<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON D.C. 20549
FORM 10-Q
(X) QUARTERLY REPORT UNDER SECTION 13 OR 15 (d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 1995
OR
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
Commission File Number 0-753
PENN VIRGINIA CORPORATION
(Exact name of registrant as specified in its charter)
VIRGINIA 23-1184320
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification no.)
100 MATSONFORD ROAD SUITE 200 RADNOR, PA 19807
(Address of principal executive offices)
(Zip code)
(610)687-8900
(Registrant's telephone number; including area code)
(Former name, former address and former fiscal year,
if changed since last report.)
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
----- -----
Number of shares of common stock of registrant outstanding at
November 14, 1995: 4,262,240
<PAGE> 2
PENN VIRGINIA CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Dollars in thousands except for share amounts)
(Unaudited)
<TABLE>
<CAPTION>
Three Months Nine Months
Ended September 30, Ended September 30,
- ------------------------------------------------------------------------------------
1995 1994* 1995 1994*
- ------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Revenues:
Natural gas sales $ 2,801 $ 2,960 $ 8,818 $ 9,606
Coal royalties 1,706 3,990 7,835 11,366
Gain on sale of securities 2,285 - 6,391 -
Dividends 573 577 1,790 2,011
Oil and gas royalties 219 325 909 1,406
Oil and condensate 214 311 676 803
Timber and land sales 131 163 503 385
Other income 84 128 345 359
------- ------- -------- -------
$ 8,013 $ 8,454 $ 27,267 $25,936
Expenses:
Operating expenses $ 867 $ 832 $ 2,319 $ 2,274
Exploration and development 119 265 361 519
Taxes other than income 489 377 1,388 1,141
General and administrative 1,659 2,305 5,110 5,676
Depreciation, depletion and amortization 2,178 1,535 5,896 4,566
------- ------- -------- -------
$ 5,312 $ 5,314 $ 15,074 $14,176
Operating Income $ 2,701 $ 3,140 $ 12,193 $11,760
Other (Income) Expense:
Interest expense $ 470 $ 373 $ 1,480 $ 1,247
(Gain) loss on sale of property 1,579 (109) 1,467 (108)
Other (income) `(451) (421) (1,616) (1,411)
------- ------- -------- -------
Income before income tax $ 1,103 $ 3,297 $ 10,862 $12,032
Income tax expense (benefit) 12 (190) 1,780 2,028
------- ------- -------- -------
Net Income $ 1,091 $ 3,487 $ 9,082 $10,004
------- ------- -------- -------
Net Income per share $ 0.26 $ 0.82 $ 2.13 $ 2.34
======= ======= ======== =======
Weighted average shares
outstanding (in thousands) 4,265 4,280 4,271 4,280
======= ======= ======== =======
</TABLE>
*Certain amounts have been reclassified to conform to the current year's
presentation.
See accompanying notes to condensed consolidated financial statements.
<PAGE> 3
PENN VIRGINIA CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Thousands of dollars)
<TABLE>
<CAPTION>
(Unaudited)
September 30, December 31,
Assets 1995 1994
------ -------- --------
<S> <C> <C>
Current assets
Cash and cash equivalents $ 3,056 $ 7,039
Receivables 2,150 3,286
Current portion of long-term notes receivable 3,646 3,646
Current deferred tax benefit 1,451 1,451
Recoverable income taxes - 1,646
Inventory 623 599
Prepaid expenses 267 249
-------- --------
Total current assets $ 11,193 $ 17,916
-------- --------
Investments in affiliated companies $ 9,793 $ 12,425
Other investments 82,404 72,896
Long-term notes receivable, net of current portion 6,952 8,881
Property, plant and equipment (net) 102,776 86,246
Intangible assets, net of amortization 807 781
Other assets 176 114
-------- --------
Total assets $214,101 $199,259
======== ========
Liabilities and Shareholders' Equity
------------------------------------
Current liabilities
Current installments on long-term debt $ 2,000 $ 7,325
Accounts payable 961 4,409
Accrued expenses 4,135 3,913
Deferred liabilities 211 220
Taxes on income 563 -
-------- --------
Total current liabilities $ 7,870 $ 15,867
-------- --------
Other liabilities $ 7,571 $ 8,031
Deferred taxes 30,747 28,459
Long-term debt, net of current installments 22,500 9,250
Minority interest 194 206
Shareholders' equity:
Preferred stock of $100 par value-
Authorized 100,000 shares; issued none
Common stock of $6.25 par value-
Authorized 8,000,000 shares; issued 4,437,517
shares in 1995 and 1994 27,734 27,734
Other paid-in capital 34,793 34,793
Retained earnings 38,895 35,571
-------- --------
$101,422 $ 98,098
Less: 175,277 and 157,977 shares in 1995 and 1994
of common stock held in treasury 7,928 7,435
Guaranteed debt to Employee Stock Ownership Plan - 300
Add: Unrealized holding gain, net of tax - investments 51,725 47,083
-------- --------
Total shareholders' equity $145,219 $137,446
-------- --------
Total liabilities and shareholders' equity $214,101 $199,259
======== ========
</TABLE>
See accompanying notes to condensed consolidated financial statements.
