<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED MARCH 31, 1998.
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: 333-29001-01
ENERGY CORPORATION OF AMERICA
(Exact name of registrant as specified in its charter)
WEST VIRGINIA 84-1235822
(State or other jurisdiction of incorporation or organization)
(I.R.S. Employer Identification No.)
4643 SOUTH ULSTER STREET, SUITE 1100
DENVER, COLORADO 80237
(Address of principal executive offices and zip code)
(303) 694-2667
(Registrant's telephone number, including area code)
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 Registrant became subject to the reporting requirements of Section 13 of
the Securities Exchange Act of 1934 on August 13, 1997.
The number of shares of the Registrant's common stock, par value $1.00 per
share, outstanding at March 31, 1998 was 664,995 shares.
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ENERGY CORPORATION OF AMERICA
TABLE OF CONTENTS
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PAGES
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PART I FINANCIAL INFORMATION
Item 1. Financial Statements
Condensed Consolidated Balance Sheets
March 31, 1998 (unaudited) and June 30, 1997...............................................3
Unaudited Condensed Consolidated Statements of Operations
For the three months and nine months ended March 31, 1998 and 1997.........................5
Unaudited Condensed Consolidated Statements of Cash Flows
For the nine months ended March 31, 1998 and 1997..........................................6
Notes to Unaudited Condensed Consolidated Financial Statements..................................7
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operation.........................................................9
PART II OTHER INFORMATION
Item 1. Legal Proceedings...............................................................................13
Item 2. Changes In Securities...........................................................................13
Item 3. Defaults Upon Senior Securities.................................................................13
Item 4. Submission of Matters to a Vote of Security Holders.............................................13
Item 5. Other Information...............................................................................13
Item 6. Exhibits and Reports on Form 8-K................................................................13
Signatures..............................................................................................14
Exhibit Index...........................................................................................15
</TABLE>
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PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
ENERGY CORPORATION OF AMERICA AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(AMOUNTS IN THOUSANDS)
<TABLE>
<CAPTION>
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MARCH 31, JUNE 30,
1998 1997
(UNAUDITED) *
<S> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 12,455 $ 20,814
Accounts receivable, net of allowance for doubtful accounts of
$966 and $1,660, respectively 54,436 37,923
Gas in storage, at average cost 4,999 12,810
Prepaid and other current assets 7,935 8,646
-------- --------
Total current assets 79,825 80,193
-------- --------
Property, plant and equipment, net of accumulated depreciation
depletion and amortization of $104,595 and $89,491, respectively 320,161 313,971
-------- --------
OTHER ASSETS:
Deferred financing costs, net of accumulated amortization of
$1,207 and $452, respectively 9,801 9,956
Deferred utility charges 18,963 18,259
Notes receivable 14,844 7,303
Other 3,995 5,075
-------- --------
Total other assets 47,603 40,593
TOTAL $447,589 $434,757
======== ========
</TABLE>
* Condensed from audited financial statements.
The accompanying notes are an integral part of these condensed consolidated
financial statements.
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ENERGY CORPORATION OF AMERICA AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(AMOUNTS IN THOUSANDS)
<TABLE>
<CAPTION>
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MARCH 31 JUNE 30,
1998 1997
(UNAUDITED) *
LIABILITIES AND STOCKHOLDERS' EQUITY
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CURRENT LIABILITIES:
Accounts payable and accrued expenses $ 32,277 $ 31,046
Short-term debt 22,478 15,724
Accrued taxes payable 12,727 7,774
Overrecovered gas costs 7,462 9,650
Other current liabilities 15,907 15,469
--------- ---------
Total current liabilities 90,851 79,663
LONG-TERM OBLIGATIONS, LESS CURRENT PORTION:
Long-term debt 260,886 260,089
Gas delivery obligation and deferred trust revenue 16,712 18,580
Deferred income taxes 32,077 32,018
Other long-term obligations 13,560 14,000
--------- ---------
Total liabilities 414,086 404,350
--------- ---------
COMMITMENTS AND CONTINGENCIES
MINORITY INTEREST 2,042 1,809
--------- ---------
STOCKHOLDERS' EQUITY:
Common stock, par value $1.00; 2,000 shares authorized;
719 and 714 shares issued in 1998 and 1997, respectively 719 714
Additional paid-in capital 4,500 4,221
Retained earnings 30,684 27,249
Treasury stock and notes receivable arising from issuance
of common stock (4,082) (3,435)
Cumulative foreign currency translation adjustment (360) (151)
--------- ---------
Total Stockholders' equity 31,461 28,598
--------- ---------
TOTAL $ 447,589 $ 434,757
========= =========
</TABLE>
* Condensed from audited financial statements.
