<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, 1997 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 30,1997
- --------------------------------------------------------------------------------
Common stock,par value of $.83 1\3 1,783,547 shares
<PAGE> 2
FALL RIVER GAS COMPANY
----------------------
INDEX
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PAGE NO.
--------
Part. I. Financial Position
Consolidated Condensed Balance Sheets -
June 30, 1997 and September 30, 1996 1
Consolidated Condensed Statements of Income -
Nine Months Ended June 30, 1997 and 1996 2
Consolidated Statements of Cash Flows -
Nine Months Ended June 30, 1997 and 1996 3
Management's Discussion and Analysis of the
Consolidated Condensed Statements of Income 4-5
Notes to Consolidated Condensed Financial Statements 6
Part II. Other Information 6
<PAGE> 3
Part I. FINANCIAL INFORMATION
-----------------------------
FALL RIVER GAS COMPANY AND SUBSIDIARY
-------------------------------------
CONSOLIDATED CONDENSED BALANCE SHEETS
-------------------------------------
<TABLE>
<CAPTION>
JUNE 30, SEPTEMBER 30,
ASSETS 1997 1996
------ ------------ ------------
<S> <C> <C>
Gas Plant, at original cost $57,786,995 $56,156,164
less accumulated depreciation 19,078,356 17,502,797
----------- -----------
38,708,639 38,653,367
----------- -----------
Rental Property 5,014,220 4,911,102
less accumulated depreciation 2,066,694 2,149,157
----------- -----------
2,947,526 2,761,945
----------- -----------
Other Investments 414,962 382,905
----------- -----------
Current Assets:
Cash 436,524 393,936
Accounts receivable, less allowance for
doubtful accounts of $1,100,839 as of
6/30/97 and $670,038 as of 9/30/96 3,411,843 2,676,323
Inventories, at average cost
Liquefied natural gas and propane 2,358,402 3,242,688
Materials and Supplies 1,351,573 1,387,076
Purchased gas costs deferred (835,193) 201,265
Prepaid and Deferred Taxes 252,243 555,984
Prepayments and Other 261,757 248,032
----------- -----------
7,237,149 8,705,304
----------- -----------
Deferred Charges:
Installation costs on leased appliances
being amortized over twenty years 1,271,222 1,225,478
Regulatory Asset 600,775 650,383
Other 470,796 811,772
----------- -----------
2,342,793 2,687,633
----------- -----------
$51,651,069 $53,191,154
=========== ===========
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 1,440,511 1,356,043
Retained earnings ($7,149,260 restricted
against payment of cash dividends as
of 6/30/97 and $4,374,576 as of 9/30/96) 11,576,051 10,865,648
----------- -----------
14,851,007 14,056,136
Less Treasury stock, at cost (414,073 shares
as of 6/30/97 and 420,792 shares as of 9/30/96) 1,396,088 1,418,743
----------- -----------
13,454,919 12,637,393
----------- -----------
Long-term debt, less current sinking
fund requirements
First Mortgage Bonds--9.44% due 2020 6,500,000 6,500,000
First Mortgage Bonds--7.99% due 2026 7,000,000 7,000,000
----------- -----------
13,500,000 13,500,000
----------- -----------
Total capitalization 26,954,919 26,137,393
----------- -----------
CURRENT LIABILITIES:
Notes payable to banks 11,200,000 14,300,000
Dividends Payable 429,142 427,330
Accounts Payable 3,613,845 3,554,623
Other 2,297,590 1,732,242
----------- -----------
17,540,577 20,014,195
----------- -----------
DEFERRED CREDITS:
Accumulated deferred income taxes 4,123,986 4,123,986
Unamortized investment tax credits 539,227 567,695
Regulatory Liability 422,660 422,660
Other 2,069,700 1,925,225
----------- -----------
7,155,573 7,039,566
----------- -----------
$51,651,069 $53,191,154
=========== ===========
</TABLE>
See accompanying notes to consolidated condensed financial statements.
1
<PAGE> 4
SUMMARIZED FINANCIAL INFORMATION
--------------------------------
FALL RIVER GAS COMPANY AND SUBSIDIARY
-------------------------------------
CONSOLIDATED CONDENSED STATEMENTS OF INCOME AND RETAINED EARNINGS
-----------------------------------------------------------------
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
June 30 June 30
---------------------------- ----------------------------
1997 1996 1997 1996
----------- ------------ ----------- ------------
<S> <C> <C> <C> <C>
GAS OPERATING REVENUES $ 9,788,594 $ 10,312,874 $41,353,963 $ 44,140,731
----------- ------------ ----------- ------------
OPERATING EXPENSES
Cost of gas sold 5,250,646 6,486,340 23,810,156 28,600,804
Other operation 2,852,253 2,471,824 9,132,313 8,216,575
Maintenance 414,881 471,555 1,560,588 1,463,226
Depreciation 405,491 325,891 1,886,094 1,515,391
General taxes 301,641 325,025 1,321,526 1,225,033
Federal income taxes 7,342 (68,490) 678,394 607,171
----------- ------------ ----------- ------------
Total operating expenses 9,232,254 10,012,145 38,389,071 41,628,200
----------- ------------ ----------- ------------
OPERATING INCOME 556,340 300,729 2,964,892 2,512,531
OTHER INCOME:
Net income of Fail River
Gas Appliance Company, Inc.