<PAGE> 4
PENN VIRGINIA CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED CASH FLOW STATEMENTS
(Thousands of dollars)
(Unaudited)
<TABLE>
<CAPTION>
Nine Months
Ended September 30,
----------------------------
1995 1994 *
--------- --------
<S> <C> <C>
Cash flows from operating activities:
Net income $ 9,082 $ 10,004
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation, depletion and amortization 5,896 4,566
(Gain) on sale of securities (6,391) -
(Gain) loss on sale of property, plant and equipment 1,467 (108)
Deferred income taxes (211) 38
Dry hole expense (84) 105
Other 123 102
(Increase) decrease in current assets 2,740 (2,362)
Decrease in current liabilities (2,917) (4,305)
(Increase) decrease in other assets (102) 3
Increase (decrease) in other liabilities (460) 81
Decrease in minority interest (12) (12)
-------- --------
Net cash provided by operating activities $ 9,131 $ 8,112
-------- --------
Cash flows from investing activities:
Proceeds from the sale of securities $ 6,656 -
Proceeds from notes 2,728 2,337
Proceeds from the sale of property, plant and equipment 883 283
Capital expenditures (24,533) (14,398)
Notes purchased (800) -
-------- --------
Net cash used in investing activities $(15,066) (11,778)
-------- --------
Cash flows from financing activities:
Dividends paid $ (5,759) (5,757)
Proceeds from debt borrowings 20,300 -
Payment of debt (12,375) (6,575)
Purchase of treasury stock (514) -
Reduction in guaranteed debt to ESOP 300 450
-------- --------
Net cash provided, (used) by financing activities $ 1,952 (11,882)
-------- --------
Net decrease in cash and cash equivalents $ (3,983) (15,548)
Cash and cash equivalents - beginning balance 7,039 23,869
-------- --------
Cash and cash equivalents - ending balance $ 3,056 $ 8,321
======== ========
Supplemental disclosures of cash flow information:
Cash paid to date for:
Interest $ 1,417 $ 1,066
======== ========
Income Taxes $ 448 $ 3,496
======== ========
</TABLE>
* Certain amounts have been reclassified to conform to the current year's
presentation.
See accompanying notes to condensed consolidated financial statements.
<PAGE> 5
PENN VIRGINIA CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
1. In the opinion of the Company, the accompanying condensed
consolidated financial statements contain all adjustments
(consisting of only normal recurring accruals) necessary to present
fairly the financial position as of September 30, 1995, and the
results of operations for the three and nine months ended September
30, 1995 and 1994 and cash flows for the nine months ended September
30, 1995 and 1994.