The accompanying notes are an integral part of these condensed consolidated
financial statements.
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ENERGY CORPORATION OF AMERICA AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED - AMOUNTS IN THOUSANDS, EXCEPT PER SHARE DATA)
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FOR THE THREE MONTHS ENDED FOR THE NINE MONTHS ENDED
MARCH 31, MARCH 31,
1998 1997 1998 1997
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REVENUES:
Utility gas sales and transportation $ 64,642 $ 75,030 $ 136,510 $ 146,965
Oil and gas related sales and other 39,608 47,333 139,270 158,188
Contract settlement 10,100 -- 10,100 --
--------- --------- --------- ---------
114,350 122,363 285,880 305,153
--------- --------- --------- ---------
COSTS AND EXPENSES:
Utility gas purchased 33,432 37,883 73,918 85,705
Oil and gas related costs 32,195 36,098 120,371 128,075
Utility operations and maintenance 5,530 5,504 15,717 15,480
General and administrative 6,840 6,793 17,563 16,479
Depreciation, depletion and amortization 6,564 5,907 15,557 14,980
Other operating expenses 6,266 10,099 15,150 18,652
--------- --------- --------- ---------
90,827 102,284 258,276 279,371
--------- --------- --------- ---------
Income from operations 23,523 20,079 27,604 25,782
OTHER (INCOME) AND EXPENSE:
Interest 6,545 5,287 19,880 17,005
Other 1,241 (8,456) 303 (8,757)
--------- --------- --------- ---------
INCOME BEFORE INCOME TAXES
AND MINORITY INTEREST 15,737 23,248 7,421 17,534
PROVISION FOR INCOME TAXES 5,919 7,360 2,774 4,960
--------- --------- --------- ---------
INCOME BEFORE MINORITY INTEREST 9,818 15,888 4,647 12,574
MINORITY INTEREST 366 124 398 339
--------- --------- --------- ---------
NET INCOME $ 9,452 $ 15,764 $ 4,249 $ 12,235
========= ========= ========= =========
Net income per common share $ 14.19 $ 23.41 $ 6.39 $ 18.12
Net income per common share,
assuming dilution $ 14.19 $ 23.35 $ 6.39 $ 18.08
</TABLE>
The accompanying notes are an integral part of these condensed consolidated
financial statements.
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ENERGY CORPORATION OF AMERICA AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED - AMOUNTS IN THOUSANDS)
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<CAPTION>
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FOR THE NINE MONTHS ENDED
MARCH 31,
1998 1997
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 4,249 $ 12,235
Adjustments to reconcile net income to net cash
provided by operating activities:
Depletion, depreciation and amortization 15,557 15,645
Other, net (3,725) (2,524)
-------- --------
16,081 25,356
Changes in Assets and Liabilities
Accounts receivable (16,513) (26,447)
Gas in storage 7,811 5,993
Other assets 711 957
Accounts payable and other current liabilities 1,231 2,249
Taxes payable 4,953 1,515
Overrecovered gas costs (2,188) (1,521)
Other (1,680) (1,403)
-------- --------
Net cash provided by operating activities 10,406 6,699
-------- --------
CASH FLOWS FROM INVESTING ACTIVITIES:
Expenditures for property, plant and equipment (24,204) (21,555)
Other investing activities 481 12,004
-------- --------
Net cash used in investing activities (23,723) (9,551)
-------- --------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of long-term debt 71,000
Principal payments on long-term debt (37) (84,223)
Short-term borrowings, net 6,754 18,222
Other financing activities (1,759) (2,013)
-------- --------
Net cash provided by financing activities 4,958 2,986
-------- --------
Net increase (decrease) in cash and cash equivalents (8,359) 134
Cash and Cash Equivalents, Beginning of Period 20,814 14,197
-------- --------
Cash and Cash Equivalents, End of Period $ 12,455 $ 14,331
======== ========
</TABLE>
The accompanying notes are an integral part of these condensed consolidated
financial statements.
