<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM 10-Q
QUARTERLY REPORT UNDER SECTION 13 or 15 (d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For Quarter Ended March 31, 1996 Commission file number 0-449
- --------------------------------------------------------------------------------
FALL RIVER GAS COMPANY
- --------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Massachusetts 04-1298780
- --------------------------------------------------------------------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Indentification No.)
155 North Main Street, Fall River, Massachusetts 02722
- --------------------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code 508-675-7811
- -----------------------------------------------------------------
"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 / /."
Indicate the number of shares outstanding of each of the issuer's classes
of common stock, as of the close of the period covered by this report.
Class Outstanding at March 31,1996
- ----------------------------------- ----------------------------
Common stock,par value of $.83 1\3 1,780,542 shares
<PAGE> 2
FALL RIVER GAS COMPANY
----------------------
INDEX
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Page No.
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Part. I. Financial Position
Consolidated Condensed Balance Sheets -
March 31, 1996 and September 30, 1995 1
Consolidated Condensed Statements of Income -
Six Months Ended March 31, 1996 and 1995 2
Consolidated Statments of Cash Flows -
Six Months Ended March 31, 1996 and 1995 3
Management's discussion and Analysis of the
Consolidated Condensed Statements of Income 4
Notes to Consolidated Condensed Financial Statements 5
Part II. Other Information 5
<PAGE> 3
PART I. FINANCIAL INFORMATION
------------------------------------------
FALL RIVER GAS COMPANY AND SUBSIDIARY
------------------------------------------
<TABLE>
CONSOLIDATED CONDENSED BALANCE SHEETS
------------------------------------------
<CAPTION>
MARCH 31, SEPTEMBER 30,
ASSETS 1996 1995
------ ----------- -----------
<S> <C> <C>
Gas Plant, at original cost $54,398,265 $52,770,211
less accumulated depreciation 17,428,445 16,561,747
----------- -----------
36,969,820 36,208,464
----------- -----------
Rental Property 4,878,117 4,852,644
less accumulated depreciation 2,171,786 2,239,952
----------- -----------
2,706,331 2,612,692
----------- -----------
Other Investments 364,751 320,354
----------- -----------
Current Assets:
Cash 144,842 112,124
Interest-bearing deposits 306,647 203,185
Special deposits 142,000 170,700
Accounts receivable, less allowance for
doubtful accounts of $911,972 as of
3/31/96 and $953,365 as of 9/30/95 8,001,668 2,159,172
Inventories, at average cost
Merchandise 150,031 203,597
Liquefied natural gas and propane 1,436,698 2,754,655
Materials and Supplies 1,260,529 1,182,645
Purchased gas costs deferred 51,014 2,808,882
Prepayments 108,711 18,947
----------- -----------
11,602,140 9,613,907
----------- -----------
Deferred Charges:
Installation costs on leased appliances
being amortized over twenty years 1,184,469 1,216,877
Regulatory Asset 527,025 527,025
Other 115,378 457,189
----------- -----------
1,826,872 2,201,091
----------- -----------
$53,469,914 $50,956,508
=========== ===========
STOCKHOLDERS' INVESTMENT AND LIABILITIES
----------------------------------------
CAPITALIZATION:
Stockholders' investment--
Common stock, par value $.83-1/3 per share,
2,201,334 shares authorized and issued $ 1,834,445 $ 1,834,445
Premium paid in on common stock 1,356,043 1,356,043
Retained earnings ($4,374,576 restricted
against payment of cash dividends as
of 3/31/96 and 9/30/95) 12,430,746 11,149,260
----------- -----------
15,621,234 14,339,748
Less Treasury stock, at cost (420,792 shares
as of 3/31/96) 1,418,743 1,418,743
----------- -----------
14,202,491 12,921,005
----------- -----------
Long-term debt, less current sinking
fund requirements
First Mortgage Bonds--9.44% due 2020 6,500,000 6,500,000
----------- -----------
6,500,000 6,500,000
----------- -----------
Total capitalization 20,702,491 19,421,005
----------- -----------
CURRENT LIABILITIES:
Current sinking fund requirements 800,000 880,000
Notes payable to banks 15,800,000 15,600,000
Accounts Payable 5,888,301 3,585,300
Gas supplier refunds due customers 64,643 1,367,969
Accrued taxes 1,128,468 838,618
Other 1,663,604 1,893,347
----------- -----------
25,345,016 24,165,234
----------- -----------
DEFERRED CREDITS:
Accumulated deferred income taxes 3,905,118 3,905,118
Unamortized investment tax credits 586,674 605,653
Regulatory Liability 1,027,113 1,027,113
Other 1,903,502 1,832,385
----------- -----------
7,422,407 7,370,269
----------- -----------
$53,469,914 $50,956,508
=========== ===========
</TABLE>
See accompanying notes to consolidated condensed financial statements.
