<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 June 30, 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 June 30, 1996
- ----------------------------------- ----------------------------
Common stock, par value of $.83 1/3 1,780,542 shares
<PAGE> 2
FALL RIVER GAS COMPANY
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INDEX
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Page No.
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Part. I. Financial Position
Consolidated Condensed Balance Sheets -
June 30, 1996 and September 30, 1995 1
Consolidated Condensed Statements of Income -
Nine Months Ended June 30, 1996 and 1995 2
Consolidated Statments of Cash Flows -
Nine Months Ended June 30, 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>
JUNE 30 SEPTEMBER 30
ASSETS 1996 1995
------ ----------- -----------
<S> <C> <C>
Gas Plant, at original cost $55,196,268 $52,770,211
less accumulated depreciation 17,635,468 16,561,747
----------- -----------
37,560,800 36,208,464
----------- -----------
Rental Property 4,866,396 4,852,644
less accumulated depreciation 2,142,966 2,239,952
----------- -----------
2,723,430 2,612,692
----------- -----------
Other Investments 373,019 320,354
----------- -----------
Current Assets:
Cash 149,584 112,124
Interest-bearing deposits 174,136 203,185
Special deposits 142,000 170,700
Accounts receivable, less allowance for
doubtful accounts of $870,018 as of
6/30/96 and $953,365 as of 9/30/95 4,026,808 2,159,172
Inventories, at average cost
Merchandise 193,564 203,597
Liquefied natural gas and propane 2,326,871 2,754,655
Materials and Supplies 1,263,172 1,182,645
Purchased gas costs deferred (1,091,300) 2,808,882
Prepayments 38,473 18,947
----------- -----------
7,223,308 9,613,907
----------- -----------
Deferred Charges:
Installation costs on leased appliances
being amortized over twenty years 1,172,152 1,216,877
Regulatory Asset 527,025 527,025
Other 382,110 457,189
----------- -----------
2,081,287 2,201,091
----------- -----------
$49,961,844 $50,956,508
=========== ===========
<CAPTION>
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 6/30/96 and 9/30/95) 11,667,062 11,149,260
----------- -----------
14,857,550 14,339,748
Less Treasury stock, at cost (420,792 shares
as of 6/30/96) 1,418,743 1,418,743
----------- -----------
13,438,807 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 19,938,807 19,421,005
----------- -----------
CURRENT LIABILITIES:
Current sinking fund requirements 0 880,000
Notes payable to banks 18,100,000 15,600,000
Accounts Payable 2,223,035 3,585,300
Gas supplier refunds due customers (80,995) 1,367,969
Accrued taxes 334,357 838,618
Other 2,061,318 1,893,347
----------- -----------
22,637,715 24,165,234
----------- -----------
DEFERRED CREDITS:
Accumulated deferred income taxes 3,905,118 3,905,118
Unamortized investment tax credits 577,186 605,653
Regulatory Liability 1,027,113 1,027,113
Other 1,875,905 1,832,385
----------- -----------
7,385,322 7,370,269
----------- -----------
$49,961,844 $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 Nine Months Ended
June 30 June 30
-------------------------- --------------------------
1996 1995 1996 1995
----------- ---------- ----------- -----------
<S> <C> <C> <C> <C>
GAS OPERATING REVENUES $10,312,874 $9,857,712 $44,140,731 $39,330,773
----------- ---------- ----------- -----------
OPERATING EXPENSES
Cost of gas sold 6,486,340 6,221,649 28,600,804 25,100,928
Other operation 2,471,824 2,237,200 8,216,575 7,151,292
Maintenance 471,555 487,696 1,463,226 1,477,861
Depreciation 325,891 300,860 1,515,391 1,398,999
General taxes 325,025 244,054 1,225,033 1,050,512
Federal Income taxes (68,490) (8,372) 607,171 680,486
----------- ---------- ----------- -----------
Total operating expenses 10,012,145 9,483,087 41,628,200 36,860,078
----------- ---------- ----------- -----------
OPERTATING INCOME 300,729 374,625 2,512,531 2,470,695
OTHER INCOME:
Net income of Fall River Gas Appliance
Company, Inc. (a wholly-owned subsidiary) 196,969 220,542 549,481 537,975
Other 3,141 5,294 (613) 14,555
----------- ---------- ----------- -----------
GROSS INCOME 500,839 600,461 3,061,399 3,023,225
----------- ---------- ----------- -----------
INTEREST EXPENSE AND OTHER:
Interest on long-term debt 170,900 174,400 514,450 524,950
Other interest 238,964 193,033 747,157 553,039
----------- ---------- ----------- -----------
409,864 367,433 1,261,607 1,077,989
----------- ---------- ----------- -----------
NET INCOME 90,975 233,028 1,799,792 1,945,236
RETAINED EARNINGS-BEGINNING OF PERIOD 12,430,747 12,527,253 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 paid on
Common Stock 427,330 427,330 1,281,990 1,281,990
Declared Payable
August 15, 1996 and 1995 427,330 427,330 427,330 427,330
----------- ---------- ----------- -----------
RETAINED EARNINGS-END OF PERIOD
($4,374,576 restricted against payment of
cash dividends as of 6/30/96 and 6/30/95) 11,667,062 11,905,621 11,667,062 11,905,621
=========== ========== =========== ===========
NET INCOME PER SHARE OF COMMON STOCK (based on
average number of shares outstanding at the
end of the respective periods) 0.05 0.13 1.01 1.09
=========== ========== =========== ===========
WEIGHTED AVERAGE NUMBER OF COMMON SHARES
OUTSTANDING DURING THE PERIOD 1,780,542 1,780,542 1,780,542 1,780,542
CASH DIVIDEND PER COMMON SHARE 0.24 0.24 0.72 0.72
=========== ========== =========== ===========
</TABLE>
See accompanying notes to consolidated condensed financial statements.
2
<PAGE> 5
FALL RIVER GAS COMPANY AND SUBSIDIARY
-------------------------------------
<TABLE>
CONSOLIDATED STATEMENTS OF CASH FLOW
------------------------------------
<CAPTION>
Nine Months Ended
June 30,
-------------------------
1996 1995
---------- ----------
<S> <C> <C>
Cash Provided by (used for)
Operating Activities:
Net income $ 1,799,792 $ 1,945,236
Items not requiring (providing) cash:
Depreciation 1,786,000 1,643,755
Amortization of Installation Costs 95,617 82,989
Amortization of Investment Tax Credit (28,487) (28,535)
Change in working capital (748,509) 4,019,987
Other sources, net (165,718) (262,139)
----------- -----------
Net cash provided by
operating activites 2,738,695 7,401,293
----------- -----------
Investing Activities
Additions to utility property, plant and equipment (2,700,025) (3,003,284)
Additions to nonutility property (368,269) (477,851)
----------- -----------
Net cash used by investing activities (3,068,294) (3,481,135)
----------- -----------
Financing activities:
Cash dividends on common stock (1,281,990) (1,281,990)
Retirement of long-term debt through sinking fund (880,000) (160,000)
Increase (Decrease) in notes payable to banks, net 2,500,000 (2,300,000)
----------- -----------
Net cash provided by (used for)
financing activities 338,010 (3,741,990)
----------- -----------
Increase (Decrease) in cash $ 8,411 $ 178,168
=========== ===========
Changes in Components of Working Capital
(excluding cash)
(Increase) decrease in current assets:
Special Deposits $ 28,700 $ -0-
Accounts receivable (1,867,636) (1,290,399)
Inventories 357,290 772,010
Prepayments and other (19,526) (50,619)
Deferred gas cost 3,900,182 3,001,943
Increase (decrease) in current liabilities:
Accounts payable (1,362,265) 270,028
Accrued taxes (504,261) 703,484
Gas supplier refunds due customers (1,448,964) 346,417
Other 167,971 267,123
----------- -----------
Change in Working Capital $ (748,509) $ 4,019,987
=========== ===========
Supplemental disclosure of cash flow information
Cash paid during year for:
Interest $ 1,188,338 $ 697,919
Income taxes $ 1,446,259 $ 433,052
</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 nine months ended June 30, 1996 reflect
an increase of 12.2% or $4,810,000. Firm sales revenues grew from $36,450,000
recorded in 1995 to $41,573,000 in 1996, mainly due to a 13% increase in firm
sales volume. Firm sales volume for nine months ended June 30, 1996 is 5,749,248
MCF as compared to the 5,091,668 MCF reported in 1995. Along with the rise of
firm sales, total sales for the nine month period which include Special
Contract, Interruptible, Interruptible Transportation and Transportation
customers, increased 10% from 6,274,220 MCF to 6,899,198 MCF in 1996. During the
nine month period, revenues from the Cost of Gas Adjustment Clause (CGAC) and
the embedded cost of gas in the base rate increased by $3,650,000. 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 nine month comparison increased 9.7% from 5,575 to
6,115.