Property, plant and equipment consist of the following:
<TABLE>
<CAPTION>
September 30, 1995 December 31, 1994
------------------ -----------------
(In thousands)
<S> <C> <C>
Property, plant and equipment $ 141,439 $ 120,251
Less: Accumulated depreciation
and depletion (38,663) (34,005)
--------- ---------
Net property, plant and equipment $ 102,776 $ 86,246
--------- ---------
</TABLE>
2. During the first quarter of 1995, the Company completed two
significant asset transactions. The first transaction consisted of
the relinquishment of the West Virginia Hampton lease by
Westmoreland Coal Company. The second transaction consisted of the
acquisition of an oil and gas property located in West Virginia
("Loup Creek") that increased the Company's proven oil and gas
reserves by approximately 42 billion cubic feet (Bcf) at a cost of
approximately $17 million. This oil and gas property is contiguous
to an oil and gas property acquired in 1992 and will allow access to
an additional gas pipeline transmission system thereby increasing
the marketability of the Company's natural gas reserves.
3. The amortized cost, gross unrealized holding gains and fair value
for available- for-sale securities at September 30, 1995 were as
follows:
<TABLE>
<CAPTION>
Gross
Unrealized
Amortized Holding Fair
Cost Gain Value
---------- ---------- ------
(In thousands)
<S> <C> <C> <C>
Available - for - sale:
Westmoreland Coal Company $ 5,263 $ - $ 5,263
Westmoreland Resources, Inc. 4,530 - 4,530
Norfolk Southern Corporation 2,839 79,565 82,404
------- -------- -------
$ 12,632 $ 79,565 $ 92,197
======== ======== ========
</TABLE>
On April 21, 1995 the Company sold 65,000 shares of its Norfolk
Southern Corporation common stock investment for approximately $4.3
million. On July 7, 1995 the Company sold an additional 35,000
shares of its Norfolk Southern Corporation common stock investment
for approximately $2.4 million. The proceeds from these sales were
used for general corporate purposes as well as for working capital
and debt service requirements.
The amortized cost and fair value of notes receivable which are
classified as held-to-maturity securities was $10,598,000 at
September 30, 1995.
4. During the first quarter of 1995 the Company executed a new $20
million loan and agency agreement with First Fidelity Bank as the
lead lender and two other commercial bank lenders. Proceeds from
this facility were used to finance the acquisition of the Loup Creek
oil and gas property and the relinquishment of the Hampton lease by
Westmoreland Coal Company.
As of September 30, 1995, $18.5 million was outstanding under this
<PAGE> 6
facility and is included with long-term debt on the Company's
balance sheet. The remaining $1.5 million is available for future
borrowings as deemed necessary by the Company.
<PAGE> 7
Management's Discussion and Analysis of
Results of Operations and Financial Condition
Results of operations for the quarter ended September 30, 1995 as
compared with the quarter ended September 30, 1994:
Operating income decreased $439,000 or 14%, for the third quarter of
1995 compared to the third quarter of 1994. This decrease is composed of a
$2,173,000 decrease in the coal and land segment, a $1,024,000 decrease in the
oil and gas segment, a $2,292,000 increase in the investment segment and a
$466,000 decrease in general corporate expenses.
Income before income taxes decreased $2,194,000 primarily due to the
recognition of a $1.4 million loss on the sale of certain Pennsylvania oil and
gas properties that occurred in the third quarter of 1995 in addition to the
operating income decrease mentioned above. Interest expense increased $97,000
or 26% due to increased bank borrowings during the third quarter of 1995.
Income taxes increased $202,000 or 106% primarily because 1994 included
a tax accrual reversal resulting from the finalization of certain tax audits
and, lower projected 1995 State income tax expense.
Coal and Land
<TABLE>
<CAPTION>
Three Months
Ended September 30,
-------------------
1995 1994
---- ----
(Thousands of dollars)
<S> <C> <C>
Revenues:
Coal royalties $ 1,706 $ 3,990
Timber and land sales 131 163
Other income 17 38
------- -------
Total $ 1,854 $ 4,191
Expenses:
Operating expenses $ 23 $ 22
Exploration and development 26 57
Taxes other than income 55 33
General and administrative 253 396
Depreciation and depletion 30 43
------- -------
Total $ 387 $ 551
------- -------
Operating income $ 1,467 $ 3,640
======= =======
</TABLE>
Operating income decreased by $2,173,000 or 60% primarily due to
decreased coal royalties from the Company's mineral fee properties located in
Virginia and West Virginia. Coal royalties decreased by $2,284,000 or 57%
primarily due to the Westmoreland Coal Company shutdown of its Virginia mining
operations in late July 1995. In addition, timber and land sales decreased
$32,000 or 20% primarily due to differences in timber grades sold in 1995
compared with 1994.
