<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 December 31, 1996 Commission file number 0-449
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FALL RIVER GAS COMPANY
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(Exact name of registrant as specified in its charter)
Massachusetts 04-1298780
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification 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
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"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 ."
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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 December 31,1996
- ---------------------------------- -------------------------------
Common stock,par value of $.83 1/3 1,781,211 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 -
December 31, 1996 and September 30, 1996 1
Consolidated Condensed Statements of Income -
Three Months Ended December 31, 1996 and 1995 2
Consolidated Statments of Cash Flows -
Three Months Ended December 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
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FALL RIVER GAS COMPANY AND SUBSIDIARY
-------------------------------------
<TABLE>
CONSOLIDATED CONDENSED BALANCE SHEETS
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<CAPTION>
DECEMBER 31, SEPTEMBER 30,
ASSETS 1996 1995
------ ------------ -------------
<S> <C> <C>
Gas Plant, at original cost $56,980,949 $56,156,164
less accumulated depreciation 17,830,888 17,502,797
----------- -----------
39,150,061 38,653,367
----------- -----------
Rental Property 4,994,711 4,911,102
less accumulated depreciation 2,128,828 2,149,157
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2,865,883 2,761,945
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Other Investments 392,791 382,905
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Current Assets:
Cash 146,944 76,621
Interest-bearing deposits 439,866 317,315
Special deposits 172,050 142,000
Accounts receivable, less allowance for
doubtful accounts of $919,993 as of
12/31/96 and $670,038 as of 9/30/96 5,810,346 2,676,323
Inventories, at average cost
Merchandise 168,664 157,878
Liquefied natural gas and propane 3,402,722 3,242,688
Materials and Supplies 1,299,162 1,229,198
Purchased gas costs deferred 1,348,919 201,265
Prepayments 221,155 22,392
----------- -----------
13,009,828 8,065,680
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Deferred Charges:
Installation costs on leased appliances
being amortized over twenty years 1,293,732 1,225,478
Regulatory Asset 650,383 650,383
Other 707,117 811,772
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2,651,232 2,687,633
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$58,069,795 $52,551,530
=========== ===========
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 1,374,519 1,356,043
Retained earnings ($7,149,260 restricted
against payment of cash dividends as
of 12/31/96 and $4,374,576 as of 9/30/96) 10,994,406 10,865,648
----------- -----------
14,203,370 14,056,136
Less Treasury stock, at cost (419,385 shares
as of 12/31/96 and 420,792 shares as of 9/30/96) 1,414,001 1,418,743
----------- -----------
12,789,369 12,637,393
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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
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13,500,000 13,500,000
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Total capitalization 26,289,369 26,137,393
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CURRENT LIABILITIES:
Current sinking fund requirements 0 0
Notes payable to banks 17,700,000 14,300,000
Accounts Payable 5,823,651 3,554,623
Gas supplier refunds due customers (69,099) (83,640)
Accrued taxes (828,642) (555,984)
Other 1,554,478 1,632,547
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24,180,388 18,847,546
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DEFERRED CREDITS:
Accumulated deferred income taxes 4,123,986 4,123,986
Unamortized investment tax credits 558,205 567,695
Regulatory Liability 949,685 949,685
Other 1,968,162 1,925,225
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7,600,038 7,566,591
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$58,069,795 $52,551,530
=========== ===========
</TABLE>
See accompanying notes to consolidated condensed financial statements
1
<PAGE> 4
SUMMARIZED FINANCIAL INFORMATION
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FALL RIVER GAS COMPANY AND SUBSIDIARY
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<TABLE>
CONSOLIDATED CONDENSED STATEMENTS OF INCOME AND RETAINED EARNINGS
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<CAPTION>
Three Months Ended
December 31
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1996 1995
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<S> <C> <C>
GAS OPERATING REVENUES 11,163,872 11,454,602
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OPERATING EXPENSES
Cost of gas sold 6,437,726 7,198,222
Other operation 3,014,635 2,850,678
Maintenance 576,532 524,765
Depreciation 446,226 358,480
General taxes 287,178 246,341
Federal income taxes (50,989) (61,323)
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Total operating expenses 10,711,308 11,117,163
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OPERATING INCOME 452,564 337,439
OTHER INCOME:
Net income of Fall River Gas Appliance
Company, Inc. (a wholly-owned subsidiary) 198,817 187,783
Other 3,840 (73)
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GROSS INCOME 655,221 525,149
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INTEREST EXPENSE AND OTHER:
Interest on long-term debt 293,225 172,650
Other interest 233,238 258,500
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526,463 431,150
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NET INCOME 128,758 93,999
RETAINED EARNINGS - BEGINNING OF PERIOD 10,865,648 11,149,260
DEDUCT - Dividends declared 0 0
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RETAINED EARNINGS - END OF PERIOD
($7,149,260 restricted against payment of
cash dividends as of 12/31/96 and $4,374,576
as of 12/31/95) 10,994,406 11,243,259
========== ==========
NET INCOME PER SHARE OF COMMON STOCK (based on
average number of shares outstanding at the
end of the respective periods) 0.07 0.05
========== ==========
WEIGHTED AVERAGE NUMBER OF COMMON SHARES
OUTSTANDING DURING THE PERIOD 1,781,211 1,780,542
CASH DIVIDEND PER COMMON SHARE 0 0
========== ==========
</TABLE>
See accompanying notes to consolidated condensed financial statements.
