<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 June 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 July 31, 1997 was 4,213,596.
<PAGE> 2
ADAMS RESOURCES & ENERGY, INC. AND SUBSIDIARIES
UNAUDITED CONSOLIDATED STATEMENT OF OPERATIONS
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
Six Months Ended Three Months Ended
June 30, June 30,
------------------------ ------------------------
1997 1996 1997 1996
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
REVENUE:
Marketing $ 917,467 $ 654,661 $ 432,855 $ 376,458
Transportation 14,271 10,489 7,581 5,274
Oil & Gas 4,422 3,768 1,579 2,285
--------- --------- --------- ---------
936,160 668,918 442,015 384,017
--------- --------- --------- ---------
COSTS AND EXPENSES:
Operating
Marketing 916,434 648,915 432,887 372,435
Transportation 11,446 9,029 6,153 4,521
Oil & Gas 794 777 359 393
Corporate general and administrative 1,077 1,303 541 610
Depreciation, depletion and amortization 2,752 4,389 1,139 3,144
--------- --------- --------- ---------
932,503 664,413 441,079 381,103
--------- --------- --------- ---------
Operating earnings 3,657 4,505 936 2,914
OTHER INCOME (EXPENSE):
Property sales and other 615 166 261 7
Interest (128) (372) (41) (190)
--------- --------- --------- ---------
487 (206) 220 (183)
--------- --------- --------- ---------
Earnings before income taxes 4,144 4,299 1,156 2,731
Income tax provision
Current 171 207 40 124
Deferred 1,375 1,350 400 900
--------- --------- --------- ---------
1,546 1,557 440 1,024
--------- --------- --------- ---------
NET EARNINGS $ 2,598 $ 2,742 $ 716 $ 1,707
========= ========= ========= =========
EARNINGS PER COMMON SHARE $ .62 $ .65 $ .17 $ .40
========= ========= ========= =========
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
Six Months Comparison
- Marketing
Gross revenues for the Company's Marketing operations increased
by $262,806,000 or 40%, in the comparative current period as a result of
(a) increased average crude oil prices, (b) increased volumes of crude oil
purchased at the wellhead, and (c) more active crude oil trading effort.
Compared to last year's first half, average crude oil sales prices were
increased by approximately 17% in 1997. Average wellhead purchases were
60,000 barrels per day in 1997 versus 55,000 barrels per day in 1996.
Marketing division operating margins before depreciation for the first six
months of 1997 were reduced to $1,033,000 versus $5,746,000 in the similar
1996 period. This result was because of a reversal of the unusually
favorable market demand conditions that existed in 1996. During 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>
First Half First Half Percentage
1997 1996 Increase
----------- ----------- -----------
<S> <C> <C> <C>
Revenues $14,271,000 $10,489,000 36%
Operating earnings
before depreciation $ 2,825,000 $ 1,460,000 93%
</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 and operating earnings increased for the
comparative six month period primarily as a result of increased natural
gas prices and volumes in the first quarter of 1997. Natural gas
production volumes increased as a direct result of the Company's drilling
efforts during 1996. Such volume increases reduced in the second quarter
of 1997, however, due to normal declines.
-3-
<PAGE> 4
Volumes and prices compare as follows:
<TABLE>
<CAPTION>
Six Months Ended Three Months Ended
---------------- ------------------
1997 1996 1997 1996
----- ---- ---- ----
<S> <C> <C> <C> <C>
Crude oil
Volume 7,500 Bbls. 44,440 Bbls. 17,500 Bbls. 24,500 Bbls.
Average price $21.93/ Bbl. $ 18.77/ Bbl. $20.65/ Bbl. $ 19.72/ Bbl.
Natural gas
Volume 1,750,000 Mcf's 1,520,000 Mcf's 830,000 Mcf's 900,000 Mcf's
Average price, includes
value of associated gas
liquids $ 2.49/ Mcf $ 1.91/ Mcf $ 1.78/ Mcf $ 2.00/ Mcf
</TABLE>
- Other income (expense)
The provision for depreciation, depletion and amortization is
reduced in the current period 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
$401,000 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.
- Three Months Comparisons
Comparisons for the three month period ended June 30, 1997 are
consistent with the discussions for the six month period.