(a wholly-owned subsidiary) 224,793 196,969 585,431 549,481
Other 8,200 3,141 21,066 (613)
----------- ------------ ----------- ------------
GROSS INCOME 789,333 500,839 3,571,389 3,061,399
----------- ------------ ----------- ------------
INTEREST EXPENSE AND OTHER:
Interest on long-term debt 293,225 170,900 879,675 514,450
Other interest 224,816 238,964 695,981 747,157
----------- ------------ ----------- ------------
518,041 409,864 1,575,656 1,261,607
----------- ------------ ----------- ------------
NET INCOME 271,292 90,975 1,995,733 1,799,792
RETAINED EARNINGS - BEGINNING OF PERIOD 12,162,264 12,430,747 10,865,648 11,149,260
ADD- Dividends declared
September 19, 1996 and
September 19, 1995, payable
November 15, 1996 and 1995 0 0 427,330 427,330
DEDUCT - Dividends paid on
Common Stock 428,361 427,330 1,283,516 1,281,990
Declared Payable
August 15, 1997 and 1996 429,142 427,330 429,142 427,330
=========== ============ =========== ============
RETAINED EARNINGS - END OF PERIOD
($7,149,260 restricted against
payment of cash dividends as
of 6/30/97 and $4,374,576
as of 6/30/96) 11,576,053 11,667,062 11,576,053 11,667,062
=========== ============ =========== ============
NET INCOME PER SHARE OF COMMON STOCK
(based on average number of shares
outstanding at the end of the
respective periods) 0.15 0.05 1.12 1.01
=========== ============ =========== ============
WEIGHTED AVERAGE NUMBER OF COMMON SHARES
OUTSTANDING DURING THE PERIOD 1,786,013 1,780,542 1,783,547 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
-------------------------------------
CONSOLIDATED STATEMENT OF CASH FLOWS
------------------------------------
<TABLE>
<CAPTION>
Nine Months Ended
June 30
----------------------------
1997 1996
----------- -----------
<S> <C> <C>
Cash Provided by (used for)
Operating Activities:
Net income $ 1,995,731 $ 1,799,792
Items not requiring (providing) cash:
Depreciation 2,086,978 1,786,080
Amortization of Installation Costs 91,260 95,517
Amortization of Investment Tax Credit (28,468) (28,467)
Change in working capital 2,135,313 (748,509)
Other sources, net 323,289 (165,718)
----------- -----------
Net cash provided by operating activities 6,604,103 2,738,695
----------- -----------
Investing Activities:
Additions to utility property, plant and equipment (1,804,632) (2,700,025)
Additions to nonutility property (373,367) (368,269)
----------- -----------
Net cash used by investing activities (2,177,999) (3,068,294)
----------- -----------
Financing activities:
Cash dividends on common stock (1,283,516) (1,281,990)
Retirement of long-term debt through sinking fund 0 (880,000)
Increase (Decrease) in notes payable to banks, net (3,100,000) 2,500,000
----------- -----------
Net cash provided by (used for) financing activities (4,383,516) 338,010
----------- -----------
Increase in cash $ 42,588 $ 8,411
=========== ===========
Changes in Components of Working Capital
(excluding cash)
(Increase) decrease in current assets:
Special Deposits $ (30,050) $ 28,700
Accounts receivable (735,520) (1,867,636)
Inventories 919,789 357,290
Prepaid and Deferred Taxes 303,741 0
Prepayments and other 16,325 (19,526)
Deferred gas cost 1,036,458 3,900,182
Increase (decrease) in current liabilities:
Accounts payable 59,222 (1,362,265)
Accrued taxes 0 (504,261)
Gas supplier refunds due customers 0 (1,448,964)
Other 565,348 167,971
----------- -----------
Change in Working Capital $ 2,135,313 $ (748,509)
=========== ===========
Supplemental disclosure of cash flow information:
Cash paid during year for:
Interest $ 1,236,119 $ 1,188,338
Income taxes $ 786,299 $ 1,446,259
</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
Firm gas operating revenues for the nine months ended June 30,1997 reflect
a decrease of 6.3% or $2,787,000. Revenues fell from $44,141,000 recorded in
1996 to $41,354,000, mainly due to a 6.3% decrease in firm sales volume. Firm
sales volume for nine months ended June 30, 1997 was 5,390,124 MCF as compared
to the 5,749,248 MCF reported in 1996. Along with the loss of firm sales, total
sales for the nine-month period that include Special Contract, Interruptible and
Transportation customers, decreased 1.6% to 6,788,893 MCF from 6,899,198 MCF in
1996. During the nine-month period, Cost of Gas (CGA) revenues decreased by
$1,834,000. The 1997 and 1996 CGA Revenues, referred to above, have been
computed on the current rate structure. 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. Temperature change was
not a factor in effecting operating revenues and firm sales volume. Degree Days
in the nine-month comparison increased slightly from 6,115 to 6,131.
