<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, 1997 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.)
5 Post Oak Park, Houston, Texas 77027
------------------------------------------------
(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, 1997 was 4,215,596.
<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,
-------------------------- -------------------------
1997 1996 1997 1996
------------ ----------- ----------- -----------
<S> <C> <C> <C> <C>
REVENUE:
Marketing $ 1,358,071 $ 1,018,959 $ 440,604 $ 364,298
Transportation 22,915 15,446 8,644 4,957
Oil & Gas 7,044 6,294 2,622 2,526
----------- ----------- ----------- -----------
1,388,030 1,040,699 451,870 371,781
----------- ----------- ----------- -----------
COSTS AND EXPENSES:
Operating
Marketing 1,355,837 1,012,128 439,403 363,213
Transportation 18,443 13,426 6,997 4,397
Oil & Gas 1,225 1,356 431 579
Corporate general and administrative 1,618 1,863 541 560
Depreciation, depletion and amortization 4,814 5,967 2,062 1,578
----------- ----------- ----------- -----------
1,381,937 1,034,740 449,434 370,327
----------- ----------- ----------- -----------
Operating earnings 6,093 5,959 2,436 1,454
OTHER INCOME (EXPENSE):
Property sales and other 615 166 -- --
Interest (197) (465) (69) (93)
----------- ----------- ----------- -----------
418 (299) (69) (93)
----------- ----------- ----------- -----------
Earnings before income taxes 6,511 5,660 2,367 1 ,361
Income tax provision
Current 295 259 124 52
Deferred 2,050 1,800 675 450
----------- ----------- ----------- -----------
2,345 2,059 799 502
----------- ----------- ----------- -----------
NET EARNINGS $ 4,166 $ 3,601 $ 1,568 $ 859
=========== =========== =========== ===========
EARNINGS PER COMMON SHARE $ .99 $ .85 $ .37 $ .20
=========== =========== =========== ===========
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
$339,112,000 or 33%, in the comparative current period as a result of
increased volumes of crude oil purchased at the wellhead and a more active
crude oil trading effort. Average wellhead purchases were 78,000 barrels
per day in 1997 versus 55,000 barrels per day in 1996. Marketing division
operating margins before depreciation for the first nine months of 1997
were reduced to $2,234,000 versus $6,831,000 in the similar 1996 period.
This result was because of a reversal of the unusually favorable market
demand conditions that existed in 1996. During the first half of 1996, and
especially in the second quarter of 1996, there were a number of spot
market shortages of crude oil that served to temporarily increase the
Company's margins.
- Transportation
Transportation revenues and operating earnings before depreciation
increased as follows:
<TABLE>
<CAPTION>
Percentage
1997 1996 Increase
----------- ----------- --------
<S> <C> <C> <C>
Revenues $ 22,915,000 $ 15,446,000 48%
Operating earnings
before depreciation $ 4,472,000 $ 2,020,000 121%
</TABLE>
The revenue increase resulted from generally strong customer
demand during the current quarter. Improved customer demand is consistent
with the generally strong United States economy. Operating earnings
improved as a direct result of the increased demand. Because of the fixed
cost component of the company's transportation operation, on a percentage
basis, operating earnings will improve at a faster rate than revenues.
- Oil and Gas
Oil and gas revenues increased by 11% and operating earnings
before depreciation increased by 17% to $5,819,000 for the comparative
current nine month period as a result of increased natural gas prices in
the first quarter of 1997.
-3-
<PAGE> 4
Volumes and prices compare as follows:
<TABLE>
<CAPTION>
Nine Months Ended Three Months Ended
----------------- ------------------
1997 1996 1997 1996
----- ---- ---- ----
<S> <C> <C> <C> <C>
Crude oil
Volume 49,300 Bbls. 64,200 Bbls. 17,800 Bbls. 19,800 Bbls.
Average price $20.09/ Bbl. $ 19.17/ Bbl. $ 17.86/ Bbl. $ 19.67/ Bbl.
Natural gas
Volume 2,575,000 Mcf's 2,470,000 Mcf's 1,075,000 Mcf's 950,000 Mcf's
Average price, includes
value of associated gas
liquids $ 2.33/ Mcf $ 2.03/ Mcf $ 2.09/ Mcf $ 2.15/ Mcf
</TABLE>
- Other income (expense)
The provision for depreciation, depletion and amortization is
reduced for the first nine months of 1997 because of a reduced capitalized
cost base. The large provision for depreciation, depletion and amortization
in 1996 served to reduce the level of capitalized costs to be amortized in
1997 and future years. Property sales and other income in 1997 include a
$400,000 recovery from an insurance carrier for prior year overcharges and
a $215,000 gain realized on the sale of twenty-one truck tractors. Seven
tank trailers were sold in 1996 for a $166,000 gain. Interest expense is
reduced in 1997 because the Company used its excess cash flow to reduce
long term debt during the first eight months of 1997.
- Three Months Comparisons
Comparisons for the three month period ended September 30, 1997
are consistent with the discussions for the nine month period except oil and gas
property additions during 1997 served to boost the third quarter 1997 provision
for depreciation.
Liquidity and Capital Resources
During the first nine months of 1997, the Company invested
$8,495,000 in property equipment additions with $3,769,000 going toward oil
and gas drilling efforts, $1,411,000 invested toward the construction of an
offshore Gulf of Mexico crude oil pipeline, and the remainder for trucks
and other marketing and transportation equipment items. Funding for these
investments was derived from the Company generating $10,215,000 of working
capital funds. The $1,720,000 of excess cash flow generated was as
additions to working capital.
Refer to the "Liquidity and Capital Resources" section of the
Company's Annual Report on Form 10-K for the year ended December 31, 1996
for additional discussion of the Company's bank relationships, tax
carryforwards and other matters.