Liquidity and Capital Resources
During the first six months of 1997, the Company invested
$4,156,000 in property equipment additions with $2,499,000 going towards
oil and gas drilling efforts and the remainder for various marketing and
transportation equipment items. Funding for these investments was derived
from the Company generating $5,860,000 of working capital funds. The
$1,709,000 of excess cash flow generated was utilized 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, 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>
June 30, December 31,
1997 1996
--------- ------------
(Unaudited)
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents .......................... $ 3,797 $ 3,782
Accounts receivable, net ........................... 63,522 80,238
Inventories ........................................ 4,106 4,867
Prepaid and other .................................. 918 1,116
Deferred income taxes .............................. 750 1,475
--------- ---------
Total current assets ................. 73,093 91,478
--------- ---------
Property and equipment ............................... 47,477 43,607
Less - accumulated depreciation,
depletion and amortization .................. (28,044) (25,440)
--------- ---------
19,433 18,167
--------- ---------
Other assets ......................................... 1,277 1,237
--------- ---------
$ 93,803 $ 110,882
========= =========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable ................................... $ 61,875 $ 77,449
Accrued and other liabilities ...................... 2,772 3,481
Current maturities of long-term debt ............... 64 64
--------- ---------
Total current liabilities ................... 64,711 80,994
Long-term debt, less current maturities .............. 2,840 6,171
Other liabilities .................................... 851 957
--------- ---------
68,402 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, 4,213,596 and 4,203,346
shares outstanding respectively ................ 421 420
Contributed capital ................................ 11,670 11,628
Retained earnings since December 31, 1992 .......... 13,310 10,712
--------- ---------
Total shareholders' equity .................. 25,401 22,760
--------- ---------
$ 93,803 $ 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>
Six Months Ended
June 30,
----------------------
1997 1996
-------- --------
<S> <C> <C>
CASH PROVIDED (USED) BY OPERATIONS:
Net earnings ............................................. $ 2,598 $ 2,742
Items of income not requiring (providing) cash -
Depreciation, depletion and amortization ............... 2,752 4,389
Deferred income tax provision .......................... 725 1,350
Gain on sale of properties ............................. (215) (166)
Other, net ............................................. (218) (478)
Decrease (increase) in accounts receivable ............... 16,716 (18,305)
Decrease (increase) in inventories ....................... 761 (276)
Decrease (increase) in prepaid and other ................. 198 17
Increase (decrease) in accounts payable .................. (15,574) 17,256
Increase (decrease) in accrued liabilities ............... (709) (534)
-------- --------
Net cash provided (required) by operating activities ... 7,034 5,995
-------- --------
INVESTING ACTIVITIES:
Property and equipment additions ......................... (4,156) (3,370)
Proceeds from property sales ............................. 425 589
-------- --------
Net cash provided by (used in) investing activities .... (3,731) (2,781)
-------- --------
FINANCING ACTIVITIES:
Repayment of debt ........................................ (3,331) (4,745)
Sales of stock ........................................... 43 --
-------- --------
Net cash provided by (used in) financing activities .... (3,288) (4,745)
-------- --------
Increase (decrease) in cash and cash equivalents ........... 15 (1,531)
Cash at beginning of period ................................ 3,782 4,037
-------- --------
Cash at end of period ...................................... $ 3,797 $ 2,506
======== ========
Supplemental disclosure of cash flow information:
Interest paid during the period .......................... $ 87 $ 388
======== ========
Income taxes paid during the period ...................... $ 867 $ 132
======== ========
</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 June 30, 1997 and December 31, 1996 and results of operations and
cash flows for the three months ended June 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 8-K
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: August 12, 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
EXHIBIT
NUMBER DESCRIPTION
- ------- -----------
27 Financial Data Schedule
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> JUN-30-1997
<CASH> 3,797
<SECURITIES> 0
<RECEIVABLES> 63,638
<ALLOWANCES> (116)
<INVENTORY> 4,106
<CURRENT-ASSETS> 73,093
<PP&E> 47,477
<DEPRECIATION> (28,044)
<TOTAL-ASSETS> 93,803
<CURRENT-LIABILITIES> 64,711
<BONDS> 2,840
0
0
<COMMON> 421
<OTHER-SE> 24,980
<TOTAL-LIABILITY-AND-EQUITY> 93,803
<SALES> 936,160
<TOTAL-REVENUES> 936,160
<CGS> 931,426
<TOTAL-COSTS> 931,888
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 128
<INCOME-PRETAX> 4,144
<INCOME-TAX> 1,546
<INCOME-CONTINUING> 2,598
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 2,598
<EPS-PRIMARY> .62
<EPS-DILUTED> .62
</TABLE>