1
<PAGE> 4
SUMMARIZED FINANCIAL INFORMATION
------------------------------------------------
FALL RIVER GAS COMPANY AND SUBSIDIARY
------------------------------------------------
<TABLE>
CONSOLIDATED CONDENSED STATEMENTS OF INCOME AND RETAINED EARNINGS
- -------------------------------------------------------------------------------
<CAPTION>
Three Months Ended Six Months Ended
March 31 March 31
----------------------------- ----------------------------
1996 1995 1996 1995
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
GAS OPERATING REVENUES $22,373,255 $19,483,274 $33,827,857 $29,473,061
----------- ----------- ----------- -----------
OPERATING EXPENSES
Cost of gas sold 14,916,242 12,802,561 22,114,464 18,879,279
Other operation 2,894,073 2,609,739 5,744,751 4,914,092
Maintenance 466,906 407,037 991,671 990,165
Depreciation 831,020 767,193 1,189,500 1,098,139
General taxes 653,667 573,780 900,008 806,458
Federal income taxes 736,984 655,951 675,661 688,858
----------- ----------- ----------- -----------
Total operating expenses 20,498,892 17,816,261 31,616,055 27,376,991
----------- ----------- ----------- -----------
OPERATING INCOME 1,874,363 1,667,013 2,211,802 2,096,070
OTHER INCOME:
Net income of Fall River Gas Appliance
Company, Inc. (a wholly-owned subsidiary) 164,729 147,407 352,512 317,433
Other (3,681) 5,136 (3,754) 9,261
----------- ----------- ----------- -----------
GROSS INCOME 2,035,411 1,819,556 2,560,560 2,422,764
----------- ----------- ----------- -----------
INTEREST EXPENSE AND OTHER:
Interest on long-term debt 170,900 174,400 343,550 350,550
Other interest 249,693 195,529 508,193 360,006
----------- ----------- ----------- -----------
420,593 369,929 851,743 710,556
----------- ----------- ----------- -----------
NET INCOME 1,614,818 1,449,627 1,708,817 1,712,208
RETAINED EARNINGS - BEGINNING OF PERIOD 11,243,259 11,504,956 11,149,260 11,242,375
ADD - Dividends declared
September 19, 1995 and
September 20, 1994, payable
November 15, 1995 and 1994 0 0 427,330 427,330
DEDUCT - Dividends declared 427,330 427,330 854,660 854,660
----------- ----------- ----------- -----------
RETAINED EARNINGS - END OF PERIOD
($4,374,576 restricted against payment of
cash dividends as of 3/31/96 and 3/31/95) 12,430,747 12,527,253 12,430,747 12,527,253
=========== =========== =========== ===========
NET INCOME PER SHARE OF COMMON STOCK (based on
average number of shares outstanding at the
end of the respective periods) 0.91 0.81 0.96 0.96
=========== =========== =========== ===========
WEIGHTED AVERAGE NUMBER OF COMMON SHARES
OUTSTANDING DURING THE PERIOD 1,780,542 1,780,542 1,780,542 1,780,542
CASH DIVIDEND PAID PER COMMON SHARE 0.24 0.24 0.48 0.48
=========== =========== =========== ===========
</TABLE>
See accomparying notes condensed financial statements.