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ENERGY CORPORATION OF AMERICA
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 1998
1. Nature of Organization
Energy Corporation of America (the "Company") was formed in June 1993
through an exchange of shares with the common stockholders of Eastern
American Energy Corporation ("Eastern"). The Company is an independent
integrated energy company that, through its subsidiaries, is primarily
engaged in operating a natural gas distribution system in the
Mid-Atlantic area and oil and gas operations in the Rocky Mountain and
Appalachian Basins. The Company also is engaged in the exploration of
oil and natural gas in other parts of the United States and New
Zealand. All references to the "Company" include Energy Corporation of
America and its consolidated subsidiaries.
2. Accounting Policies
Reference is hereby made to the Company's Annual Report on Form 10-K
for 1997, which contains a summary of major accounting policies
followed in preparation of its consolidated financial statements. These
policies were also followed in preparing the quarterly financial
statements included herein.
Management of the Company believes that all adjustments (consisting of
only normal recurring accruals) necessary for a fair presentation of
the results of such interim periods, included herein, have been made.
The results of operations for the nine months ended March 31, 1998 are
not necessarily indicative of the results to be expected for the full
year.
3. Contract Settlement
On February 16, 1998, the Company terminated its long-term gas supply
agreement with a purchaser effective June 30, 1998 or earlier under
certain conditions for $22 million. The consideration is payable in
sixteen quarterly installments plus interest at 8% beginning October 1,
1998. The purchaser is renegotiating its long-term power supply
contract with its customer. In the event the purchaser completes the
renegotiations, receiving a cash settlement, the total consideration
will be paid immediately. The Company has discounted the receivable to
a market rate of interest and further discounted the receivable pending
the outcome of uncertainties surrounding the purchaser renegotiations
and cash settlement.
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<PAGE> 8
4. Earnings per Share
Effective December 15, 1997, the Company adopted Statement of Financial
Accounting Standard No. 128, Earnings per Share ("SFAS 128"). SFAS 128
establishes standards for computing and presenting earnings per share
("EPS"), and supersedes APB Opinion No. 15 and its related
interpretations. It replaces the presentation of primary EPS with a
presentation of basic EPS, which excludes dilution, and requires dual
presentation of basic and diluted EPS for all entities with complex
capital structures. Diluted EPS is computed similarly to fully diluted
EPS pursuant to Opinion No. 15. A reconciliation of the numerators and
denominators of the basic and diluted per-share computations for income
from continuing operations is as follows:
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<CAPTION>
FOR THE THREE MONTHS ENDED FOR THE NINE MONTHS ENDED
MARCH 31, 1998 MARCH 31, 1998
------------------------------------------- -----------------------------------------
INCOME SHARES PER-SHARE INCOME SHARES PER-SHARE
(NUMERATOR) (DENOMINATOR) AMOUNT (NUMERATOR) (DENOMINATOR) AMOUNT
<S> <C> <C> <C> <C> <C> <C>
Basic and Diluted Earnings per Share
Income available to common
shareholders $9,452,000 665,897 $14.19 $4,249,000 665,064 $ 6.39
========== ========== ====== ========== ========== ======
</TABLE>
<TABLE>
<CAPTION>
FOR THE THREE MONTHS ENDED FOR THE NINE MONTHS ENDED
MARCH 31, 1997 MARCH 31, 1997
----------------------------------------------- ---------------------------------------------
INCOME SHARES PER-SHARE INCOME SHARES PER-SHARE
(NUMERATOR) (DENOMINATOR) AMOUNT (NUMERATOR) (DENOMINATOR) AMOUNT
<S> <C> <C> <C> <C> <C> <C>
Basic Earnings per Share
Income available to common
shareholders $15,764,000 673,514 $ 23.41 $12,235,000 675,172 $ 18.12
========= =========
Effect of dilutive stock options -- 1,493 -- 1,493
----------- ----------- ----------- ----------
Diluted Earnings per Share
Income available to common
shareholders plus assumed
conversions $15,764,000 675,007 $ 23.35 $12,235,000 676,665 $ 18.08
=========== =========== ========= =========== ========== =========
</TABLE>
5. Contingencies
The Company is involved in various legal actions and claims arising in
the ordinary course of business. Management does not expect these
matters to have a material adverse effect on the Company's financial
position.
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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
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Management's discussion and analysis of changes in the Company's
financial condition, including results of operations and liquidity and capital
resources during the three and nine month periods ended March 31, 1998 and 1997.