During the third quarter of 1997 Firm sales show an increase but due to a
lower CGAC decimal operating revenues decreased $262,000 lower than the
comparable three months in 1996. Firm sales, as mentioned above, increased 4.7%,
from 1,287,342 MCF in 1996 to 1,348,140 MCF in 1997, with Firm Sales revenues
decreasing 2.7% from $9,620,000 in 1996 to 9,358,000 in 1997. The increase in
Firm sales can be attributed to an increase in Degree Days for the quarter, from
876 in 1996 to 987 in 1997.
Total operating expenses, excluding federal and state income taxes, for the
nine month comparisons reflected an 8.1% decrease from $40,891,000 to
$37,566,000, a decrease of $3,325,000. The most significant operation expense -
cost of gas sold - decreased by $4,791,000 for the nine-month comparison due to
the decrease in Firm sales volume discussed above. Other operation expenses
including health benefits, payroll, materials and supplies, and regulatory
commission expense have increased by $916,000, 11% higher for the nine month
comparisons.
Operating expenses, excluding federal and state income taxes, for the
three-month comparison decreased 8.6% from $10,093,000 in 1996 to $9,222,000 in
1997, a decrease of $871,000, principally due to a $1,236,000 decrease in cost
of gas sold. Other operation expenses including health benefits, payroll,
materials and supplies, and regulatory commission expense have increased by
$380,000, 15.4% higher for the three month comparisons.
Interest expense increased by $314,000, 24.9%, for the nine
4
<PAGE> 7
month comparison and $108,000, 26.4%, for the three-month comparison because 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, and, to serve additional customers. For the nine
months ended June 30, 1997, capital expenditures totaled approximately
$1,800,000.
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.
On May 17, 1996 the Company filed with the MDPU a request to increase its
firm rates. After responding to interrogatories and presenting witnesses in
support of the Company's filing, the Company was able to reach a settlement
agreement with all parties. Contained in this settlement was an increase in
revenues of $3,200,000 along with the "unbundling" of its commercial and
industrial tariffs. With unbundled rates our customers can now choose to buy gas
from the Company or purchase its own gas supply from a third party and have it
transported up to and into the Company's distribution system. These new rates
are effective for gas sold on or after December 1, 1996.
See accompanying notes to consolidated financial statements
5
<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, 1997
and 1996 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, 1997 and 1996, 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,
1997.
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)
/s/ Peter H. Thanas
--------------------------------------
(Signature)
July 23, 1997 Peter H. Thanas, Treasurer,
Chief Financial and Accounting Officer
6
<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 NINE MONTHS ENDED JUNE
30, 1997 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH NOTES TO
CONSOLIDATED CONDENSED FINANCIAL STATEMENTS APPEARING ON PAGE 6 OF FORM 10-Q FOR
NINE MONTHS ENDED JUNE 30, 1997.
</LEGEND>
<MULTIPLIER> 1
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> SEP-30-1997
<PERIOD-START> OCT-01-1997
<PERIOD-END> JUN-30-1997
<EXCHANGE-RATE> 1
<BOOK-VALUE> PER-BOOK
<TOTAL-NET-UTILITY-PLANT> 38,708,639
<OTHER-PROPERTY-AND-INVEST> 3,362,488
<TOTAL-CURRENT-ASSETS> 7,237,149
<TOTAL-DEFERRED-CHARGES> 2,342,793
<OTHER-ASSETS> 0
<TOTAL-ASSETS> 51,651,069
<COMMON> 1,834,445
<CAPITAL-SURPLUS-PAID-IN> 1,440,511
<RETAINED-EARNINGS> 11,576,051
<TOTAL-COMMON-STOCKHOLDERS-EQ> 14,851,007
0
0
<LONG-TERM-DEBT-NET> 13,500,000
<SHORT-TERM-NOTES> 11,200,000
<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> 12,100,062
<TOT-CAPITALIZATION-AND-LIAB> 51,651,069
<GROSS-OPERATING-REVENUE> 41,353,963
<INCOME-TAX-EXPENSE> 1,999,920
<OTHER-OPERATING-EXPENSES> 36,389,151
<TOTAL-OPERATING-EXPENSES> 38,389,071
<OPERATING-INCOME-LOSS> 2,964,892
<OTHER-INCOME-NET> 606,497
<INCOME-BEFORE-INTEREST-EXPEN> 3,571,389
<TOTAL-INTEREST-EXPENSE> 1,575,656
<NET-INCOME> 1,995,733
0
<EARNINGS-AVAILABLE-FOR-COMM> 4,426,791
<COMMON-STOCK-DIVIDENDS> 0
<TOTAL-INTEREST-ON-BONDS> 0
<CASH-FLOW-OPERATIONS> 6,604,103
<EPS-PRIMARY> 1.12
<EPS-DILUTED> 1.12
</TABLE>