General and administrative expenses decreased $143,000 or 36% primarily
due to lower salary, contributions and employee benefits expenses. Taxes other
than income increased $22,000 or 67% due to increased property taxes relating
to the relinquishment of the West Virginia Hampton lease by Westmoreland Coal
Company in the first quarter of 1995. Depletion expense decreased due to the
decline in coal production associated with the shutdown of Westmoreland Coal
Company's Virginia operations during the third quarter of 1995.
Penn Virginia Corporation received coal royalties from Westmoreland
Coal Company totalling $727,000 and $3,018,000 for the three months ending
September 30, 1995 and 1994, respectively.
<PAGE> 8
Oil and Gas
<TABLE>
<CAPTION>
Three Months
Ended September 30,
-------------------
1995 1994
---- ----
(Thousands of dollars)
<S> <C> <C>
Revenues:
Natural gas sales $ 2,801 $ 2,960
Oil and gas royalties 219 325
Oil and condensate 214 311
Other income 67 90
------- -------
Total $ 3,301 $ 3,686
Expenses:
Operating expenses $ 844 $ 810
Exploration and development 93 208
Taxes other than income 391 301
General and administrative 725 752
Depreciation and depletion 2,139 1,482
------- -------
Total $ 4,192 $ 3,553
------- -------
Operating income, (loss) $ (891) $ 133
======= =======
</TABLE>
Operating income decreased $1,024,000 primarily due to the effects of
lower natural gas pricing and higher 1995 depletion rates. Natural gas prices
have declined by approximately 23% which has driven down natural gas sales
$159,000 or 5%. Oil and gas royalties decreased $106,000 or 32% primarily due
to the gas curtailment. Oil sales decreased $97,000 or 31% due to lower
production volumes and oil prices in 1995.
Depreciation and depletion expense increased $657,000 or 44% primarily
due to higher 1995 production and depletion rates. Exploration and development
expense decreased $115,000 or 55% due to lower dry hole expense. Taxes
other than income increased $91,000 or 30% due to additional severance, ad
valorem and property taxes associated with the first quarter of 1995 Loup Creek
property acquisition.
Investments
<TABLE>
<CAPTION>
Three Months
Ended September 30,
-------------------
1995 1994
---- ----
(Thousands of dollars)
<S> <C> <C>
Revenues:
Gain on sale of securities $ 2,285 $ -
Dividends 573 577
------- -------
Total $ 2,858 $ 577
Expenses:
Taxes other than income - 1
General and administrative 3 13
Depreciation - -
------- -------
Total $ 3 $ 14
------- -------
Operating income $ 2,855 $ 563
======= =======
</TABLE>
Operating income increased $2,292,000 due to the gain recognized on the
sale of an additional 35,000 shares of Norfolk Southern Corporation common
stock held by the Company.
<PAGE> 9
Corporate
General corporate expenses decreased $466,000 or 39% primarily because
of a 1994 charge for personnel realignment expenses for $466,000 that was
recorded in the third quarter of 1994.
Results of operations for the nine months ended September 30, 1995 as
compared to the nine months ended September 30, 1994:
Operating income increased $433,000 or 4%. This increase is comprised
of a $3,395,000 decrease in the coal and land segment, a $2,989,000 decrease in
the oil and gas segment, a $6,209,000 increase in the investment segment and a
decrease of $608,000 in general corporate expenses.
Income before income taxes decreased $1,170,000 or 10% primarily due to
the recognition of a $1.4 million loss on the sale of certain Pennsylvania oil
and gas properties that occurred in the third quarter of 1995 in addition to
the operating income increase mentioned above. Interest expense increased
$233,000 or 19% primarily due to increased bank borrowings during the third
quarter of 1995.
Income taxes decreased $248,000 or 12%. The decrease is primarily due
to the estimated decrease in the effective Federal tax rate due to lower
projected 1995 pre-tax earnings, a smaller deduction for 1995 State income
tax expense and the 1994 inclusion of a tax accrual reversal resulting from the
finalization of certain tax audits.