COMPARISON OF RESULTS OF OPERATIONS FOR THREE MONTHS ENDED MARCH 31, 1998 AND
THREE MONTHS ENDED MARCH 31, 1997
NET INCOME. The Company recorded net income of $9.5 million for the
three months ending March 31, 1998, compared to net income of $15.8 million for
the same period in 1997. The decrease in net income for the periods is
attributable to an $8.0 million decrease in revenue and a $9.7 million decrease
in other income offset by a $11.5 million decrease in costs and expenses.
REVENUES. Total revenues decreased $8.0 million or 6.5% during the
periods. The decrease was due to a 13.9% decrease in utility gas sales and
transportation, an 18.3% decrease in gas marketing and pipeline sales, a 36.3%
decrease in oil and gas sales, offset by a $11.6 million increase in other
revenue. Revenues from utility gas sales and transportation decreased $10.4
million from $75.0 million during the quarter ending March 31, 1997 to $64.6
million in the quarter ending March 31, 1998. The decrease is primarily due to
1.9 million mcf less in volumes of gas sold as a result of warmer weather in the
current period, 773 fewer degree days, partially offset by an increase in
transportation revenue due to increased usage by commercial and industrial
customers. Revenues from gas marketing and pipeline sales decreased $6.3 million
from $34.5 million during the quarter ending March 31, 1997 to $28.2 million in
the quarter ending March 31, 1998. The decrease in revenue is primarily
attributable to a 17.4% decrease in the average unit price and a 1.2% decline in
marketed volumes from 10.8 million dth at March 31, 1997 to 10.7 million dth at
March 31, 1998. The decrease in volumes is a result of reduced volumes
associated with trading activities. Revenues from oil and gas sales decreased
$3.3 million from $9.2 million at March 31, 1997 to $5.9 million at March 31,
1998. The decrease in revenue is primarily attributable to a 27.0% decline in
Mcfe units sold from 3.2 Bcfe at March 31, 1997 to 2.3 Bcfe at March 31, 1998
and a 12.8% decrease in the average unit sales price from $2.86 to $2.50 per
Mcfe for the respective periods. The 27.0% decline in units sold between March
31, 1997 and 1998 was primarily as a result of the sale of the Company's limited
partnership interests in Westside Operating Partners Limited Partnership
("WOPLP") which accounted for 0.9 Bcfe of the decline in units sold, which was
partially offset by an increase of 0.1 Bcfe from the production of the Company's
drilling program. The sale of WOPLP occurred in March 1997. Other operating
revenues increased $11.6 million between the periods primarily as a result of an
agreement to terminate an existing long-term gas delivery contract. See Contract
Settlement discussion below.
COSTS AND EXPENSES. The Company's costs and expenses decreased $11.5
million or 11.2% during this period primarily as the result of a $4.5 million
decline in the cost of utility gas purchased, a $4.4 million decline in gas
marketing and pipeline costs and a $1.3 million decline in impairment and
exploratory costs. The decline in the cost of utility gas purchased was
primarily the
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<PAGE> 10
result of decreased volumes and a decrease in the price of commodity gas of
approximately $0.30 per Mcf sold offset by a $4.3 million increase in demand
charges resulting from a rate settlement with Columbia Gas Transmission
Corporation in the prior period. The $4.4 million decline in gas marketing and
pipeline costs was the result of an 83,000 dth decline in volumes marketed which
was partially offset by a $0.39 decrease in the average unit cost. Impairment
and exploratory costs decreased $1.3 million for the current period due to
provisions recognized in the prior period for the abandonment of certain
exploratory prospects, impairment of certain leasehold positions and dry hole
costs. General and administrative expenses, depreciation and amortization
related to non-depleting assets and depletion of oil and gas properties were
comparable between the periods.
INTEREST EXPENSE. Interest expense increased 23.8% from $5.3 million
to $6.5 million in the current year. The increase was due to a 12.6%, $29.2
million increase in long term debt due to the issuance of the Senior
Subordinated Notes and increased interest rates, partially offset by a 15.5%,
$4.1 million decrease in short term debt.
OTHER (INCOME) EXPENSE. Other income decreased $9.7 million primarily
due to the sale of WOPLP, resulting in a gain of $7.8 million during the quarter
ended March 31, 1997 compared to a loss of $1.2 million on the sale of certain
oil and gas properties during the quarter ended March 31, 1998.
