<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, 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 1-7908
ADAMS RESOURCES & ENERGY, INC.
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(Exact name of Registrant as specified in its charter)
<TABLE>
<S> <C>
Delaware 74-1753147
- ---------------------------------- -----------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
</TABLE>
5 Post Oak Park, Suite 2700, Houston, Texas 77027
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(Address of principal executive office & Zip Code)
Registrant's telephone number, including area code (713) 881-3600
-------------------
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 October 31, 1996 was 4,203,098.
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<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,
---------------------------------- ---------------------------------
1996 1995 1996 1995
-------------- -------------- -------------- -------------
<S> <C> <C> <C> <C>
REVENUE:
Marketing $ 1,018,959 $ 541,163 $ 364,298 $ 201,921
Transportation 15,446 16,059 4,957 5,056
Oil and gas 6,294 5,267 2,526 1,591
-------------- -------------- -------------- --------------
1,040,699 562,489 371,781 208,568
-------------- -------------- -------------- --------------
COSTS AND EXPENSES:
Operating
Marketing 1,012,128 539,016 363,213 201,218
Transportation 13,426 13,947 4,397 4,369
Oil and gas 1,356 1,279 579 515
Corporate general and administrative 1,863 1,580 560 526
Depreciation, depletion and amortization 5,967 5,791 1,578 3,071
-------------- -------------- -------------- --------------
1,034,740 561,613 370,327 209,699
-------------- -------------- -------------- --------------
Operating earnings (loss) 5,959 876 1,454 (1,131)
OTHER INCOME (EXPENSE):
Property sales and other 166 917 - 917
Interest (465) (339) (93) (123)
-------------- -------------- -------------- --------------
(299) 578 (93) 794
-------------- -------------- -------------- --------------
Earnings (loss) before income taxes 5,660 1,454 1,361 (337)
Income tax provision (benefit)
Current 259 68 52 (11)
Deferred 1,800 250 450 (350)
-------------- -------------- -------------- --------------
2,059 318 502 (361)
-------------- -------------- -------------- --------------
NET EARNINGS $ 3,601 $ 1,136 $ 859 $ 24
============== ============== ============== ==============
EARNINGS PER COMMON SHARE $ .85 $ .27 $ .20 $ -
============== ============== ============== ==============
DIVIDENDS PER COMMON SHARE $ - $ - $ - $ -
============== ============== ============== ==============
</TABLE>
The accompanying notes are an integral part of these financial statements.
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<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
$477,796,000, or 88%, in the comparative current period as a result of (i)
increased overall world crude oil prices, (ii) increased volumes of crude
purchased at the wellhead, and (iii) a more active crude oil trading effort.
Average crude oil prices increased approximately $3.00 per barrel for the
comparative period while average wellhead purchases increased to 55,000 barrels
per day in 1996 versus 45,000 barrels per day in 1995. Marketing division
operating margins before depreciation for the first nine months of 1996 were
$6,831,000 versus $2,147,000 in the similar 1995 period, partially as a result
of the combination of events discussed above. The most significant factor
affecting 1996 operating margins, however, was a severe crude oil shortage
situation that existed in the mid-continent region of the United States. As a
supplier of crude oil to the region, this demand condition served to temporarily
improve the Company's margins. As crude oil markets returned to a more normal
balance between supply and demand during the third quarter of 1996, the
Company's level of Marketing earnings returned to its historic pattern.
- Transportation
Transportation revenues and earnings experienced little variation
between the comparative periods as market conditions remained consistent.
- Oil and Gas
Oil and gas revenues and operating earnings before depreciation
increased in the comparative current period as a result of increased
natural gas volumes and prices. Volumes and prices compare as follows:
<TABLE>
<CAPTION>
NINE MONTHS ENDED THREE MONTHS ENDED
----------------- ------------------
1996 1995 1996 1995
----------------- ----------------- ----------------- -----------------
<S> <C> <C> <C> <C>
Crude Oil
Volume 64,200 Bbls. 83,400 Bbls. 19,800 Bbls. 24,600 Bbls.
Average price $19.17/ Bbls. $16.09/ Bbl. $19.67/Bbls. $15.98/Bbl.
Natural gas
Volume 2,470,000 Mcf's 2,430,000 Mcf's 950,000 Mcf's 810,000 Mcf's
Average price, includes value
of associated gas liquids $2.03/Mcf $1.51/Mcf $2.15/Mcf $1.45/Mcf
</TABLE>
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<PAGE> 4
- Other
The current provision for depreciation, depletion and amortization
includes a $1,167,000 asset impairment recognized by the Company during the
second quarter of 1996 on certain refined product marketing facilities and
equipment. The impairment was recorded because of continued operating and cash
flow losses associated with these assets.
Property sales and other earnings of $166,000 resulted from a gain
realized on the sale of seven tank trailers during the second quarter of 1996.
Three Month Comparison
Variations in operating results for the comparative three month
period ended September 30, 1996, are consistent with the discussion above,
except in the third quarter of 1995, the Company recorded a $900,000 write down
of its oil and gas leasehold position as additional depreciation, depletion and
amortization. This item did not recur in 1996.
-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 trailers were sold upon the expiration of their lease term.
-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 which the company expects to realize.
Liquidity and Capital Resources
During the first nine months of 1996, the Company invested
$4,086,000 in property equipment additions with $1,975,000 of such investments
going towards oil and gas drilling efforts. Funding for these investments was
derived from the Company generating $11,202,000 of working capital, defined
generally as the sum of net cash 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. The $7,116,000 of excess cash flow generated
was utilized primarily to reduce bank debt.
