SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 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 DECEMBER 31, 1999.
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)
(IRS 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 number of shares of the Registrant's common stock, par value $1.00 per
share, outstanding at December 31, 1999 was 644,564 shares.
<PAGE>
<TABLE>
<CAPTION>
ENERGY CORPORATION OF AMERICA
TABLE OF CONTENTS
<S> <C>
PAGES
PART I FINANCIAL INFORMATION
Item 1. Financial Statements
Condensed Consolidated Balance Sheets
December 31, 1999 (unaudited) and June 30, 1999. . . . . . . . . . . 3
Unaudited Condensed Consolidated Statements of Operations
For the three and six months ended December 31, 1999 and 1998. . . . 5
Unaudited Condensed Consolidated Statements of Cash Flows
For the six months ended December 31, 1999 and 1998. . . . . . . . . 6
Notes to Unaudited Condensed Consolidated Financial Statements. . . . . 7
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operation. . . . . . . . . . . . . . . . . . . . . . . . . . 14
PART II OTHER INFORMATION
Item 1. Legal Proceedings . . . . . . . . . . . . . . . . . . . . . . . 20
Item 2. Changes in Securities . . . . . . . . . . . . . . . . . . . . . 20
Item 3. Defaults Upon Senior Securities . . . . . . . . . . . . . . . . 20
Item 4. Submission of Matters to a Vote of Security Holders . . . . . . 20
Item 5. Other Information . . . . . . . . . . . . . . . . . . . . . . . 20
Item 6. Exhibits and Reports on Form 8-K. . . . . . . . . . . . . . . . 20
Signatures. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
Exhibit Index . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
</TABLE>
<PAGE>
PART I FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
ENERGY CORPORATION OF AMERICA
CONDENSED CONSOLIDATED BALANCE SHEETS
(AMOUNTS IN THOUSANDS)
- ----------------------------------------------------------------------------------
<S> <C> <C>
DECEMBER 31 JUNE 30
1999 1999
(UNAUDITED) *
ASSETS
CURRENT ASSETS
Cash and cash equivalents . . . . . . . . . . . . . . . $ 14,308 $ 13,101
Accounts receivable, net of allowance for doubtful
accounts of $429 . . . . . . . . . . . . . . . . . . 13,046 14,920
Net utility assets held for sale. . . . . . . . . . . . 66,092 70,625
Gas in storage, at average cost . . . . . . . . . . . . 369 357
Income tax receivable . . . . . . . . . . . . . . . . . 3,180 3,180
Prepaid and other current assets. . . . . . . . . . . . 695 1,338
------------ --------
Total current assets . . . . . . . . . . . . . . . . 97,690 103,521
------------ --------
Property, plant and equipment, net of accumulated
depreciation and depletion of $87,243 and $82,158 . . . 157,986 158,442
------------ --------
OTHER ASSETS
Deferred financing costs, net of accumulated
amortization of $2,047 and $1,647. . . . . . . . . . 5,609 6,009
Notes receivable, less allowance for doubtful accounts
of $440. . . . . . . . . . . . . . . . . . . . . . . 3,180 3,384
Other . . . . . . . . . . . . . . . . . . . . . . . . . 14,983 14,807
------------ --------
Total other assets . . . . . . . . . . . . . . . . . 23,772 24,200
------------ --------
TOTAL. . . . . . . . . . . . . . . . . . . . . . . . . . . $ 279,448 $286,163
============ ========
<FN>
* Condensed from audited consolidated financial statements.
</TABLE>
The accompanying notes are an integral part of these condensed consolidated
financial statements.
<PAGE>
<TABLE>
<CAPTION>
ENERGY CORPORATION OF AMERICA
CONDENSED CONSOLIDATED BALANCE SHEETS
(AMOUNTS IN THOUSANDS)
- -------------------------------------------------------------------------------------
<S> <C> <C>
DECEMBER 31 JUNE 30
1999 1999
(UNAUDITED) *
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable . . . . . . . . . . . . . . . . . . . . $ 11,486 $ 15,474
Current portion of long-term debt. . . . . . . . . . . . 2,844 6,618
Funds held for future distribution . . . . . . . . . . . 5,457 5,378
Accrued taxes, other than income . . . . . . . . . . . . 4,794 4,583
------------- ---------
Total current liabilities . . . . . . . . . . . . . . 24,581 32,053
LONG-TERM OBLIGATIONS
Long-term debt . . . . . . . . . . . . . . . . . . . . . 219,631 219,886
Gas delivery obligation and deferred trust revenue . . . 22,706 13,839
Deferred income tax liability. . . . . . . . . . . . . . 2,527 4,877
Other long-term obligation . . . . . . . . . . . . . . . 1,007 1,031
------------- ---------
Total liabilities . . . . . . . . . . . . . . . . . . 270,452 271,686
------------- ---------
STOCKHOLDERS' EQUITY
Common stock, par value $1.00; 2,000,000 shares
authorized; 721,000 shares issued . . . . . . . . . . 721 721
Class A stock, no par value; 100,000 shares authorized;
26,000 shares issued. . . . . . . . . . . . . . . . . 2,940 2,940
Additional paid in capital . . . . . . . . . . . . . . . 4,656 4,656
Retained earnings. . . . . . . . . . . . . . . . . . . . 7,903 13,598
Treasury stock and notes receivable arising from the
issuance of common stock. . . . . . . . . . . . . . . (7,472) (7,261)
Accumulated comprehensive income (loss). . . . . . . . . 248 (177)
------------- ---------
Total Stockholders' equity. . . . . . . . . . . . . . 8,996 14,477
------------- ---------
TOTAL . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 279,448 $286,163
============= =========
<FN>
* Condensed from audited consolidated financial statements.
</TABLE>
The accompanying notes are an integral part of these condensed consolidated
financial statements.