Coal and Land
<TABLE>
<CAPTION>
Nine Months
Ended September 30,
-------------------
1995 1994
---- ----
(Thousands of dollars)
<S> <C> <C>
Revenues:
Coal royalties $ 7,835 $ 11,366
Timber and land sales 503 385
Other income 64 107
------- --------
Total $ 8,402 $ 11,858
Expenses:
Operating expenses $ 55 $ 63
Exploration and development 121 147
Taxes other than income 201 107
General and administrative 903 990
Depreciation and depletion 95 $ 129
------- --------
Total $ 1,375 $ 1,436
------- --------
Operating income $ 7,027 $ 10,422
======= ========
</TABLE>
Operating income decreased $3,395,000 or 33% primarily due to decreased
coal royalties received from Westmoreland Coal Company's (WCX) Virginia
operations following the WCX shutdown of its Virginia mining operations in late
July 1995. Coal royalties decreased by $3,531,000 or 31% of which WCX Virginia
royalties amounted to $2,693,000 or a 39% decline from 1994 royalties earned.
The remaining decrease in coal royalties represents reduced coal mining
activity by non-WCX operators of $735,000 or 27% and lower royalties from the
West Virginia properties of $103,000 or 6%. Timber and land sales increased
$118,000 or 31% due to increased timber parcel sales.
The decrease in exploration and development expense of $26,000 or 18%
is due to a reduction in the level of coal core drilling in 1995 compared with
1994. Taxes other than income increased $94,000 or 88% due to increased
property taxes relating to the relinquishment of the West Virginia Hampton
lease by WCX in the first quarter of 1995. Depletion decreased $34,000 or 26%
due to the decline in coal production associated with the WCX shutdown of its
Virginia operations.
Penn Virginia Corporation received coal royalties from Westmoreland
Coal Company
<PAGE> 10
totalling $4,337,000 and $8,561,000 for the nine months ending
September 30, 1995 and 1994.
Oil and Gas
<TABLE>
<CAPTION>
Nine Months
Ended September 30,
-------------------
1995 1994
---- ----
(Thousands of dollars)
<S> <C> <C>
Revenues:
Natural gas sales $ 8,818 $ 9,606
Oil and gas royalties 909 1,406
Oil and condensate 676 803
Other income $ 281 $ 252
-------- --------
Total $ 10,684 $ 12,067
Expenses:
Operating expenses $ 2,265 $ 2,211
Exploration and development 239 372
Taxes other than income 1,050 914
General and administrative 2,259 2,078
Depreciation and depletion 5,773 4,405
-------- --------
Total $ 11,586 $ 9,980
-------- --------
Operating income (loss) $ (902) $ 2,087
======== ========
</TABLE>
Operating income decreased $2,989,000 or 143% primarily due to the
effects of lower natural gas pricing and higher 1995 depletion rates. Natural
gas prices have declined by approximately 30% which has driven down natural gas
sales $788,000 or 8%. Oil and gas royalties decreased $497,000 or 35%
primarily due to the gas curtailment. Oil sales decreased $127,000 or 16% due
to lower production volumes and oil prices in 1995.
General and administrative expenses increased $181,000 or 9% primarily
due to higher 1995 office space costs and the reclassification of gas marketing
costs previously netted against natural gas sales. Taxes other than income
increased $136,000 or 15% due to additional severance, ad valorem and property
taxes associated with the first quarter of 1995 Loup Creek property
acquisition. Depreciation and depletion expense increased $1,368,000 or 31%
primarily due to higher 1995 production and depletion rates. Exploration and
development expenses decreased $133,000 or 36% due to lower dry hole expense.