2
<PAGE> 5
FALL RIVER GAS COMPANY AND SUBSIDIARY
--------------------------------------------------------------------
<TABLE>
CONSOLIDATED STATEMENT OF CASH FLOWS
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<CAPTION>
Six Months Ended
March 31
---------------------------------------
1996 1995
------------ ------------
<S> <C> <C>
Cash Provided by (used for)
Operating Activities:
Net income $ 1,708,816 $ 1,712,208
Items not requiring (providing) cash:
Depreciation 1,361,055 1,271,555
Amortization of Installation Costs 63,678 55,326
Amortization of Investment Tax Credit (18,979) (19,024)
Change in working capital (792,271) 1,906,963
Other sources, net 234,085 (190,123)
----------- -----------
Net cash provided by
operating activities 2,556,384 4,736,905
----------- -----------
Investing Activities:
Additions to utility property, plant and equipment (1,856,032) (1,866,194)
Additions to nonutility property (256,842) (374,322)
----------- -----------
Net cash used by investing activities (2,112,874) (2,240,516)
----------- -----------
Financing activities:
Cash dividends on common stock (427,330) (427,330)
Retirement of long-term debt through sinking fund (80,000) (80,000)
Increase (Decrease) in notes payable to banks, net 200,000 (2,000,000)
----------- -----------
Net cash provided by (used for)
financing activities (307,330) (2,507,330)
----------- -----------
Increase (Decrease) in cash $ 136,180 ($10,941)
=========== ===========
Changes in Components of Working Capital
(excluding cash)
(Increase) decrease in current assets:
Special Deposits $ 28,700 $ 0
Accounts receivable (5,842,496) (4,378,195)
Inventories 1,293,639 1,392,010
Prepayments and other (89,764) (60,057)
Deferred gas cost 2,757,868 2,042,541
Increase (decrease) in current liabilities:
Accounts payable 2,303,001 1,282,889
Accrued taxes 289,850 1,036,000
Gas supplier refunds due customers (1,303,326) 654,366
Other (229,743) (62,591)
----------- -----------
Change in Working Capital ($792,271) $ 1,906,963
=========== ===========
Supplemental disclosure of cash flow information:
Cash paid during year for:
Interest $ 936,187 $ 496,489
Income taxes $ 830,573 $ 137,479
</TABLE>
See accompanying notes to consolidated condensed financial statements.
3
<PAGE> 6
FALL RIVER GAS COMPANY AND SUBSIDIARY
MANAGEMENT'S DISCUSSION AND ANALYSIS
Results of Operations
Gas operating revenues for the six months ended March 31, 1996 reflect an
increase of 14.8% or $4,355,000. Revenues grew from $27,583,000 recorded in 1995
to $31,953,000, mainly due to a 15% increase in firm sales volume. Firm sales
volume for six months ended March 31, 1996 is 4,461,906 MCF as compared to the
3,892,166 MCF reported in 1995. Along with the rise of firm sales, total sales
for the six month period which include Special Contract, Interruptible and
Transportation customers, increased 12.6% from 4,618,682 MCF to 5,199,632 MCF in
1996. During the six month period, revenues from the Cost of Gas Adjustment
Clause (CGAC) and the embedded cost of gas in the base rate increased by
$3,141,000. In accordance with the Company's approved CGAC increases or
decreases in the cost of gas sold continue to be passed directly to our Firm
customers, dollar for dollar. Colder weather is another factor in the increase
of operating revenues and firm sales volume. Degree Days in the six month
comparison increased 11.2% from 4,713 to 5,239.
During the second quarter of 1996 a higher CGAC decimal and increased Firm
sales resulted in increasing operating revenues $2,890,000 higher than the
comparable three months in 1995. Firm sales, as mentioned above, increased
14.1%, from 2,661,834 MCF in 1995 to 3,037,932 MCF in 1996, with revenues
increasing 15.5% from 18,449,000 in 1995 to 21,322,000 in 1996. Also aiding
operating revenues was a 8.9% increase in Degree Days for the quarter, from
2,911 in 1995 to 3,169 in 1996.
Total operating expenses, excluding federal and state income taxes, for the
six month comparisons reflected a 16.0% increase from $26,543,000 to
$30,798,000, an increase of $4,255,000. The most significant operation expense -
cost of gas sold - increased by $3,235,000 for the six month comparison due to
the increase in Firm sales volume discussed above. Other operation expenses
including health benefits, payroll, and materials and supplies have increased by
$831,000, 16.9% higher for the six month comparisons.
Operating expenses, excluding federal and state income taxes, for the three
month comparison increased 15.2% from $17,024,000 in 1995 to $19,609,000 in
1996, an increase of $2,585,000, principally due to a $2,114,000 increase in
cost of gas sold.
Interest expense increased by $141,000, 2.0%, for the six month comparison
and $51,000, 1.4%, for the three month comparison as a result of increased
borrowing and higher short term interest cost.