<PAGE>
<TABLE>
<CAPTION>
ENERGY CORPORATION OF AMERICA
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED - AMOUNTS IN THOUSANDS, EXCEPT PER SHARE DATA)
- ----------------------------------------------------------------------------------------------------
FOR THE THREE FOR THE SIX
MONTHS ENDED MONTHS ENDED
DECEMBER 31 DECEMBER 31
1999 1998 1999 1998
<S> <C> <C> <C> <C>
REVENUES:
Gas marketing and pipeline sales . . . . . . . . . . . $19,244 $23,196 $ 38,840 $ 52,019
Oil and gas sales. . . . . . . . . . . . . . . . . . . 5,424 4,864 11,291 9,710
Well operations and service revenues . . . . . . . . . 1,607 1,595 3,189 3,375
Other revenue. . . . . . . . . . . . . . . . . . . . . - - - 191
-------- -------- --------- ---------
26,275 29,655 53,320 65,295
-------- -------- --------- ---------
COST AND EXPENSES:
Gas marketing and pipeline cost. . . . . . . . . . . . 18,847 22,207 37,959 50,257
Field operating expenses . . . . . . . . . . . . . . . 2,036 1,916 4,022 4,068
General and administrative . . . . . . . . . . . . . . 2,871 2,666 5,332 5,085
Taxes, other than income . . . . . . . . . . . . . . . 347 313 676 533
Depletion and depreciation, oil and gas related. . . . 2,377 2,028 4,413 4,074
Depreciation of pipelines and equipment. . . . . . . . 727 812 1,465 1,612
Exploration and impairment . . . . . . . . . . . . . . 1,737 726 2,938 2,811
-------- -------- --------- ---------
28,942 30,668 56,805 68,440
-------- -------- --------- ---------
Loss from operations . . . . . . . . . . . . . . . . . (2,667) (1,013) (3,485) (3,145)
-------- -------- --------- ---------
OTHER (INCOME) EXPENSE
Interest . . . . . . . . . . . . . . . . . . . . . . . 6,177 5,017 11,515 10,052
Gain on sale of assets . . . . . . . . . . . . . . . . (4) (369) (5) (1,096)
Other. . . . . . . . . . . . . . . . . . . . . . . . . (394) (527) (604) (794)
-------- -------- --------- ---------
Loss from continuing operations before income taxes
and minority interest. . . . . . . . . . . . . . . . . (8,446) (5,134) (14,391) (11,307)
Benefit from income taxes . . . . . . . . . . . . . . . . (2,642) (1,819) (4,249) (3,389)
-------- -------- --------- ---------
Loss from continuing operations before minority interest. (5,804) (3,315) (10,142) (7,918)
Minority interest . . . . . . . . . . . . . . . . . . . . - - - 7
-------- -------- --------- ---------
Loss from continuing operations . . . . . . . . . . . . . (5,804) (3,315) (10,142) (7,925)
Disposal of utility operations:
Income from utility operations, net of income tax
provision of $2,228, $4,243, $2,268 and $2,063. . . 4,414 6,663 4,447 3,443
-------- -------- --------- ---------
NET INCOME (LOSS) . . . . . . . . . . . . . . . . . . . . $(1,390) $ 3,348 $ (5,695) $ (4,482)
======== ======== ========= =========
Basic and diluted earnings per common share:
Loss from continuing operations. . . . . . . . . . . . $ (8.72) $ (5.03) $ (15.22) $ (12.01)
Income from disposed utility operations. . . . . . . . 6.63 10.11 6.67 5.22
-------- -------- --------- ---------
Net income (loss). . . . . . . . . . . . . . . . . . . $ (2.09) $ 5.08 $ (8.55) $ (6.79)
======== ======== ========= =========
</TABLE>
The accompanying notes are an integral part of these condensed consolidated
financial statements.
<PAGE>
<TABLE>
<CAPTION>
ENERGY CORPORATION OF AMERICA
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED - AMOUNTS IN THOUSANDS)
- --------------------------------------------------------------------------------------------------------
FOR THE SIX MONTHS ENDED
DECEMBER
1999 1998
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss from continuing operations. . . . . . . . . . . . . . . . . . . . . . $(10,142) $ (7,925)
Adjustment to reconcile net loss to net cash used by operating activities
Minority interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Depletion, depreciation and amortization. . . . . . . . . . . . . . . . . . 6,277 6,086
Gain on sale of assets. . . . . . . . . . . . . . . . . . . . . . . . . . . (5) (1,096)
Exploration and impairment. . . . . . . . . . . . . . . . . . . . . . . . . 1,969 2,553
Other, net. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (3,058) (614)
--------- ---------
(4,959) (989)
Changes in assets and liabilities:
Accounts receivable. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,873 116
Gas in storage . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (12) 2
Prepaid and other assets . . . . . . . . . . . . . . . . . . . . . . . . . . . 643 4,186
Accounts payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (3,692) (9,855)
Funds held for future distributions. . . . . . . . . . . . . . . . . . . . . . 78 (838)
Other. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (81) (4,969)
--------- ---------
Net cash used by operating activities from continuing operations. . . . . . (6,150) (12,347)
Net cash used by operating activities from disposed operations. . . . . . . (22,222) (15,419)
--------- ---------
Net cash used by operating activities . . . . . . . . . . . . . . . . . . . (28,372) (27,766)
--------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES
Expenditures for property, plant and equipment . . . . . . . . . . . . . . . . (7,178) (14,242)
Proceeds from sale of assets . . . . . . . . . . . . . . . . . . . . . . . . . 38 1,540
Notes receivable and other . . . . . . . . . . . . . . . . . . . . . . . . . . (273) (133)
--------- ---------
Net cash provided (used) by investing activities from continuing operations (7,413) (12,835)
Net cash used by investing activities from disposed operations. . . . . . . (18,585) (6,123)
--------- ---------
Net cash used by investing activities . . . . . . . . . . . . . . . . . . . (25,998) (18,958)
--------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from long-term debt . . . . . . . . . . . . . . . . . . . . . . . . . 2,500
Principal payment on long-term debt. . . . . . . . . . . . . . . . . . . . . . (4,029) (184)
Purchase of treasury stock and other financing activities. . . . . . . . . . . (211) (465)
Prepayment of future gas delivery. . . . . . . . . . . . . . . . . . . . . . . 10,000
Dividends. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (642)
--------- ---------
Net cash provided (used) by financing activities from continuing operations 5,760 1,209
Net cash provided by financing activities from disposed operations. . . . . 49,817 29,403
--------- ---------
Net cash provided by financing activities . . . . . . . . . . . . . . . . . 55,577 30,612
--------- ---------
Net increase (decrease) in cash and cash equivalents. . . . . . . . . . . . 1,207 (16,112)
Cash and cash equivalents, beginning of period. . . . . . . . . . . . . . . 13,101 20,485
--------- ---------
Cash and cash equivalents, end of period. . . . . . . . . . . . . . . . . . . . . $ 14,308 $ 4,373
========= =========
</TABLE>
The accompanying notes are an integral part of these condensed consolidated
financial statements.