2
<PAGE> 5
FALL RIVER GAS COMPANY AND SUBSIDIARY
-------------------------------------
<TABLE>
CONSOLIDATED STATEMENT OF CASH FLOWS
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<CAPTION>
Three Months Ended
December 31
------------------------------------
1996 1995
----------- -----------
<S> <C> <C>
Cash Provided by (used for)
Operating Activities:
Net income $ 128,758 $ 93,998
Items not requiring (providing) cash:
Depreciation 507,733 429,785
Amortization of Installation Costs 30,420 31,839
Amortization of Investment Tax Credit (9,490) (9,489)
Change in working capital (2,818,432) (2,822,096)
Other sources, net (22,490) 102,818
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Net cash provided by
operating activities (2,183,501) (2,173,145)
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Investing Activities:
Additions to utility property, plant and equipment (862,438) (1,451,260)
Additions to nonutility property (161,187) (134,854)
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Net cash used by investing activities (1,023,625) (1,586,114)
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Financing activities:
Cash dividends on common stock 0 0
Retirement of long-term debt through sinking fund 0 (80,000)
Increase in notes payable to banks, net 3,400,000 4,000,000
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Net cash provided by
financing activities 3,400,000 3,920,000
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Increase in cash $ 192,874 $ 160,741
=========== ===========
Changes in Components of Working Capital
(excluding cash)
(Increase) decrease in current assets:
Accounts receivable $(3,134,023) $(3,344,564)
Inventories (240,784) 284,400
Prepayments and other (228,813) (195,814)
Deferred gas cost (1,147,654) (538,665)
Increase (decrease) in current liabilities:
Accounts payable 2,269,028 2,176,367
Accrued taxes (272,658) (545,146)
Gas supplier refunds due customers 14,541 (402,305)
Other (78,069) (256,369)
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Change in Working Capital $(2,818,432) $(2,822,096)
=========== ===========
Supplemental disclosure of cash flow information:
Cash paid during year for:
Interest $ 217,668 $ 331,404
Income taxes $ 65,650 $ 590,000
</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 three months ended December 31, 1996
reflect a decrease of 2.5% or $291,000. Revenues decreased from $11,455,000
recorded in 1995 to $11,164,000, mainly due to a 6.4% decrease in CGA revenues
as discussed below. Firm sales volume for three months ended December 31, 1996
is 1,415,439 MCF as compared to the 1,423,974 MCF reported in 1995. Unlike the
loss in firm sales, total sales for the three month period which include Special
Contract, Interruptible, Interruptible Transportation and Transportation
customers, increased 5.9% from 1,812,206 MCF to 1,918,745 MCF in 1996. During
the quarter, cost of gas (CGA) revenues decreased by $281,000 due to the net
differences in our CGA decimal in the three months ended December 1996 and 1995
respectively. The 1996 and 1995 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. Slightly colder
weather did not have an impact on either operating revenues or firm sales
volume. Degree Days in the three month comparison increased 2.7% from 2,070 to
2,126.
Total operating expenses, excluding federal and state income taxes, for
the three month comparisons reflected a 3.7% decrease from $11,189,000 to
$10,771,000 a decrease of $418,000. The most significant operation expense -
cost of gas sold - decreased by $760,000 for the three month comparison due to
the decrease in Firm sales volume discussed above. Other operation expenses
including health benefits, payroll, and materials and supplies have increased by
$164,000, 5.8% higher than the comparable period in 1995.
Interest expense increased by $95,000, 22.1%, 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
three months ended December 31, 1996, capital expenditures totalled
approximately $1,000,000.
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
<PAGE> 7
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
4
<PAGE> 8
FALL RIVER GAS COMPANY AND SUBSIDIARY
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
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1. The results of operation for the three month periods ending December 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 December 31, 1996 and 1995, and the results of
operations for the three 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 December
31, 1996.
PART II. OTHER INFORMATION
--------------------------
Not applicable.
SIGNATURES
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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
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(Registrant)
Peter H. Thanas
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(Signature)
Date February 3, 1997 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 3 MONTHS
ENDED DECEMBER 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 3 MONTHS ENDED DECEMBER 31, 1996.
</LEGEND>
<MULTIPLIER> 1
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> SEP-30-1997
<PERIOD-START> OCT-01-1996
<PERIOD-END> DEC-31-1996
<EXCHANGE-RATE> 1
<BOOK-VALUE> PER-BOOK
<TOTAL-NET-UTILITY-PLANT> 39,150,061
<OTHER-PROPERTY-AND-INVEST> 3,258,674
<TOTAL-CURRENT-ASSETS> 13,009,828
<TOTAL-DEFERRED-CHARGES> 2,651,232
<OTHER-ASSETS> 0
<TOTAL-ASSETS> 58,069,795
<COMMON> 1,834,445
<CAPITAL-SURPLUS-PAID-IN> 1,374,519
<RETAINED-EARNINGS> 10,994,406
<TOTAL-COMMON-STOCKHOLDERS-EQ> 14,203,370
0
0
<LONG-TERM-DEBT-NET> 13,500,000
<SHORT-TERM-NOTES> 17,700,000
<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> 12,666,425
<TOT-CAPITALIZATION-AND-LIAB> 58,069,795
<GROSS-OPERATING-REVENUE> 11,163,872
<INCOME-TAX-EXPENSE> 236,189
<OTHER-OPERATING-EXPENSES> 10,475,119
<TOTAL-OPERATING-EXPENSES> 10,711,308
<OPERATING-INCOME-LOSS> 452,564
<OTHER-INCOME-NET> 202,657
<INCOME-BEFORE-INTEREST-EXPEN> 655,221
<TOTAL-INTEREST-EXPENSE> 526,463
<NET-INCOME> 128,758
0
<EARNINGS-AVAILABLE-FOR-COMM> 3,845,145
<COMMON-STOCK-DIVIDENDS> 0
<TOTAL-INTEREST-ON-BONDS> 0
<CASH-FLOW-OPERATIONS> (2,183,501)
<EPS-PRIMARY> .07
<EPS-DILUTED> .07
</TABLE>
