------
Earnings (loss) before income taxes . . . . . . . 1,454 3,856 (337) 1,128
Income tax provision (benefit)
Current . . . . . . . . . . . . . . . . . . . . 68 132 (11) 48
Deferred . . . . . . . . . . . . . . . . . . . 250 1,325 (350) 375
-------- -------- -------- --------
318 1,457 (361) 423
-------- -------- -------- --------
Net earnings . . . . . . . . . . . . . . . . . . $ 1,136 $ 2,399 $ 24 $ 705
======== ======== ======== ========
Earnings per common share . . . . . . . . . . . . $ .27 $ .57 $ - $ .17
======== ======== ======== ========
Dividends per common share . . . . . . . . . . . $ - $ - $ - $ -
======== ======== ======== ========
</TABLE>
The accompanying notes are an integral part of these financial statements.
2
<PAGE> 3
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
Results of Operations
Nine Months Comparison
- Marketing
Gross revenues for the Company's Marketing operations increased by
$66,690,000, or 14%, in the comparative current period as a result of generally
higher overall world crude oil prices. In contrast to higher crude oil prices,
the Company's purchases of crude oil at the wellhead remained consistent at
approximately 45,000 barrels per day. The Company's strategy for crude oil
marketing is to link purchase and sales contracts to established quotations
(postings) that move with general market trends. In this manner, profitability
is based on the spread between the going price paid to suppliers at the
wellhead and the price received from customers at various delivery points less
transportation. Thus, the Company is substantially insulated from the impact
of general movements in world crude oil prices. Because of the Company's crude
oil marketing strategy, higher world crude oil prices had little or no impact
on current operating margins. Marketing division operating margins before
depreciation for the first nine months of 1995 were $2,147,000 versus
$2,122,000 in the similar 1994 period.
- Transportation
Transportation revenues have remained fairly consistent between the
comparitive nine month periods. However, operating margins before depreciation
decreased by 19% to $2,112,000 because the Company's cost structure has
increased while trucking rates have remained constant. Increased costs are
attributable to competitive pressures to increase driver wages and improve the
level of service. In addition, the Company is in the process of increasing
its sales volumes to better match its expanded terminal facility and fleet
capacity. As an improved balance between sales volumes and service capacity is
obtained, profitability should improve dramatically.
- Oil and Gas
Oil and gas revenues and operating earnings before depreciation and
depletion doubled in the current period to $5,267,000 and $3,988,000
respectively as a direct result of increased oil and gas production volumes
stemming from the Company's recent drilling efforts. Volumes and prices
compare as follows:
<TABLE>
<CAPTION>
Nine Months Ended Three Months Ended
September 30, September 30,
----------------------------- -------------------------------
1995 1994 1995 1994
------------ ------------ ------------ -------------
<S> <C> <C> <C> <C>
Crude oil
Volume 83,400 Bbls. 46,450 Bbls. 24,600 Bbls. 18,300 Bbls.
Average price $ 16.09/Bbl. $ 14.55/Bbl. $ 15.98/Bbl. $ 16.23/Bbl.
Natural gas
Volume 2,430,000 Mcf 660,000 Mcf 810,000 Mcf 245,000 Mcf
Average price, includes value
of associated gas liquids $ 1.51 Mcf $ 2.07 Mcf $ 1.45 Mcf $ 2.21 Mcf
</TABLE>
3
<PAGE> 4
- Depreciation, depletion and amortization
The provision for depreciation, depletion and amortization is
increased in the current period with increased capital costs associated with
the Company's recent oil and gas drilling activity. In addition, during the
third quarter 1995, depressed natural gas prices coupled with marginal results
from recent drilling efforts caused the Company to record a $900,000 write down
of its oil and gas leasehold position.
- Other income (expense)
During the third quarter of 1995, the Company substantially completed
its coal land reclamation obligations and obtained general approval from the
State of Kentucky. As a result, the Company reduced its estimated liability
for future coal related costs by $372,000. The Company also recognized a
$545,000 gain during the third quarter of 1995, when nine tractors and 22
trailer were sold upon the expiration of their lease term.
Interest expense has increased because of the Company's increase in
its level of debt during 1994 to finance its drilling activity.
- Income tax provision
During the third quarter of 1995, the Company adjusted its estimated
effective tax rate to reflect the recognition of approximately $200,000 of
depletion tax benefits which the Company expects to realize.
Three Month Comparison
Variations for the comparative three month period ended September 30,
1995 are consistent with the discussion above.
Liquidity and Capital Resources
During the first nine months of 1995, the Company invested $6,068,000
in property equipment additions with the majority of the investment ($4.3
million) going towards oil and gas drilling efforts. Funding for these
investments was from the Company generating $7,177,000 of working capital
funds, defined as the sum of net earnings plus the non-cash provisions for
depreciation and deferred income taxes not owing as a result of the Company's
tax loss carryforward position. Due to depressed natural gas prices combined
with marginal results from the Company's most recent drilling efforts, the
Company has slowed its rate of investment in new oil and gas drilling. In this
manner, the Company's historic balance between working capital generated from
operations and capital spending is maintained.