<PAGE>
ENERGY CORPORATION OF AMERICA
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1999
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 American"). The Company is an independent integrated
energy company. All references to the "Company" include Energy Corporation of
America and its consolidated subsidiaries.
Oil and Gas Exploration, Development, Production and Marketing - The Company,
- -----------------------------------------------------------------
primarily through Eastern American, is engaged in exploration, development and
production, transportation and marketing of natural gas primarily within the
Appalachian Basin states of West Virginia, Pennsylvania and Ohio.
The Company, through its wholly owned subsidiaries Westech Energy Corporation
and Westech Energy New Zealand, is engaged in the exploration for and production
of oil and natural gas primarily in the Rocky Mountains, New Zealand and
Australia.
2. Accounting Policies
Reference is hereby made to the Company's Annual Report on Form 10-K for 1999,
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 report 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 period ended December 31, l999 are not necessarily indicative
of the results to be expected for the full year.
Certain amounts in the financial statements of prior periods have been
reclassified to conform to the current period presentation. In addition, due to
the sale of the utility operations, see Note 4, amounts in the financial
statements and related notes for all periods presented have been reclassified.
3. Recently Issued Accounting Pronouncements
The Company adopted Statement of Financial Accounting Standards ("SFAS") No.
130, "Reporting Comprehensive Income", effective July 1, 1998. The standard
establishes rules for the reporting of comprehensive income and its components.
The Company's comprehensive income (loss) consists of foreign currency
translation adjustments.
In June 1998, SFAS No. 133, "Accounting for Derivative Instruments and Hedging
Activities" was issued, which is effective for all fiscal quarters of all fiscal
years beginning after June 15, 2000. SFAS No. 133 establishes accounting and
reporting standards for derivative instruments, including certain derivative
instruments embedded in other contracts, and hedging activities. It requires
the recognition of all derivative instruments as assets or liabilities in the
Company's balance sheet and measurement of those instruments at fair value. The
accounting treatment of changes in fair value is dependent upon whether or not a
derivative instrument is designated as a hedge and if so, the type of hedge.
The Company has not fully analyzed what impact the provisions of SFAS No. 133
will have on the Company's financial statements.
<PAGE>
4. Disposal of Utility Operations
On December 20, 1999, the Company agreed to sell its utility operations,
Mountaineer Gas Company and its Subsidiaries ("Mountaineer"), to Allegheny
Energy, Inc. ("Allegheny") pursuant to a stock purchase agreement for $323
million, which includes the assumption of approximately $100 million of long
term debt and is subject to certain adjustments, resulting in net proceeds of
$223 million prior to other adjustments. The transaction is conditioned upon
the prior receipt of regulatory approval, including the approval of the
Securities and Exchange Commission pursuant to the Public Utility Holding
Company Act of 1935, the West Virginia Public Service Commission and the Federal
Trade Commission. The Company has also entered into a gas sale and purchase
agreement with Allegheny whereby it will begin the delivery of natural gas
beginning on or after July 1, 2001. The Company has received a $10 million
prepayment pursuant to the agreement, which is recorded as long term deferred
revenue on the balance sheet. Potentially, the Company has the ability to
receive additional prepayments up to $20 million, pending the ability to present
a letter of credit equal to the prepayment.
The utility operations have historically been reported as a separate segment.
As a result of the sale, its disposition is considered, for accounting purposes,
to be a discontinued operation. Accordingly, amounts in the financial
statements and related notes for all periods presented have been restated.
Summarized financial statements for the utility operations is as follows, in
thousands:
<TABLE>
<CAPTION>
<S> <C> <C>
December 31, 1999 June 30, 1999
ASSETS
Cash and cash equivalents . . . . $ 1,495 $ 457
Accounts receivable . . . . . . . 34,439 22,117
Prepaid and other current assets. 33,002 24,682
------------------ --------------
Total current assets . . . . . 68,936 47,256
Property, plant and equipment . . 168,747 156,873
Deferred utility charges. . . . . 17,558 18,785
Other . . . . . . . . . . . . . . 2,719 2,674
------------------ --------------
TOTAL. . . . . . . . . . . . . . . . $ 257,960 $ 225,588
================== ==============
LIABILITIES AND STOCKHOLDERS' EQUITY
Accounts payable. . . . . . . . . $ 10,785 $ 24,575
Short term borrowings . . . . . . 26,827 16,799
Other current liabilities . . . . 19,566 18,596
------------------ --------------
Total current liabilities. . . 57,178 59,970
Long-term debt. . . . . . . . . . 100,124 60,135
Deferred income tax liability . . 22,426 22,991
Other long-term obligation. . . . 11,122 10,819
------------------ --------------
Total liabilities. . . . . . . 190,850 153,915
Total Stockholders' equity . . 67,110 71,673
------------------ --------------
TOTAL. . . . . . . . . . . . . . . . $ 257,960 $ 225,588
================== ==============
</TABLE>
<TABLE>
<CAPTION>
For the Three For the Six
Months Ended Months Ended
December 31 December 31
----------------- -----------------
<S> <C> <C> <C> <C>
1999 1998 1999 1998
REVENUES:
Utility gas sales and transportation. . $53,927 $53,171 $70,833 $67,034
Other revenue . . . . . . . . . . . . . 1,885 3,603 5,469 7,001
