<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, 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 March 31,1997
- ------------------------------------- -------------------------------------
Common stock,par value of $.83 1\3 1,782,314 shares
<PAGE> 2
FALL RIVER GAS COMPANY
----------------------
INDEX
-----
Page No.
--------
Part. I. Financial Position
Consolidated Condensed Balance Sheets -
March 31, 1997 and September 30, 1996 1
Consolidated Condensed Statements of Income -
Six Months Ended March 31, 1997 and 1996 2
Consolidated Statments of Cash Flows -
Six Months Ended March 31, 1997 and 1996 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
-------------------------------------
CONSOLIDATED CONDENSED BALANCE SHEETS
-------------------------------------
<TABLE>
<CAPTION>
MARCH 31, SEPTEMBER 30,
1997 1996
----------- -----------
<S> <C> <C>
ASSETS
------
Gas Plant, at original cost $57,368,989 $56,156,164
less accumulated depreciation 18,756,103 17,502,797
----------- -----------
38,612,886 38,653,367
----------- -----------
Rental Property 4,986,774 4,911,102
less accumulated depreciation 2,073,984 2,149,157
----------- -----------
2,912,790 2,761,945
----------- -----------
Other Investments 402,462 382,905
----------- -----------
Current Assets:
Cash 634,926 393,936
Accounts receivable, less allowance for
doubtful accounts of $952,765 as of
3/31/97 and $670,038 as of 9/30/96 7,668,043 2,676,323
Inventories, at average cost
Liquefied natural gas and propane 1,768,492 3,242,688
Materials and Supplies 1,371,459 1,387,076
Purchased gas costs deferred (751,485) 201,265
Prepaid and Deferred Taxes 0 555,984
Prepayments and Other 312,425 248,032
----------- -----------
11,003,860 8,705,304
----------- -----------
Deferred Charges:
Installation costs on leased appliances
being amortized over twenty years 1,289,722 1,225,478
Regulatory Asset 637,981 650,383
Other 322,018 811,772
----------- -----------
2,249,721 2,687,633
----------- -----------
$55,181,719 $53,191,154
=========== ===========
STOCKHOLDERS' INVESTMENT AND LIABILITIES
----------------------------------------
CAPITALIZATION:
Stockholders' investment--
Common stock, pax 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 1,410,779 1,356,043
Retained earnings ($7,149,260 restricted
against payment of cash dividends as
of 3/31/97 and $4,374,576 as of 9/30/96) 12,162,265 10,865,648
----------- -----------
15,407,489 14,056,136
Less Treasury stock, at cost (416,539 shares
as of 3/31/97 and 420,792 shares as of 9/30/96) 1,404,405 1,418,743
----------- -----------
14,003,084 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 27,503,084 26,137,393
----------- -----------
CURRENT LIABILITIES:
Notes payable to banks 14,400,000 14,300,000
Dividends Payable 0 427,330
Accounts Payable 4,064,604 3,554,623
Gas supplier refunds due customers 0 0
Accrued taxes 93,426 0
Other 2,008,351 1,732,242
----------- -----------
20,566,381 20,014,195
----------- -----------
DEFERRED CREDITS:
Accumulated deferred income taxes 4,123,986 4,123,986
Unamortized investment tax credits 548,716 567,695
Regulatory Liability 422,660 422,660
Other 2,016,892 1,925,225
----------- -----------
7,112,254 7,039,566
----------- -----------
$55,181,719 $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 Six Months Ended
March 31 March 31
-------------------------- --------------------------
1997 1996 1997 1996
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
GAS OPERATING REVENUES $20,401,497 $22,373,255 $31,565,369 $33,827,857
----------- ----------- ----------- -----------
OPERATING EXPENSES
Cost of gas sold 12,121,784 14,916,242 18,559,510 22,114,464
Other operation 3,265,425 2,894,073 6,280,060 5,744,751
Maintenance 569,175 466,906 1,145,707 991,671
Depreciation 1,034,377 831,020 1,480,603 1,189,500
General taxes 732,707 653,667 1,019,885 900,008
Federal income taxes 722,041 736,984 671,052 675,661
----------- ----------- ----------- -----------
Total operating expenses 18,445,509 20,498,892 29,156,817 31,616,055
----------- ----------- ----------- -----------
OPERATING INCOME 1,955,988 1,874,363 2,408,552 2,211,802
OTHER INCOME:
Net income of Fall River Gas Appliance