Refer to the "Liquidity and Capital Resources" section of the
Company's Annual Report on Form 10-K for the year ended December 31, 1994 for
additional discussion of the Company's bank relationships, tax loss
carryforwards and other matters.
4
<PAGE> 5
ADAMS RESOURCES & ENERGY, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
(In thousands)
<TABLE>
<CAPTION>
September 30, December 31,
1995 1994
------------- ------------
(Unaudited)
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents . . . . . . . . . . . . . . . . . . . . . $ 2,412 $ 2,695
Accounts receivable, net . . . . . . . . . . . . . . . . . . . . . 54,251 35,952
Inventories . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,956 2,218
Prepaid and other . . . . . . . . . . . . . . . . . . . . . . . . . 947 552
----------- -----------
Total current assets . . . . . . . . . . . . . . . . . 60,566 41,417
----------- -----------
Property and equipment . . . . . . . . . . . . . . . . . . . . . . . 40,295 35,230
Less - accumulated depreciation,
depletion and amortization . . . . . . . . . . . . . . . (20,352) (15,564)
----------- -----------
19,943 19,666
----------- -----------
Deferred income taxes . . . . . . . . . . . . . . . . . . . . . . . . 1,840 725
Other assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . 846 493
----------- -----------
$ 83,195 $ 62,301
=========== ===========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable . . . . . . . . . . . . . . . . . . . . . . . . . $ 53,131 $ 35,420
Accrued and other liabilities . . . . . . . . . . . . . . . . . . . 2,173 2,387
Current maturities of long-term debt . . . . . . . . . . . . . . . 1,116 653
----------- -----------
Total current liabilities . . . . . . . . . . . . . . 56,420 38,460
Long-term debt, less current maturities . . . . . . . . . . . . . . . 10,403 9,263
Other liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . 574 1,345
----------- -----------
67,397 49,068
----------- -----------
Shareholders' equity:
Common stock - $.10 par value, 7,500,000
shares authorized, 4,197,597 shares outstanding . . . . . . . 420 418
Contributed capital . . . . . . . . . . . . . . . . . . . . . . . . 9,897 8,470
Retained earnings, after eliminating $13,931,000 of
accumulated deficit on December 31, 1992 . . . . . . . . . . 5,481 4,345
----------- -----------
Total shareholders' equity . . . . . . . . . . . . . 15,798 13,233
----------- -----------
$ 83,195 $ 62,301
=========== ===========
</TABLE>
5
<PAGE> 6
ADAMS RESOURCES & ENERGY, INC. AND SUBSIDIARIES
UNAUDITED CONSOLIDATED STATEMENT OF SHAREHOLDERS' INVESTMENT
NINE MONTHS ENDED SEPTEMBER 30, 1995 AND 1994
(In thousands)
<TABLE>
<CAPTION>
Total
Common Contributed Retained Shareholders'
Stock Captial Earnings Equity
------- ------------ -------- -------------
<S> <C> <C> <C> <C>
BALANCE, December 31, 1993 $417 $8,427 $1,452 $10,296
Stock options exercised . . . . . . . . . . 1 43 - 44
Net earnings . . . . . . . . . . . . . . . - - 2,399 2,399
---- ------ ------ -------
BALANCE, September 30, 1994 . . . . . . . . . . . $418 $8,470 $3,851 $12,739
==== ====== ====== =======
BALANCE, December 31, 1994 $418 $8,470 $4,345 $13,233
Stock options exercised . . . . . . . . . . 2 62 - 64
Reduction in deferred tax
valuation allowance . . . . . . . . . . . - 1,365 - 1,365
Net earnings . . . . . . . . . . . . . . . - - 1,136 1,136
---- ------ ------ -------
BALANCE, September 30, 1995 . . . . . . . . . . . $420 $9,897 $5,481 $15,798
==== ====== ====== =======
</TABLE>
The accompanying notes are an integral part of these financial statements.