-------- ------- -------- --------
55,812 56,774 76,302 74,035
-------- ------- -------- --------
COST AND EXPENSES:
Utility gas purchased . . . . . . . . . 28,936 25,323 33,387 32,741
Utility operations and maintenance. . . 5,328 4,995 10,912 10,579
General and administrative. . . . . . . 3,838 3,666 6,542 6,358
Depreciation of pipelines and equipment 3,771 3,345 5,159 4,622
Other . . . . . . . . . . . . . . . . . 5,139 6,636 9,713 10,922
-------- ------- -------- --------
47,012 43,965 65,713 65,222
-------- ------- -------- --------
Income from operations. . . . . . . . . 8,800 12,809 10,589 8,813
-------- ------- -------- --------
OTHER (INCOME) EXPENSE
Interest. . . . . . . . . . . . . . . . 2,227 1,789 3,992 3,358
Other . . . . . . . . . . . . . . . . . (69) 114 (118) (51)
-------- ------- -------- --------
Income before income taxes. . . . . . . 6,642 10,906 6,715 5,506
Provision for income taxes . . . . . . . . 2,228 4,243 2,268 2,063
-------- ------- -------- --------
NET INCOME . . . . . . . . . . . . . . . . $ 4,414 $ 6,663 $ 4,447 $ 3,443
======== ======= ======== ========
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
For the Six Months Ended
December
------------------------
<S> <C> <C>
1999 1998
CASH FLOWS FROM OPERATING ACTIVITIES
Net income. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 4,447 $ 3,443
Adjustment to reconcile earnings to net cash used by operating activities
Depletion, depreciation and amortization . . . . . . . . . . . . . . . 5,159 4,622
Other, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (9,221) (10,082)
Changes in assets and liabilities:
Current assets. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (11,957) (7,414)
Current liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . (9,972) (6,259)
--------- ---------
Net cash used by operating activities. . . . . . . . . . . . . . . . . (21,544) (15,690)
--------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES
Expenditures for property, plant and equipment. . . . . . . . . . . . . . (18,585) (6,123)
--------- ---------
Net cash used by investing activities. . . . . . . . . . . . . . . . . (18,585) (6,123)
--------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from long-term debt. . . . . . . . . . . . . . . . . . . . . . . 40,000
Net short term borrowings . . . . . . . . . . . . . . . . . . . . . . . . 10,028 29,403
Debt issuance costs . . . . . . . . . . . . . . . . . . . . . . . . . . . (211)
Dividends to parent company . . . . . . . . . . . . . . . . . . . . . . . (8,650) (7,500)
--------- ---------
Net cash provided by financing activities. . . . . . . . . . . . . . . 41,167 21,903
--------- ---------
Net increase in cash and cash equivalents. . . . . . . . . . . . . . . 1,038 90
Cash and cash equivalents, beginning of period . . . . . . . . . . . . 457 1,062
--------- ---------
Cash and cash equivalents, end of period . . . . . . . . . . . . . . . . . . $ 1,495 $ 1,152
========= =========
</TABLE>
Mountaineer's various debt agreements contain certain restrictions and
conditions, including the restriction in the payment of dividends to the
Company. As of December 31, 1999, approximately $2.2 million was available for
the declaration of dividends. Mountaineer's scheduled maturities of long term
debt for each of the periods indicated is as follows (in thousands):
<TABLE>
<CAPTION>
For the Quarter Ending:
<S> <C>
March 31, 2000. . . . . . $ 4
June 30, 2000 . . . . . . 4
September 30, 2000. . . . 4
December 31, 2000 . . . . 3
--------
Total current . . . . . . 15
March 31, 2001. . . . . . 4
June 30, 2001 . . . . . . 4
For the Fiscal Year Ending:
June 30, 2002 . . . . . . 3,348
June 30, 2003 . . . . . . 3,348
June 30, 2004 . . . . . . 3,348
June 30, 2005 . . . . . . 3,348
Thereafter. . . . . . . . 86,724
--------
Total. . . . . . . . . $100,139
========
</TABLE>
<PAGE>
5. Earnings per Share
A reconciliation of the components of basic and diluted net loss per common
share is as follows:
<TABLE>
<CAPTION>
Per-Share
Loss Shares Amount
------------- ------- --------
<S> <C> <C> <C>
Three months ended December 31, 1999
Basic and Diluted Earnings per Share
Loss from continuing operations available to
common shareholders . . . . . . . . . . . $ (5,804,000) 665,683 $ (8.72)
Six months ended December 31, 1999
- -------------------------------------------------
Basic and Diluted Earnings per Share
Loss from continuing operations available to
common shareholders . . . . . . . . . . . $(10,142,000) 666,407 $(15.22)
Three months ended December 31, 1998
- -------------------------------------------------
Basic and Diluted Earnings per Share
Loss from continuing operations available to
common shareholders . . . . . . . . . . . $ (3,315,000) 659,105 $(5.03)
Six months ended December 31, 1998
- -------------------------------------------------
Basic and Diluted Earnings per Share
Loss from continuing operations available to
common shareholders . . . . . . . . . . . $ (7,925,000) 659,860 $(12.01)
</TABLE>
The effect of outstanding stock options during the current period was not
included in the computation of diluted earnings per share because to do so would
have been antidilutive. There were no stock options exercisable during the
prior period.
6. The Company adopted SFAS No. 131, "Disclosures About Segments of an
Enterprise and Related Information," in fiscal 1999. The Company's reportable
business segments have been identified based on the differences in products and
service provided. Revenues for the exploration and production segment are
derived from the production and sale of natural gas and crude oil. Revenues for
the marketing and pipeline segment arise from the marketing of both Company and
third party produced natural gas volumes and the related transportation. The
Company utilizes earnings before interest, taxes, depreciation, depletion,
amortization and exploratory costs ("EBITDAX") to evaluate the operations of
each segment.