INCOME TAX EXPENSE. The provision for income taxes decreased between
the two periods as a result of the decrease in pre-tax income during the current
period.
COMPARISON OF RESULTS OF OPERATIONS FOR NINE MONTHS ENDED MARCH 31, 1998 AND
NINE MONTHS ENDED MARCH 31, 1997
NET INCOME. The Company recorded net income of $4.2 million for the
nine months ending March 31, 1998, compared to net income of $12.2 million for
the same period in 1997. The decrease in net income for the periods is primarily
attributable to a $19.3 million decrease in revenue and $9.1 million decrease in
other income partially offset by a $21.1 million decrease in costs and expenses.
REVENUES. Total revenues decreased $19.3 million or 6.3% during the
periods. The decrease was due to a 7.1% decrease in utility gas sales and
transportation, 11.7% decrease in gas marketing and pipeline sales and a 30.6%
decrease in oil and gas sales, which were partially offset by a $12.9 million
increase in other operating revenue. Revenues from utility gas sales and
transportation decreased $10.5 million from $147.0 million during the nine
months ending March 31, 1997 to $136.5 million for the same period ending March
31, 1998. The decrease is primarily due to 1.9 million mcf less in volumes of
gas sold as a result of warmer weather in the current period, partially offset
by an increase in transportation revenue due to increased usage by commercial
and industrial customers. Revenues from gas marketing and pipeline sales
decreased $14.1 million from $120.3 million during the period ending March 31,
1997 to $106.2 million in the period ending March 31, 1998. The decrease in
revenue is primarily attributable to a 4.6% decrease in the average unit price
and a 6.7% decline in marketed volumes from 42.5 million dth at March 31, 1997
to 39.7 million dth at March 31, 1998. The decrease in volumes is a result of a
change in pipeline sales and transportation components, discontinued pipeline
sales to a customer, and reduced volumes associated with trading activities.
Revenues from oil
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and gas sales decreased $8.3 million from $27.0 million at March 31, 1997 to
$18.7 million March 31, 1998. The decrease in revenue is primarily attributable
to a 28.5% decline in Mcfe units sold from 10.0 Bcfe at March 31, 1997 to 7.1
Bcfe and a 2.9% decrease in the average unit sales price from $2.71 to $2.63 per
Mcfe for the respective periods. The 28.5% decline in units sold between March
31, 1997 and 1998 was primarily as a result of the sale of the Company's limited
partnership interests in WOPLP which accounted for 2.7 Bcfe and 96.4% of the
total decline in units sold which was partially offset by an increase of 1.6
Bcfe from the production of the Company's drilling program. The sale of WOPLP
occurred in March 1997. Other operating revenues increased $12.9 million between
the periods primarily as a result of an agreement to terminate an existing
long-term gas delivery contract. See Contract Settlement discussion below.
COSTS AND EXPENSES. The Company's costs and expenses decreased $21.1
million or 7.6% during this period primarily as the result of a $11.8 million
decline in the cost of utility gas purchased, a $5.4 million decrease in gas
marketing and pipeline costs and a $3.6 million decline in the field and lease
operating expense which was partially offset by a $1.1 million increase in
general and administrative expense. The decline in the cost of utility gas
purchased was the result of decreased volumes and a decrease in the price of
commodity gas of approximately $0.25 per Mcf sold and a $0.9 million decrease in
demand charges resulting from a rate settlement with Columbia Gas Transmission
Corporation in the prior period. The $5.4 million decrease in gas marketing and
pipeline costs is the result of a 2.6 million dth decline in volumes marketed
offset by a $0.06 increase in the average unit cost. The $3.6 million decline in
field and lease operating expense was primarily the result of the reduction in
operating costs of $3.5 million associated with the sale of the limited
partnership interests previously discussed. General and administrative expenses
increased $1.1 million primarily as a result of an acquisition, see development
activities below, and increased expenditures related to utility operations.
Depreciation and amortization related to non-depleting assets and depletion of
oil and gas properties were relatively comparable between the periods.
INTEREST EXPENSE. Interest expense increased 16.9% from $17.0 million
to $19.9 million in the current year. The increase was due to the additional
average long-term debt due to the issuance of the Senior Subordinated Notes and
increased interest rates during the nine months ended March 31.