6
<PAGE> 7
ADAMS RESOURCES & ENERGY, INC. AND SUBSIDIARIES
UNAUDITED CONSOLIDATED STATEMENT OF CASH FLOWS
(In thousands)
<TABLE>
<CAPTION>
Nine Months Ended
September 30,
---------------------------
1995 1994
--------- ---------
<S> <C> <C>
CASH PROVIDED (USED) BY OPERATIONS:
Net earnings . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 1,136 $ 2,399
Items of income not requiring (providing) cash -
Depreciation, depletion and amortization . . . . . . . . . . . . . 5,791 1,296
Deferred income tax provision . . . . . . . . . . . . . . . . . . . 250 1,325
Gain on sale of equipment . . . . . . . . . . . . . . . . . . . . . (545) -
Other, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (1,124) 887
Decrease (increase) in accounts receivable . . . . . . . . . . . . . (18,299) (1,751)
Decrease (increase) in inventories . . . . . . . . . . . . . . . . . (738) (617)
Decrease (increase) in prepaid and other . . . . . . . . . . . . . . (395) (40)
Increase (decrease) in accounts payable . . . . . . . . . . . . . . . 17,711 2,236
Increase (decrease) in accrued liabilities . . . . . . . . . . . . . (214) (1,172)
--------- --------
Net cash provided (required) by operating
activities . . . . . . . . . . . . . . . . . . . . . . . . . . 3,573 4,563
--------- --------
INVESTING ACTIVITIES:
Property and equipment additions . . . . . . . . . . . . . . . . . . (6,068) (8,704)
Proceeds from property sales . . . . . . . . . . . . . . . . . . . . 545 504
--------- --------
Net cash provided by (used in) investing
activities . . . . . . . . . . . . . . . . . . . . . . . . . . (5,523) (8,200)
--------- --------
FINANCING ACTIVITIES:
Borrowings from bank . . . . . . . . . . . . . . . . . . . . . . . . 2,065 5,567
Repayment of debt . . . . . . . . . . . . . . . . . . . . . . . . . . (462) (375)
Sales of stock . . . . . . . . . . . . . . . . . . . . . . . . . . . 64 44
--------- --------
Net cash provided by (used in) financing
activities . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,667 5,236
--------- --------
Increase (decrease) in cash . . . . . . . . . . . . . . . . . . . . . . (283) 1,599
Cash at beginning of period . . . . . . . . . . . . . . . . . . . . . . 2,695 3,323
--------- --------
Cash at end of period . . . . . . . . . . . . . . . . . . . . . . . . . $ 2,412 $ 4,922
========= ========
Supplemental disclosure of cash flow information:
Interest paid during the period . . . . . . . . . . . . . . . . . . $ 665 $ 252
========= ========
Income taxes paid during the period . . . . . . . . . . . . . . . . $ 226 $ 87
========= ========
</TABLE>
The accompanying notes are an integral part of these financial statements.
7
<PAGE> 8
ADAMS RESOURCES & ENERGY, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED
CONSOLIDATED FINANCIAL STATEMENTS
Note 1 - Basis of Presentation
The accompanying condensed financial statements are unaudited but, in
the opinion of the Company's management, include all adjustments (consisting of
normal recurring accruals) necessary for a fair presentation of financial
position at September 30, 1995 and results of operations and cash flows for the
nine months ended September 30, 1995 and 1994. Certain information and note
disclosures normally included in annual financial statements prepared in
accordance with generally accepted accounting principles have been condensed or
omitted pursuant to Securities and Exchange Commission rules and regulations,
although the Company believes the disclosures made are adequate to make the
information presented not misleading. It is suggested these condensed
financial statements be read in conjunction with the financial statements, and
the notes thereto, included in the Company's latest annual report on Form 10-K.
The interim statement of operations is not necessarily indicative of results to
be expected for a full year.
8
<PAGE> 9
ADAMS RESOURCES & ENERGY, INC. AND SUBSIDIARIES
PART II. OTHER INFORMATION
Item 1. - None
Item 2. - None
Item 3. - None
Item 4. - None
Item 6. - None
9
<PAGE> 10
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.
ADAMS RESOURCES & ENERGY, INC.
(Registrant)
Date: November 4, 1995 By: K. S. ADAMS, JR.
---------------------- ------------------------------------
K. S. Adams, Jr.
Chief Executive Officer
RICHARD B. ABSHIRE
------------------------------------
Richard B. Abshire
Chief Financial Officer
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
ADAMS RESOURCES & ENERGY INC.
FINNCIAL DATA TABLE
PURSUANT TO ARTICLE 5 OF REGULATION SX
</LEGEND>
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> SEP-30-1995
<PERIOD-END> SEP-30-1995
<CASH> 2,412
<SECURITIES> 0
<RECEIVABLES> 54,464
<ALLOWANCES> (213)
<INVENTORY> 2,956
<CURRENT-ASSETS> 60,566
<PP&E> 40,295
<DEPRECIATION> (20,352)
<TOTAL-ASSETS> 83,195
<CURRENT-LIABILITIES> 56,420
<BONDS> 10,403
<COMMON> 421
0
0
<OTHER-SE> 15,377
<TOTAL-LIABILITY-AND-EQUITY> 83,195
<SALES> 562,489
<TOTAL-REVENUES> 563,406
<CGS> 554,242
<TOTAL-COSTS> 561,613
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 339
<INCOME-PRETAX> 1,454
<INCOME-TAX> 318
<INCOME-CONTINUING> 1,136
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,136
<EPS-PRIMARY> .27
<EPS-DILUTED> .27
</TABLE>