<PAGE>
Summarized financial information for the Company's reportable segments for
continuing operations is as follows (in thousands):
<TABLE>
<CAPTION>
Exploration Marketing
and and
Production Pipeline Other Consolidated
------------ ---------- -------- -------------
<S> <C> <C> <C> <C>
For the six months ended December 31, 1999
Sales to unaffiliated customers. . . . . . $ 14,480 $ 38,840 $ 53,320
Intersegment revenues. . . . . . . . . . . -
Depreciation, depletion, amortization. . . 5,183 516 179 5,878
Exploratory costs. . . . . . . . . . . . . 2,938 2,938
Operating profit (loss). . . . . . . . . . (929) (445) (2,111) (3,485)
Interest expense . . . . . . . . . . . . . 26 2 11,487 11,515
EBITDAX. . . . . . . . . . . . . . . . . . 7,527 (106) (1,480) 5,941
Total assets . . . . . . . . . . . . . . . 124,327 59,193 29,836 213,356
Capital expenditures . . . . . . . . . . . 7,057 92 29 7,178
- ------------------------------------------- ------------ ---------- -------- -------------
For the six months ended December 31, 1998
- -------------------------------------------
Sales to unaffiliated customers. . . . . . 13,085 44,825 191 58,101
Intersegment revenues. . . . . . . . . . . 7,194 7,194
Depreciation, depletion, amortization. . . 4,959 556 171 5,686
Exploratory costs. . . . . . . . . . . . . 2,811 2,811
Operating profit (loss). . . . . . . . . . (1,437) 250 (1,958) (3,145)
Interest expense . . . . . . . . . . . . . 60 1 9,991 10,052
EBITDAX. . . . . . . . . . . . . . . . . . 8,166 665 (1,595) 7,236
Total assets . . . . . . . . . . . . . . . 88,369 62,539 53,731 204,639
Capital expenditures . . . . . . . . . . . 11,346 315 2,581 14,242
- ------------------------------------------- ------------ ---------- -------- -------------
</TABLE>
Operating profit (loss) represents revenues less costs which are directly
associated with such operations. Revenues are priced and accounted for
consistently for both unaffiliated and intersegment sales. The 'Other' column
includes corporate-related items, including corporate debt, non-reportable
segments and elimination items. Included in the total assets of the exploration
and production segment are net long-lived assets located in New Zealand of $3.1
and $2.9 million, as of December 31, 1999 and 1998, respectively.
7. Debt
A rollforward of the debt from June 30, 1999 to December 31, 1999, is as follows
(in thousands):
<TABLE>
<CAPTION>
Current
Portion Long Long Term Total Long
Term Debt Debt Term Debt
-------------- ----------- -----------
<S> <C> <C> <C>
Balance at June 30, 1999 . . . $ 6,618 $ 219,886 $ 226,504
Long term debt payment . . . (4,029) (4,029)
Reclassify long term debt to
current portion . . . . . 255 (255)
-------------- -----------
Balance at December 31, 1999 . $ 2,844 $ 219,631 $ 222,475
============== =========== ===========
</TABLE>
<PAGE>
The Company's scheduled maturities of long term debt for each of the periods
indicated is as follows (in thousands)
<TABLE>
<CAPTION>
<S> <C>
For the Quarter Ending:
March 31, 2000. . . . . . $ 906
June 30, 2000 . . . . . . 902
September 30, 2000. . . . 893
December 31, 2000 . . . . 143
--------
Total current . . . . . . 2,844
March 31, 2001. . . . . . 28
June 30, 2001 . . . . . . 28
For the Fiscal Year Ending:
June 30, 2002 . . . . . . 19,113
June 30, 2003 . . . . . . 113
June 30, 2004 . . . . . . 113
June 30, 2005 . . . . . . 113
Thereafter. . . . . . . . 200,123
--------
Total. . . . . . . . . $222,475
========
</TABLE>
The Company's various debt agreements contain certain restrictions and
conditions among which are limitations on indebtedness, funding of certain
subsidiaries, dividends and investments, and certain tangible net worth and debt
and interest coverage ratio requirements. The agreements require the Company to
maintain certain financial conditions, including a minimum net worth,
restriction on funded debt and restrictions on the amount of dividends that can
be declared.
8. 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.
<PAGE>
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF
------- --------------------------------------------------
OPERATIONS AND FINANCIAL CONDITION
----------------------------------
This discussion and analysis of financial condition and results of
operations, and other sections of this Form 10-Q, contain forward-looking
statements that are based on management's beliefs, assumptions, current
expectations, estimates and projections about the oil and gas industry, the
economy and about the Company itself. Words such as "anticipates," "believes,"
"estimates," "expects," "forecasts," "intends," "is likely," "plans,"
"predicts," "projects," variations of such words and similar expressions are
intended to identify such forward-looking statements. These statements are not
guarantees of future performance and involve certain risks, uncertainties and
assumptions that are difficult to predict with regard to timing, extent,
likelihood and degree of occurrence. Therefore, actual results and outcomes may
materially differ from what may be expressed or forecasted in such
forward-looking statements. Furthermore, the Company undertakes no obligation
to update, amend or clarify forward-looking statements, whether as a result of
new information, future events or otherwise.
Important factors that could cause actual results to differ materially from
the forward-looking statements include, but are not limited to, weather
conditions, changes in production volumes, worldwide demand and commodity prices
for petroleum natural resources, the timing and extent of the Company's success
in discovering, acquiring, developing and producing oil and natural gas
reserves, risks incident to the drilling and operation of oil and natural gas
wells, future production and development costs, the effect of existing and
future laws, governmental regulations and the political and economic climate of
the United States and New Zealand, the effect of hedging activities, and
conditions in the capital markets.
DISPOSAL OF UTILITY OPERATIONS
- ---------------------------------
On December 20, 1999, the Company entered into a stock purchase and sale
agreement, a copy of which was filed on the Company's form 8-K filed January 10,
2000, with Allegheny Energy, Inc., wherein the Company agreed to sell all of the
stock its wholly owned utility, Mountaineer Gas Company and Subsidiaries for
$323 million, which includes the assumption of approximately $100 million of
debt, ($223 million net to the Company). The sale is subject to regulatory
approval by the Securities and Exchange Commission pursuant to the Public
Utility Holding Company Act of 1935, the West Virginia Public Service Commission
and the Federal Trade Commission. Subject to the noted approvals being
received, the Company expects that the transaction will close in the fourth
quarter of the current fiscal year. At this time, the Company expects to
realize an after-tax gain of approximately $100 million on this transaction and
to net approximately $175 million in cash proceeds from this sale.
The financial statements have been reclassified to exclude the operating
results of this segment from continuing operations, effective December 31, 1999,
and for accounting purposes classify such results as discontinued operations
(see Note 4). The following discussion, unless otherwise noted, relates only to
the Company's continuing operations.