During the third quarter of 1996 a higher CGAC decimal and increased
Firm sales resulted in increasing operating revenues $455,000 higher than the
comparable three months in 1995. Firm sales, as mentioned above, increased 7.3%
from 1,199,505 MCF in 1995 to 1,287,342 MCF in 1996, with revenues increasing
8.5% from 8,867,000 in 1995 to 9,620,000 in 1996. Also aiding operating revenues
was a 1.7% increase in Degree Days for the quarter, from 862 in 1995 to 876 in
1996.
Total operating expenses, excluding federal and state income taxes, for
the nine month comparisons reflected a 13.5% increase from $36,035,000 to
$40,891,000, an increase of $4,856,000. The most significant operating expense
- - cost of gas sold - increased by $3,500,000 for the nine 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
$1,065,000, 14.9% higher for the nine month comparisons.
Operating expenses, excluding federal and state income taxes, for the
three month comparison increased 6.3% from $9,491,000 in 1995 to $10,093,000 in
1996, an increase of $601,000, principally due to a $265,000 increase in cost of
gas sold.
Interest expense increased by $184,000, 17.0%, for the nine month
comparison and $42,000, 11.5%, for the three month comparison as a result of
increased borrowing and higher short term interest cost.
<PAGE> 7
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
nine months ended June 30, 1996, capital expenditures totalled approximately
$2,700,000.
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> 8
FALL RIVER GAS COMPANY AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. The results of operation for the nine month periods ending June 30, 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 June 30, 1996 and 1995, and the results of
operations for the nine months ended and changes in financial position for
the nine 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 June 30,
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 August 12, 1996 Peter H. Thanas, Treasurer,
- -------------------- Chief Financial and
Accounting Officer
5
<TABLE> <S> <C>
<ARTICLE> UT
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANICAL INFORMATION EXTRACTED FROM THE BALANCE
STEET, INCOME STATEMENT AND CASH FLOW STATEMENT FOR THE NINE MONTHS ENDED JUNE
30, 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
NINE MONTHS ENDED JUNE 30, 1996.
</LEGEND>
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> SEP-30-1996
<PERIOD-START> OCT-01-1996
<PERIOD-END> JUN-30-1996
<BOOK-VALUE> PER-BOOK
<TOTAL-NET-UTILITY-PLANT> 37,560,800
<OTHER-PROPERTY-AND-INVEST> 3,096,449
<TOTAL-CURRENT-ASSETS> 7,223,308
<TOTAL-DEFERRED-CHARGES> 2,081,287
<OTHER-ASSETS> 0
<TOTAL-ASSETS> 49,961,844
<COMMON> 1,834,445
<CAPITAL-SURPLUS-PAID-IN> 1,356,043
<RETAINED-EARNINGS> 11,667,062
<TOTAL-COMMON-STOCKHOLDERS-EQ> 14,857,550
0
0
<LONG-TERM-DEBT-NET> 6,500,000
<SHORT-TERM-NOTES> 18,100,000
<LONG-TERM-NOTES-PAYABLE> 0
<COMMERCIAL-PAPER-OBLIGATIONS> 0
<LONG-TERM-DEBT-CURRENT-PORT> 0
0
<CAPITAL-LEASE-OBLIGATIONS> 0
<LEASES-CURRENT> 0
<OTHER-ITEMS-CAPITAL-AND-LIAB> 10,504,294
<TOT-CAPITALIZATION-AND-LIAB> 49,961,844
<GROSS-OPERATING-REVENUE> 44,140,731
<INCOME-TAX-EXPENSE> 1,832,204
<OTHER-OPERATING-EXPENSES> 39,795,996
<TOTAL-OPERATING-EXPENSES> 41,628,200
<OPERATING-INCOME-LOSS> 2,512,531
<OTHER-INCOME-NET> 548,868
<INCOME-BEFORE-INTEREST-EXPEN> 3,061,399
<TOTAL-INTEREST-EXPENSE> 1,261,607
<NET-INCOME> 1,799,792
0
<EARNINGS-AVAILABLE-FOR-COMM> 7,292,487
<COMMON-STOCK-DIVIDENDS> 0
<TOTAL-INTEREST-ON-BONDS> 0
<CASH-FLOW-OPERATIONS> 2,738,695
<EPS-PRIMARY> 1.01
<EPS-DILUTED> 1.01
</TABLE>