-4-
<PAGE> 5
ADAMS RESOURCES & ENERGY, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
(IN THOUSANDS)
<TABLE>
<CAPTION>
September 30, December 31,
1997 1996
------------ -----------
(Unaudited)
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents................................... $ 5,333 $ 3,782
Accounts receivable, net.................................... 80,842 80,238
Inventories................................................. 4,096 4,867
Prepaid and other........................................... 894 1,116
Deferred income taxes....................................... 25 1,475
------------ -----------
Total current assets.......................... 91,190 91,478
------------ -----------
Property and equipment........................................ 51,158 43,607
Less - accumulated depreciation,
depletion and amortization........................... (29,448) (25,440)
------------ -----------
21,710 18,167
------------ -----------
Other assets.................................................. 1,284 1,237
------------ -----------
$ 114,184 $ 110,882
============ ===========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable............................................ $ 75,871 $ 77,449
Accrued and other liabilities............................... 2,634 3,481
Current maturities of long-term debt........................ 71 64
------------ -----------
Total current liabilities............................ 78,576 80,994
Long-term debt, less current maturities....................... 7,775 6,171
Other liabilities............................................. 845 957
------------ -----------
87,196 88,122
Shareholders' equity:
Preferred stock - $1.00 par value, 960,000 shares
authorized, none outstanding............................ - -
Common stock - $.10 par value, 7,500,000
shares authorized, 4,215,596 and 4,203,346
shares outstanding respectively......................... 422 420
Contributed capital......................................... 11,688 11,628
Retained earnings since December 31, 1992................... 14,878 10,712
------------ -----------
Total shareholders' equity .......................... 26,988 22,760
------------ -----------
$ 114,184 $ 110,882
============ ===========
</TABLE>
The accompanying notes are an integral part of these financial statements.
-5-
<PAGE> 6
ADAMS RESOURCES & ENERGY, INC. AND SUBSIDIARIES
UNAUDITED CONSOLIDATED STATEMENT OF CASH FLOWS
(IN THOUSANDS)
<TABLE>
<CAPTION>
Nine Months Ended
September 30,
---------------------------
1997 1996
----------- ----------
<S> <C> <C>
CASH PROVIDED (USED) BY OPERATIONS:
Net earnings .................................................................. $ 4,166 $ 3,601
Items of income not requiring (providing) cash -
Depreciation, depletion and amortization .................................... 4,814 5,967
Deferred income tax provision ............................................... 1,450 1,800
Gain on sale of properties................................................... (215) (166)
Other, net .................................................................. (231) (481)
Decrease (increase) in accounts receivable .................................... (604) (29,577)
Decrease (increase) in inventories ............................................ 771 (631)
Decrease (increase) in prepaid and other ...................................... 222 514
Increase (decrease) in accounts payable ....................................... (1,578) 28,565
Increase (decrease) in accrued liabilities .................................... (847) 378
----------- ----------
Net cash provided (required) by operating activities ........................ 7,948 9,970
---------- ----------
INVESTING ACTIVITIES:
Property and equipment additions .............................................. (8,495) (4,086)
Proceeds from property sales .................................................. 425 589
---------- ----------
Net cash provided by (used in) investing activities ......................... (8,070) (3,497)
---------- -----------
FINANCING ACTIVITIES:
Borrowing from bank.............................................................. 1,675 -
Repayment of debt................................................................ (64) (6,304)
Sales of stock ................................................................ 62 16
---------- ----------
Net cash provided by (used in) financing activities ......................... 1,673 (6,288)
---------- -----------
Increase (decrease) in cash and cash equivalents................................. 1,551 185
Cash at beginning of period...................................................... 3,782 4,037
---------- ----------
Cash at end of period............................................................ $ 5,333 $ 4,222
========== ==========
Supplemental disclosure of cash flow information:
Interest paid during the period ............................................... $ 197 $ 508
========== ==========
Income taxes paid during the period............................................ $ 867 $ 233
========== ==========
</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, 1997 and December 31, 1996 and results of operations
and cash flows for the nine months ended September 30, 1997 and 1996. 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.
-7-
<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 6. Exhibits and Reports on Form 8K
- ----------------------------------------
a. Exhibits - None.
b. Reports on Form 8-K - None.
-8-
<PAGE> 9
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 6, 1997 By /s/ K.S. Adams,Jr.
--------------------- ------------------------
K. S. Adams, Jr.
Chief Executive Officer
By /s/ Richard B. Abshire
------------------------
Richard B. Abshire
Chief Financial Officer
-9-
<PAGE> 10
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION
- ------- -----------
<S> <C>
27 Financial Data Schedule
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> SEP-30-1997
<PERIOD-END> SEP-30-1997
<CASH> 5,333
<SECURITIES> 0
<RECEIVABLES> 80,950
<ALLOWANCES> (108)
<INVENTORY> 4,096
<CURRENT-ASSETS> 91,190
<PP&E> 51,158
<DEPRECIATION> (29,448)
<TOTAL-ASSETS> 114,184
<CURRENT-LIABILITIES> 78,576
<BONDS> 7,775
0
0
<COMMON> 422
<OTHER-SE> 26,566
<TOTAL-LIABILITY-AND-EQUITY> 114,184
<SALES> 1,388,030
<TOTAL-REVENUES> 1,388,645
<CGS> 1,375,505
<TOTAL-COSTS> 1,381,937
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 197
<INCOME-PRETAX> 6,511
<INCOME-TAX> 2,345
<INCOME-CONTINUING> 4,166
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 4,166
<EPS-PRIMARY> .99
<EPS-DILUTED> .99
</TABLE>