Company, Inc. (a wholly-owned subsidiary) 161,821 164,729 360,638 352,512
Other 9,026 (3,681) 12,866 (3,754)
----------- ----------- ----------- -----------
GROSS INCOME 2,126,835 2,035,411 2,782,056 2,560,560
----------- ----------- ----------- -----------
INTEREST EXPENSE AND OTHER:
Interest on long-term debt 293,225 170,900 586,450 343,550
Other interest 237,927 249,693 471,165 508,193
----------- ----------- ----------- -----------
531,152 420,593 1,057,615 851,743
----------- ----------- ----------- -----------
NET INCOME 1,595,683 1,614,818 1,724,441 1,708,817
RETAINED EARNINGS - BEGINNING OF PERIOD 10,994,406 11,243,259 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 declared 427,825 427,330 855,155 854,660
----------- ----------- ----------- -----------
RETAINED EARNINGS - END OF PERIOD
($7,149,260 restricted against payment of
cash dividends as of 3/31/97 and $4,374,576
as of 3/31/96) 12,162,264 12,430,747 12,162,264 12,430,747
=========== =========== =========== ===========
NET INCOME PER SHARE OF COMMON STOCK (based on
average number of shares outstanding at the
end of the respective periods) 0.89 0.91 0.97 0.96
=========== =========== =========== ===========
WEIGHTED AVERAGE NUMBER OF COMMON SHARES
OUTSTANDING DURING THE PERIOD 1,783,440 1,780,542 1,782,314 1,780,542
CASH DIVIDEND PAID PER COMMON SHARE 0.24 0.24 0.48 0.48
=========== =========== =========== ===========
</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>
Six Months Ended
March 31
---------------------------
1997 1996
----------- -----------
<S> <C> <C>
Cash Provided by (used for)
Operating Activities:
Net income $ 1,724,441 $ 1,708,816
Items not requiring (providing) cash:
Depreciation 1,612,103 1,361,055
Amortization of Installation Costs 60,840 63,678
Amortization of Investment Tax Credit (18,979) (18,979)
Change in working capital (1,605,380) (792,271)
Other sources, net 400,529 234,085
----------- -----------
Net cash provided by
operating activities 2,173,554 2,556,384
----------- -----------
Investing Activities:
Additions to utility property, plant and equipment (1,331,074) (1,856,032)
Additions to nonutility property (273,666) (256,842)
----------- -----------
Net cash used by investing activities (1,604,740) (2,112,874)
----------- -----------
Financing activities:
Cash dividends on common stock (427,824) (427,330)
Retirement of long-term debt through sinking fund 0 (80,000)
Increase (Decrease) in notes payable to banks, net 100,000 200,000
----------- -----------
Net cash provided by (used for)
financing activities (327,824) (307,330)
----------- -----------
Increase (Decrease) in Cash $ 240,990 $ 136,180
=========== ===========
Changes in Components of Working Capital
(excluding cash)
(Increase) decrease in current assets:
Special Deposits $ (30,050) $ 28,700
Accounts receivable (4,991,720) (5,842,496)
Inventories 1,489,813 1,293,639
Prepayments and other (85,377) (89,764)
Deferred gas cost 952,750 2,757,868
Increase (decrease) in current liabilities:
Accounts payable 509,981 2,303,001
Accrued taxes 649,410 289,850
Gas supplier refunds due customers 51,034 (1,303,326)
Other (151,221) (229,743)
----------- -----------
Change in Working Capital $(1,605,380) $ (792,271)
=========== ===========
Supplemental disclosure of cash flow information:
Cash paid during year for:
Interest $ 1,050,461 $ 936,187
Income taxes $ 545,650 $ 830,573
</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, 1997 reflect a
decrease of 6.7% or $2,262,000. Revenues fell from $31,953,000 recorded in 1996
to $30,681,000, mainly due to a 9% decrease in firm sales volume. Firm sales
volume for six months ended March 31, 1997 was 4,041,984 MCF as compared to the
4,461,906 MCF reported in 1996. Along with the loss of firm sales, total sales
for the six month period which include Special Contract, Interruptible and
Transportation customers, decreased 4.1% to 4,984,797 MCF from 5,199,632 MCF in
1996. During the six month period, Cost of Gas (CGA) revenues decreased by
$1,454,000. 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 is
another factor affecting operating revenues and firm sales volume. Degree Days
in the six month comparison decreased 1.8% from 5,239 to 5,144.