COMPARISON OF RESULTS OF OPERATIONS FOR THE THREE MONTHS ENDED DECEMBER 31, 1999
- --------------------------------------------------------------------------------
AND 1998
- ---------
The Company recorded a net loss from continuing operations of $5.8 million for
the three months ended December 31, 1999 compared to a net loss from continuing
operations of $3.3 million for the same period in 1998. The decrease in income
of $2.5 million is attributed to the net of a $3.4 million decrease in revenue,
a $1.7 million decrease in operating expenses, a $0.5 million decrease in other
non-operating income, a $1.2 million increase in interest expense and a $0.8
million increase in income tax benefits.
<PAGE>
REVENUES. Total revenues decreased $3.4 million or 11.4% between the periods.
- --------
The decrease was due to a 17.0% decrease in gas marketing and pipeline sales,
which was offset by an 11.5% increase in oil and gas sales. Well and service
operating revenue and other operating revenue remained relatively constant
between the periods.
Revenues from gas marketing and pipeline sales decreased $4.0 million from
$23.2 million during the period ended December 31, 1998 to $19.2 million during
the period ended December 31, 1999. The decrease in revenue is primarily
attributable to a 27% decline in marketed gas volumes from 9.3 million Mmbtu to
6.8 million Mmbtu, partially offset by a 13% increase in the average sales price
per Mmbtu from $2.44 for the quarter ended December 31, 1998 to $2.75 for the
quarter ended December 31, 1999. The decline in volumes for the quarter ended
December 31, 1999 was partially attributable to the expiration of contracts,
which accounted for $4.2 million in sales and 2.0 Bcfe. Also contributing to
the decreased revenue is the reduction of trading activity volumes as a result
of the marketing focus change. At the end of the last fiscal year, it was
decided that the Company would no longer enter into contracts to purchase and
resell independent producers gas, as this business was becoming more competitive
and less economical to maintain.
Revenues from oil and gas sales increased $0.5 million from $4.9 million
for the period ended December 31, 1998 to $5.4 million for the period ended
December 31, 1999. The increase in revenue is primarily attributable to a
166.7% increase in the average per barrel oil price from $8.09 to $21.57 and a
12.6% increase in the average per Mcf gas price from $2.25 to $2.54 between
December 31, 1998 and 1999. Mcfe production volumes were comparable between
periods.
COSTS AND EXPENSES. The Company's costs and expenses decreased $2.3
--------------------
million or 7.5% during this period primarily as the result of a 15.10% decrease
in gas marketing and pipeline costs offset by a 139.3% increase in impairment
and exploratory costs. Field and lease operating expenses, general and
administrative expenses, taxes other than income and depreciation, depletion and
amortization costs remained relatively constant between the periods.
The $3.4 million decrease in gas marketing and pipeline costs is primarily
the result of a 30.0% decline in purchased gas volumes from 8.6 Bcfe to 6.1 Bcfe
from December 31, 1998 to December 31, 1999. Partially offsetting this decline
in costs was a 12.7% increase in the average price paid for gas purchased, from
$2.44 per Mmbtu to $2.75 per Mmbtu between periods.
Impairment and exploratory expenses increased $1.0 million primarily due to
seismic activity and dry holes in New Zealand.
INTEREST EXPENSE. Interest expense increased $1.2 million between the periods
- -----------------
due to the net addition to long-term debt, including the current portion, of
$18.1 million, when comparing December 31, 1999 to December 31, 1998.
BENEFIT FOR INCOME TAXES. The benefit for income taxes increased $0.8
---------------------------
million primarily because of the increased pre-tax loss.
DISPOSAL OF UTILITY OPERATIONS. Net income from the utility operations
- ---------------------------------
decreased between the periods $2.2 million or 33.8%. The decrease was primarily
the result of increased utility gas purchased and interest expense. The utility
gas purchased costs increased $3.6 million primarily due to a gas supply
agreement, effective November 1, 1998, in which the demand costs associated with
transmission services are included in a fixed price per Dth delivered to
Mountaineer's city gate rather than the previous fixed monthly charge. Interest
expense increased $0.4 million due primarily to the additional debt issued
November 1, 1999 of $10 million at 7.83% interest and $30 million at 8.09%
interest.
<PAGE>
COMPARISON OF RESULTS OF OPERATIONS FOR THE SIX MONTHS ENDED DECEMBER 31, 1999
- --------------------------------------------------------------------------------
AND 1998
- ---------
The Company recorded a net loss from continuing operations of $10.1 million for
the six months ended December 31, 1999 compared to a net loss from continuing
operations of $7.9 million for the same period in 1998. The decrease in income
of $2.2 million is attributed to the net of a $12.0 million decrease in revenue,
an $11.6 million decrease in operating expenses, a $1.3 million decrease in
other non-operating income, a $1.5 million increase in interest expense and a
$0.9 million increase in income tax benefits.
REVENUES. Total revenues decreased $12.0 million or 18.3% between the periods.
- --------
The decrease was due to a 25.3% decrease in gas marketing and pipeline sales,
which was offset by a 16.3% increase in oil and gas sales. Well and service
operating revenue and other operating revenue remained relatively constant
between the periods.
Revenues from gas marketing and pipeline sales decreased $13.2 million from
$52.0 million during the period ended December 31, 1998 to $38.8 million during
the period ended December 31, 1999. The decrease in revenue is primarily
attributable to a 37% decline in marketed gas volumes from 22.1 million Mmbtu to
13.9 million Mmbtu, partially offset by an 18% increase in the average sales
price per Mmbtu from $2.31 for the six months ended December 31, 1998 to $2.73
for the six months ended December 31, 1999. The decline in volumes for the
period ended December 31, 1999 was partially attributable to the expiration of
contracts, which accounted for $16.6 million in sales and 8.5 Bcfe. Also
contributing to the decreased revenue is the reduction of trading activity
volumes as a result of the marketing focus change. At the end of the last
fiscal year, it was decided that the Company would no longer enter into
contracts to purchase and resell independent producers gas, as this business was
becoming more competitive and less economical to maintain.