Refer to the "Liquidity and Capital Resources" section of the
Company's Annual Report on Form 10-K for the year ended December 31, 1995 for
additional discussion of the Company's bank relationships, tax loss
carryforwards and other matters.
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<PAGE> 5
ADAMS RESOURCES & ENERGY, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
(IN THOUSANDS)
<TABLE>
<CAPTION>
September 30, December 31,
1996 1995
------------------ ----------------
ASSETS (unaudited)
<S> <C> <C>
CURRENT ASSETS
Cash and cash equivalents $ 4,222 $ 4,037
Accounts receivable, net 80,061 50,484
Inventories 3,808 3,177
Prepaid and other 506 1,020
------------------ ------------------
Total Current Assets 88,597 58,718
------------------ ------------------
Property and equipment 41,875 40,011
Less - accumulated depreciation, depletion and amortization (25,398) (21,067)
------------------ ------------------
16,477 18,944
------------------ ------------------
Deferred income taxes 265 2,065
Other assets 1,395 705
------------------ ------------------
$ 106,734 $ 80,432
================== ==================
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable $ 78,102 $ 49,537
Accrued and other liabilities 2,794 2,416
Current maturities of long-term debt 58 1,650
------------------ ------------------
Total current liabilities 80,954 53,603
Long-term debt, less current maturities 5,877 10,589
Other liabilities 608 562
------------------ ------------------
$ 87,439 $ 64,754
------------------ ------------------
SHAREHOLDERS' EQUITY
Common stock - $.10 par value, 7,500,000 shares authorized;
4,203,098 and 4,197,598 shares outstanding, respectively 420 420
Contributed capital 9,911 9,895
Retained earnings, after eliminating $13,931,000 of
accumulated deficit on December 31, 1992 8,964 5,363
------------------ ------------------
Total shareholders' equity 19,295 15,678
------------------ ------------------
$ 106,734 $ 80,432
================== ==================
</TABLE>
The accompanying notes are an integral part of these financial statements.
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<PAGE> 6
ADAMS RESOURCES & ENERGY, INC. AND SUBSIDIARIES
UNAUDITED CONSOLIDATED STATEMENT OF CASH FLOWS
(IN THOUSANDS)
<TABLE>
<CAPTION>
NINE MONTHS ENDED
SEPTEMBER 30,
-----------------------------------
1996 1995
--------------- --------------
<S> <C> <C>
CASH PROVIDED BY OPERATIONS
Net earnings $ 3,601 $ 1,136
Items of income not requiring (providing) cash -
Depreciation, depletion and amortization 5,967 5,791
Deferred income tax provision 1,800 250
Gain on sale of properties (166) (545)
Other, net (481) (1,124)
Decrease (increase) in accounts receivable (29,577) (18,299)
Decrease (increase) in inventories (631) (738)
Decrease (increase) in prepaid and other 514 (395)
Increase (decrease) in accounts payable 28,565 17,711
Increase (decrease) in accrued liabilities 378 (214)
-------------- --------------
Net cash provided by operating activities 9,970 3,573
-------------- --------------
INVESTING ACTIVITIES
Property and equipment additions (4,086) (6,068)
Proceeds from property sales 589 545
-------------- --------------
Net cash (required) by investing activities (3,497) (5,523)
-------------- --------------
FINANCING ACTIVITIES
Borrowings from bank - 2,065
Repayment of debt (6,304) (462)
Sales of stock 16 64
-------------- --------------
Net cash provided by (used in) financing activities (6,288) 1,667
-------------- --------------
Increase (decrease) in cash 185 (283)
Cash at beginning of period 4,037 2,695
-------------- --------------
Cash at end of period $ 4,222 $ 2,412
============== ==============
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
Interest paid during the period $ 508 $ 665
============== ==============
Income taxes paid during the period $ 233 $ 226
============== ==============
</TABLE>
The accompanying notes are an integral part of these financial statements.
- 6 -
<PAGE> 7
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, 1996 and December 31, 1995 and results of operations
and cash flows for the nine months ended September 30, 1996 and 1995. 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
that 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.
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<PAGE> 8
ADAMS RESOURCES & ENERGY, INC. AND SUBSIDIARIES
PART II. OTHER INFORMATION
Item 1. - None
Item 2. - None
Item 3. - None
Item 4. - None
Item 5. - None
Item 6. - None
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<PAGE> 9
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.
ADAMS RESOURCES & ENERGY, INC.
(Registrant)
Date: November 4, 1996 By: K. S. ADAMS, JR.
--------------------------- ---------------------------
K. S. Adams, Jr.
Chief Executive Officer
RICHARD B. ABSHIRE
---------------------------
Richard B. Abshire
Chief Financial Officer
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<PAGE> 10
EXHIBIT INDEX
27 -- Financial Data Schedule
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> SEP-30-1996
<PERIOD-END> SEP-30-1996
<CASH> 4,222
<SECURITIES> 0
<RECEIVABLES> 80,191
<ALLOWANCES> (130)
<INVENTORY> 3,808
<CURRENT-ASSETS> 88,597
<PP&E> 41,875
<DEPRECIATION> (25,398)
<TOTAL-ASSETS> 106,734
<CURRENT-LIABILITIES> 80,954
<BONDS> 5,877
<COMMON> 420
0
0
<OTHER-SE> 18,875
<TOTAL-LIABILITY-AND-EQUITY> 106,734
<SALES> 1,040,699
<TOTAL-REVENUES> 1,040,865
<CGS> 1,026,910
<TOTAL-COSTS> 1,034,740
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 465
<INCOME-PRETAX> 5,660
<INCOME-TAX> 2,059
<INCOME-CONTINUING> 3,601
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 3,601
<EPS-PRIMARY> .85
<EPS-DILUTED> .85
</TABLE>