OTHER (INCOME) EXPENSE. Other income decreased $9.0 million primarily
due to the sale of WOPLP, resulting in a gain of $7.8 million compared to a loss
of $1.2 million on the sale of certain oil and gas properties during the nine
months ended March 31, 1998.
INCOME TAX BENEFIT. The provision for income taxes decreased $2.2
million as a result of a decrease in pre-tax operating income.
LIQUIDITY AND CAPITAL RESOURCES
CASH FLOWS. Net cash provided by operating activities is primarily
affected by oil and gas prices, seasonality, heating degree-days, utility rate
regulation, marketing margins and the Company's success in drilling activities.
The Company's net increase of cash flow from operations was approximately $10.4
million for the nine-months ended March 31, 1998. The seasonality of the
Company's utility and oil and gas operations accounted for the major portion of
the increased cash.
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<PAGE> 12
Additionally, the Company invested approximately $11.0 million in oil and gas
exploration and development activities and $10.9 million in utility plant
improvements. The net cash invested in asset additions were funded primarily
through current operations and short-term borrowings. The Company plans to
continue to pursue capital investment opportunities both domestically and
internationally. Management believes that the Company has adequate capital
resources to meet its operating requirements and to pursue capital investment
opportunities.
DEVELOPMENT ACTIVITIES AND ACQUISITIONS. The Company has drilled 18
gross (9.63 net) development wells and 21 gross (7.74 net) exploratory wells
during the nine months ended March 31, 1998. Of these, 21 gross (8.09 net) wells
are on line and producing. During the same period, the Company has drilled 11
gross (3.56 net) dry holes, of which 8 gross (2.32 net) were exploratory.
In November 1997, the Company acquired a data conversion and software
development company for approximately $1.4 million that was funded with existing
cash.
In March 1998, the Company acquired a 63 mile natural gas gathering
and pipeline system for $1.3 million. The acquisition cost was funded with
existing cash and a long-term note of $0.9 million.
CREDIT FACILITIES. The Company and certain operating subsidiaries of
the Company have (i) a $50 million secured, revolving credit facility under
which no amounts were outstanding at March 31, 1998 and (ii) $73 million in
unsecured, revolving bank lines of credit, under which approximately $22.5
million was drawn at March 31, 1998.
CONTRACT SETTLEMENT. On February 16, 1998, the Company terminated its
long-term gas supply agreement with a purchaser effective June 30, 1998 or
earlier under certain conditions for $22 million. The consideration is payable
in sixteen quarterly installments plus interest at 8% beginning October 1, 1998.
The purchaser is renegotiating its long-term power supply contract with its
customer. In the event the purchaser completes the renegotiations, receiving a
cash settlement, the total consideration will be paid immediately. The Company
has discounted the receivable to a market rate of interest and further
discounted the receivable pending the outcome of uncertainties surrounding the
purchaser renegotiations and cash settlement.
OTHER MATTERS. The Company is currently assessing its computer systems
to determine any issues it may have regarding the year 2000. The Company has
determined that the majority of the existing systems will be replaced through a
capital project with new technology. The remaining legacy systems are projected
to be in compliance with the year 2000 prior to the end of the next fiscal year.
The Company does not expect there to be a material impact on the Company's
business, operations, cash flow or financial condition.
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<PAGE> 13
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
The Company is not a party to any legal actions that would materially
affect the Company's operations or financial statements.
ITEM 2. CHANGES IN SECURITIES
None
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None
ITEM 5. OTHER INFORMATION
None
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) 27 Financial Data Schedule
(b) No reports on Form 8-K have been filed during the quarter ended
March 31, 1998.
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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, in the City of Denver, State of
Colorado, on the 15th day of May, 1998.
ENERGY CORPORATION OF AMERICA
By: /s/ JOHN MORK
-------------------------------------
John Mork
Chief Executive Officer and Director
By: /s/ JOSEPH E. CASABONA
-------------------------------------
Joseph E. Casabona
Executive Vice President and Director
By: /s/ J. MICHAEL FORBES
-------------------------------------
J. Michael Forbes
Vice President and Treasurer
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EXHIBIT INDEX
Exhibit
Number Description
27 Financial Data Schedule
-15-
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FORM CONSOLIDATED
BALANCE SHEETS AND STATEMENTS OF OPERATIONS O PAGES 3-5 OF THE COMPANIES MARCH
31, 1998 FORM 10-Q AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
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