Revenues from oil and gas sales increased $1.6 million from $9.7 million
for the period ended December 31, 1998 to $11.3 million for the period ended
December 31, 1999. The increase in revenue is primarily attributable to a 94.9%
increase in the average per barrel oil price from $9.93 to $19.35 and an 18.0%
increase in the average per Mcf gas price from $2.22 to $2.62 between December
31, 1998 and 1999. Mcfe production volumes were comparable between periods.
COSTS AND EXPENSES. The Company's costs and expenses decreased $12.2
--------------------
million or 17.8% during this period primarily as the result of a 24.5% decrease
in gas marketing and pipeline costs. Field and lease operating expenses,
general and administrative expenses, taxes other than income, depreciation,
depletion and amortization and impairment and exploratory costs remained
relatively constant between the periods.
The $12.3 million decrease in gas marketing and pipeline costs is primarily
the result of a 39.8% decline in purchased gas volumes from 20.6 Bcfe to 12.4
Bcfe from December 31, 1998 to December 31, 1999. Partially offsetting this
decline in costs was a 17.2% increase in the average price paid for gas
purchased, from $2.32 per Mmbtu to $2.72 per Mmbtu between periods.
INTEREST EXPENSE. Interest expense increased $1.5 million between the
-----------------
periods due to the net addition to long-term debt, including the current
portion, of $18.1 million, when comparing December 31, 1999 to December 31,
1998.
<PAGE>
OTHER (INCOME) EXPENSE. Other income decreased $1.3 million primarily due
-----------------------
to the recognition of gains on the sale of property during the prior period.
BENEFIT FOR INCOME TAXES. The benefit for income taxes increased $0.9
---------------------------
million primarily because of the increased pre-tax loss.
DISPOSAL OF UTILITY OPERATIONS. Net income from the utility operations
- ---------------------------------
increased between the periods $1.0 million or 29.2%. The increase was primarily
due to increased volumes of gas sold resulting from the acquisition of the West
Virginia assets of Shenandoah Gas Company, which included approximately 3,600
additional customers. The increase in revenues was partially offset by
increased utility gas purchased and interest expense. The utility gas purchased
costs increased $0.6 million primarily due to increased volumes purchased. This
increase was partially offset by a $2.1 million refund from Mountaineer's
primary transmission service provider and a gas supply agreement, effective
November 1, 1998, in which the demand costs associated with transmission
services are included in a fixed price per Dth delivered to Mountaineer's city
gate rather than the previous fixed monthly charge. Interest expense increased
$0.6 million primarily due to the additional debt issued November 1, 1999 of $10
million at 7.83% interest and $30 million at 8.09% interest.
LIQUIDITY AND CAPITAL RESOURCES
- ----------------------------------
The Company's financial condition improved during the current six month
period, as the ratio of current assets to current liabilities (excluding "net
utility assets held for sale" of $66.1 million for the current period and $70.6
million for the period ended June 30,1999) improved from 1:1 at June 30, 1999 to
1.3:1 at December 31, 1999. The Company increased its cash and cash facilities
from $13.1 million at June 30, 1999 to $14.3 million at December 31, 1999.
The Company's net cash used by operating activities decreased from $12.3
million for the six month period ended December 31, 1998 ("prior period") to
$6.1 million for the six month period ended December 31, 1999 ("current
period"). The primary sources of cash from continuing operations for the
current period versus the prior period were net income (loss) (plus non-cash
charges for one-time items, depreciation, depletion and amortization, etc.) of
($1.4) million and $1.0 million, decreases in accounts receivable of $1.9
million and $0.1 million, and gas in storage and prepaids of $0.6 million and
$4.2 million, respectively. These sources were primarily offset by decreases in
accounts payable of $3.7 million and $9.9 million and decreases of $3.5 million
and $7.8 million in funds held and other accrued expenses for the periods,
respectively.
The Company incurred a net cash outflow of $7.4 million from investing
activities for the current period versus a cash outflow of $12.8 million in the
prior period. Capital expenditure activities of $7.2 million and $14.2 million,
respectively, were related primarily to oil and gas drilling activities.
Investing activities cash used in the prior period was offset by $1.5 million of
cash received from miscellaneous asset sales.
The Company s financing activities in the current period resulted in the
Company's revolving credit facility being reduced by $4 million. This debt
reduction will not be available to draw upon in future periods under the
Company's amended and restated credit facility. In addition, during the current
period the Company purchased $0.2 million in treasury stock. The net cash
inflow of $5.8 million for the current period resulted from the receipt of $10
million in the form of a prepayment under a gas sale agreement (See Note 4).
The primary sources of cash from financing activities in the prior period were
net borrowings of $2.5 million offset by treasury stock purchases of $0.5
million and dividend payments of $0.6 million.
<PAGE>
At December 31, 1999, the Company's principal sources of liquidity
consisted of $14.3 million of cash, and approximately $2.0 million of available
credit facilities. The Company has a $19.0 million revolving line of credit
agreement that will be subject to a borrowing base redetermination by the
lenders on June 30, 2000 and which expires in March 2003. Under this credit
facility, $21.3 million was outstanding at December 31, 1999, which will be
reduced by September 30, 2000 to $19.0 million, the amount of the borrowing
base. The Company is highly leveraged with a debt to equity ratio of 25 to 1 at
December 31, 1999. On October 12, 1999, Moody's Investor Service downgraded the
credit rating of the Company's Senior Subordinated Notes to Caa1 and Standard
and Poor's lowered its credit rating on these notes to single 'B' minus. In the
event that the sale of Mountaineer and Subsidiaries receives regulatory approval
and the transaction closes as discussed herein, the debt to equity ratio of the
Company will improve to an estimated 1.8 to 1.
Pursuant to the terms of the Company's $200 million Senior Subordinated
Notes (the "Notes"), the Company has the option within 360 days of receipt of
the net proceeds from the sale of the stock of Mountaineer to apply such
proceeds (a) to reduce debt senior to or pari passu with the Notes, provided
that in connection with the reduction of pari passu debt a pro rata portion of
the Notes is redeemed; (b) to acquire a controlling interest in another business
engaged in either natural gas distribution or the exploration, development or
operation of oil, gas or other hydrocarbon properties (an "Energy Business");
(c) to make capital expenditures in respect to the Company's or its restricted
subsidiaries' Energy Business; to purchase long term assets that are used or
useful in the Energy Business; or (e) to repurchase the Notes. If the Company
does not apply all of the net proceeds in accordance with one of the above
options within 360 days of receipt of such proceeds, then with respect to those
net proceeds which were not applied to one of the above options, the Company
must make an offer to the holders of the Notes, (and holders of the pari passu
debt, to the extent required by the terms of the pari passu debt) to repurchase
the maximum principal amount of the Notes and any pari passu debt at an offer
price in cash equal to 100% of the principal amount thereof, plus accrued and
unpaid interest thereon to the date of the purchase.