During the second quarter of 1997 Firm sales continued to fall resulting in
a decrease in operating revenues, $1,972,000 lower than the comparable three
months in 1996. Firm sales, as mentioned above, decreased 13.5%, from 3,037,932
MCF in 1996 to 2,626,545 MCF in 1997, with Firm Sales revenues decreasing 6.6%
from 21,322,000 in 1996 to 19,907,000 in 1997. Also impacting operating revenues
was a 4.8% decrease in Degree Days for the quarter, from 3,169 in 1996 to 3,018
in 1997.
Total operating expenses, excluding federal and state income taxes, for the
six month comparisons reflected a 8% decrease from $30,798,000 to $28,345,000, a
decrease of $2,453,000. The most significant operation expense - cost of gas
sold - decreased by $3,555,000 for the six 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 $535,000, 9.3%
higher for the six month comparisons.
Operating expenses, excluding federal and state income taxes, for the three
month comparison decreased 10.4% from $19,609,000 in 1996 to $17,574,000 in
1997, a decrease of $2,035,000, principally due to a $2,794,000 decrease in cost
of gas sold. Other operation expenses including health benefits, payroll, and
materials and supplies have increased by $371,000, 12.8% higher for the three
month comparisons.
Interest expense increased by $206,000, 24.2%, for the six month comparison
and $111,000, 26.3%, for the three month
<PAGE> 7
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, 1997, capital expenditures totaled approximately
$1,300,000.
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
4
<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, 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 March 31, 1997 and 1996, and the results of
operations for the six months ended and changes in financial position for
the six 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, 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)
Date May 14, 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 SIX MONTHS ENDED MARCH
31, 1997 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
SIX MONTHS ENDED MARCH 31, 1997.
</LEGEND>
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> SEP-30-1997
<PERIOD-START> OCT-01-1996
<PERIOD-END> MAR-31-1997
<BOOK-VALUE> PER-BOOK
<TOTAL-NET-UTILITY-PLANT> 38,612,886
<OTHER-PROPERTY-AND-INVEST> 3,315,252
<TOTAL-CURRENT-ASSETS> 11,003,860
<TOTAL-DEFERRED-CHARGES> 2,249,721
<OTHER-ASSETS> 0
<TOTAL-ASSETS> 55,181,719
<COMMON> 1,834,445
<CAPITAL-SURPLUS-PAID-IN> 1,410,779
<RETAINED-EARNINGS> 12,162,265
<TOTAL-COMMON-STOCKHOLDERS-EQ> 15,407,489
0
0
<LONG-TERM-DEBT-NET> 13,500,000
<SHORT-TERM-NOTES> 14,400,000
<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> 11,874,230
<TOT-CAPITALIZATION-AND-LIAB> 55,181,719
<GROSS-OPERATING-REVENUE> 31,565,369
<INCOME-TAX-EXPENSE> 1,690,937
<OTHER-OPERATING-EXPENSES> 27,465,880
<TOTAL-OPERATING-EXPENSES> 29,156,817
<OPERATING-INCOME-LOSS> 2,408,552
<OTHER-INCOME-NET> 373,504
<INCOME-BEFORE-INTEREST-EXPEN> 2,782,056
<TOTAL-INTEREST-EXPENSE> 1,057,615
<NET-INCOME> 1,724,441
0
<EARNINGS-AVAILABLE-FOR-COMM> 5,013,005
<COMMON-STOCK-DIVIDENDS> 0
<TOTAL-INTEREST-ON-BONDS> 0
<CASH-FLOW-OPERATIONS> 2,173,554
<EPS-PRIMARY> .97
<EPS-DILUTED> .97
</TABLE>