Capital Resources and Liquidity
The Company's major capital requirement results from upgrading the
efficiency of existing plant, as well as, to serve additional customers. For the
six months ended March 31, 1996, capital expenditures totalled approximately
$1,900,000.
Cash flow patterns reflect the seasonality of the Company's business. The
greatest demand for cash is in the late fall and winter as construction projects
are brought to completion and accounts receivable balances rise.
Capital expenditures and accounts receivable balances were financed by
internally generated funds and supplemented by short-term borrowings.
See accompanying notes to consolidated financial statements
4
<PAGE> 7
<PAGE> 8
FALL RIVER GAS COMPANY AND SUBSIDIARY
-------------------------------------
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
------------------------------------------
1. The results of operation for the six month periods ending March 31, 1996
and 1995 are not necessarily indicative of the results to be expected for
the full year.
2. In the opinion of the Company, the accompanying unaudited consolidated
condensed financial statements contain all adjustments (consisting of only
normal recurring accruals) necessary to present fairly the Company's
financial position as of March 31, 1996 and 1995, and the results of
operations for the six months ended and changes in financial position for
the three months then ended.
3. The Company had no shares of its common stock reserved for officers and
employees, options, warrants, conversions or other requirements at March
31, 1996.
PART II. OTHER INFORMATION
--------------------------
Not applicable.
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.
FALL RIVER GAS COMPANY
----------------------
(Registrant)
Peter H. Thanas
----------------------
(Signature)
Date May 1, 1996 Peter H. Thanas, Treasurer,
------------ Chief Financial and
Accounting Officer
5
<TABLE> <S> <C>
<ARTICLE> UT
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE BALANCE
SHEET INCOME STATEMENT AND CASH FLOW STATEMENT FOR THE SIX MONTH ENDED MARCH
31, 1996, AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH NOTES TO
CONSOLIDATED CONDENSED FINANCIAL STATEMENTS APPEARING ON PAGE 5 OF FORM 10-Q
FOR 6 MONTHS ENDED MARCH 31, 1996.
</LEGEND>
<MULTIPLIER> 1
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> SEP-30-1996
<PERIOD-START> OCT-01-1995
<PERIOD-END> MAR-31-1996
<EXCHANGE-RATE> 1
<BOOK-VALUE> PER-BOOK
<TOTAL-NET-UTILITY-PLANT> 36,969,820
<OTHER-PROPERTY-AND-INVEST> 3,071,082
<TOTAL-CURRENT-ASSETS> 11,602,140
<TOTAL-DEFERRED-CHARGES> 1,826,872
<OTHER-ASSETS> 0
<TOTAL-ASSETS> 53,469,914
<COMMON> 1,834,445
<CAPITAL-SURPLUS-PAID-IN> 1,356,043
<RETAINED-EARNINGS> 12,430,746
<TOTAL-COMMON-STOCKHOLDERS-EQ> 15,621,234
0
0
<LONG-TERM-DEBT-NET> 6,500,000
<SHORT-TERM-NOTES> 15,800,000
<LONG-TERM-NOTES-PAYABLE> 0
<COMMERCIAL-PAPER-OBLIGATIONS> 0
<LONG-TERM-DEBT-CURRENT-PORT> 800,000
0
<CAPITAL-LEASE-OBLIGATIONS> 0
<LEASES-CURRENT> 0
<OTHER-ITEMS-CAPITAL-AND-LIAB> 14,748,680
<TOT-CAPITALIZATION-AND-LIAB> 53,469,914
<GROSS-OPERATING-REVENUE> 33,827,857
<INCOME-TAX-EXPENSE> 1,575,669
<OTHER-OPERATING-EXPENSES> 30,040,386
<TOTAL-OPERATING-EXPENSES> 31,616,055
<OPERATING-INCOME-LOSS> 2,211,802
<OTHER-INCOME-NET> 348,758
<INCOME-BEFORE-INTEREST-EXPEN> 2,560,560
<TOTAL-INTEREST-EXPENSE> 851,743
<NET-INCOME> 1,708,817
0
<EARNINGS-AVAILABLE-FOR-COMM> 8,056,170
<COMMON-STOCK-DIVIDENDS> 0
<TOTAL-INTEREST-ON-BONDS> 0
<CASH-FLOW-OPERATIONS> 2,556,384
<EPS-PRIMARY> .96
<EPS-DILUTED> .96
</TABLE>