It is the intention of the Company to seek to reinvest such proceeds into Energy
Business assets. A component of the Company's reinvestment strategy will be to
expand its exploration and development activities, both domestically and
internationally. In addition to the Company's exploration and development
drilling activities associated with this reinvestment program, the Company will
seek to satisfy the reinvestment requirement by engaging in acquisitions of
utility assets or oil and natural gas reserves and properties. There can be no
assurance that the Company will be able to acquire exploration or development
drilling opportunities or to identify acquisition candidates in the required 360
day time period. Further, there can be no assurance that the drilling
activities associated with the reinvestment program will achieve commercial
success or that any future acquisitions made by the Company will achieve desired
profitability objectives. In addition to cash and available credit facilities,
the Company may from time to time seek to raise additional capital in the debt
and capital markets. The availability and attractiveness of such sources of
financing will depend upon a number of factors, some of which will relate to the
financial condition and performance of the Company, and some of which will be
beyond the Company's control, such as prevailing interest rates, oil and gas
prices, weather patterns, credit agency rating reports and other market
conditions. The Company's liquidity is directly affected by such factors.
Other than the reinvestment program described above, the timing of the Company's
capital expenditures is mostly discretionary with no material capital
expenditure commitments. Consequently, the Company has a significant degree of
flexibility to adjust its level of such expenditures as circumstances warrant.
Although the Company's cash requirements will fluctuate based on timing and the
extent of the interplay of the factors discussed above, management believes that
cash generated from operations, proceeds from the sale of Mountaineer, together
with the liquidity provided by existing cash balances and borrowing capability,
will be sufficient to satisfy commitments for capital expenditures, debt service
obligations, working capital needs and other cash requirements for the next
year.
<PAGE>
The Company believes that its existing capital resources, its mitigating
management efforts, and its expected fiscal year 2000 results of operations and
cash flows from operating activities will be sufficient for the Company to
remain in compliance with the requirements of its Senior Subordinated Debt and
its Revolving Credit Facility. However, since the expected fiscal year 2000
results of operations and cash flow from operating activities, debt service
capability, and levels and availability of capital resources and continuing
liquidity are dependent on future weather patterns, maintaining current levels
of oil and gas commodity sales prices and future exploration and development
drilling success, the Company can give no assurance that such expectations will
be realized or that debt service or debt covenant violations will not occur. In
such instances, the Company may elect to increase debt levels, restructure debt
agreements (including debt agreements with additional lenders), sell core and
non-core assets, defer discretionary capital expenditures, curtail certain
domestic and international oil and gas programs or take other actions necessary
to mitigate liquidity short-falls and debt agreement violations or acquire new
or additional capital resources, although no assurances can be given that such
actions will be successful.
YEAR 2000 COMPLIANCE. The Company has not experienced significant year
----------------------
2000 issues as steps were taken to ensure its systems were compliant. These
steps include the purchase and implementation of an integrated application
software package, which together with the associated hardware and external
consulting resources has cost, to date, approximately $6.8 million. In
addition, the Company completed modification of existing operating and
application systems that were not Year 2000 compliant. The costs associated
with the modification of existing information systems consisted primarily of
personnel expense for staff dedicated to the effort. The Company's policy is to
expense these costs as incurred. The Company also has invested in new or
upgraded technology, which has definable value lasting beyond 2000. In these
instances, such as the implementation of the integrated software application
discussed above, the Company is capitalizing and depreciating such costs over
their estimated useful life. In addition, the Company has not experienced any
problems due to its significant suppliers, vendors or customers experiencing
Year 2000 issues.
<PAGE>
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) Reports on Form 8-K. The Company filed a report on Form 8-K, Item 5,
dated January 10, 2000, reporting the arrangement to enter into a stock
purchase agreement to sell its utility operations, Mountaineer Gas Company, to
Allegheny Energy, Inc.
<PAGE>
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 under
signed thereunto, duly authorized, in the City of Denver, State of Colorado, on
the 14th day of February, 2000.
ENERGY CORPORATION OF AMERICA
By: /s/John Mork
------------------
John Mork
Chief Executive Officer
and Director
By: /s/Michael S. Fletcher
----------------------------
Michael S. Fletcher
Chief Financial Officer
and Treasurer
<PAGE>
EXHIBIT INDEX
Exhibit
Number Description
- ------ -----------
27 Financial Data Schedule
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM CONSOLIDATED
BALANCE SHEETS AND STATEMENTS OF OPERATIONS ON PAGES 3-6 OF THE COMPANY'S
DECEMBER 31, 1999 FORM 10-Q AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO
SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> JUN-30-2000
<PERIOD-START> SEP-30-1999
<PERIOD-END> DEC-31-1999
<CASH> 14308
<SECURITIES> 0
<RECEIVABLES> 13475
<ALLOWANCES> 429
<INVENTORY> 369
<CURRENT-ASSETS> 97690
<PP&E> 245229
<DEPRECIATION> 87243
<TOTAL-ASSETS> 279448
<CURRENT-LIABILITIES> 24581
<BONDS> 219631
0
0
<COMMON> 721
<OTHER-SE> 8275
<TOTAL-LIABILITY-AND-EQUITY> 279448
<SALES> 26275
<TOTAL-REVENUES> 26275
<CGS> 20883
<TOTAL-COSTS> 28942
<OTHER-EXPENSES> (398)
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 6177
<INCOME-PRETAX> (8446)
<INCOME-TAX> (2642)
<INCOME-CONTINUING> (5804)
<DISCONTINUED> 4414
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (1390)
<EPS-BASIC> (2.09)
<EPS-DILUTED> (2.09)
</TABLE>