<PAGE> 11
Investments
<TABLE>
<CAPTION>
Nine Months
Ended September 30,
---------------------
1995 1994
------- -------
(Thousands of dollars)
<S> <C> <C>
Revenues:
Gain on sale of securities $ 6,391 $ -
Dividends 1,790 2,011
------- -------
Total $ 8,181 $ 2,011
Expenses:
Taxes other than income $ - $ 2
General and administrative 12 45
Depreciation - 4
------- -------
Total $ 12 $ 51
------- -------
Operating income $ 8,169 $ 1,960
======= =======
</TABLE>
Operating income increased $6,209,000 due to the gain recognized on the
sale of 100,000 shares of Norfolk Southern Corporation common stock held by the
Company. Partially offsetting this increase is a decrease in dividend income
of $221,000 or 11% primarily due to the timing of dividend receipts from other
investments.
Corporate
General corporate expenses decreased $608,000 or 22% in 1995 versus
1994. The Company was able to reverse $225,000 of its previously recorded
relocation reserve no longer required. In addition, 1994 expenses included a
charge of $466,000 for personnel realignment expenses. Partially offsetting
these decreases was an increase in office-related and outside consulting
expenses.
Financial Condition, Liquidity, Capital Resources and Other Financial
Data at September 30, 1995:
Working capital at September 30, 1995 was $3.3 million compared to $2
million at December 31, 1994. See the Condensed Consolidated Statement of Cash
Flows for details regarding the change. On July 7, 1995 the Company sold an
additional 35,000 shares of Norfolk Southern Corporation common stock for
approximately $2.4 million. The proceeds from this sale were used for general
corporate purposes.
Presently, the Company has $1.5 million of available debt capacity.
Three factors that could influence future earnings and cash flow of the
Company are coal tonnages mined, natural gas prices and natural gas production.
The first factor is the number of tons of coal mined from the Company's mineral
fee properties. Westmoreland Coal Company (WCX), our largest lessee, announced
July 31, 1995 that it had reached an agreement with Duke Power Company whereby
Duke would buy out the remaining term of a WCX coal supply agreement originally
entered into on January 1, 1986. The coal shipped to Duke under this agreement
was being mined from the Company's Virginia mineral fee properties. To date,
WCX has been unsuccessful in finding an operator to purchase its remaining
Virginia assets.
WCX completed its announced shutdown of its Virginia mining operations
at the end of July 1995. The shutdown of the Virginia coal properties will
have a significant impact on Penn Virginia Corporation's 1995 and 1996 earnings
and cash flows. The Company estimates a potential decrease in its total 1995
coal royalties of $2.3 million if the Virginia coal properties were to remain
idle for the remainder of 1995.
In an effort to diversify the risks associated with having one
principal lessee on the Company's West Virginia coal properties and more fully
exploit the mineable coal reserves, the Company obtained the relinquishment of
the WCX Hampton lease in
<PAGE> 12
February, 1995. It is the Company's intent to have several lessees mining coal
on this property.
In West Virginia, the Company is currently entering into a lease with
Ashland Coal for an estimated 250,000 tons of mined coal per year. Production
is expected to begin in late 1996 on this lease. In addition, the Company has
currently entered into final negotiations with a potential major new lessee
that could result in a forecasted annualized rate of production of nearly 2
million tons per year by late 1997 or early 1998. The initial production by
this new lessee could begin in late 1996.
The second factor is natural gas prices. Since the majority of the
Company's natural gas is sold in the spot market or under contracts less than
one year in duration, future earnings will be directly related to the
fluctuation of those prices. Any sustained decline in these prices could
result in some impairment of oil and gas assets.
As previously disclosed, lower natural gas prices continue to have a
negative impact on revenues, which are down 14% in spite of a 22% increase in
gas volumes produced to date in 1995. In addition, the Company continues to
experience temporary partial curtailments of its natural gas production due to
pipeline repairs on the Columbia Gas System. Part of the originally scheduled
pipeline repair was completed in late October and the entire repair is
scheduled to be completed by December 1, 1995. This curtailment reduced natural
gas production an estimated .75 billion cubic feet (Bcf) in the third quarter
and will also impact fourth quarter production. The anticipated economic
impact of these curtailments is estimated to be a decrease in 1995 natural gas
volumes sold of .8 Bcf. Based on current pricing natural gas revenues are
expected to decrease by approximately $1.4 million.
In a continuing effort to mitigate the recent decline in natural gas
prices and the scheduled curtailments by Columbia Gas, the Company has
undertaken several steps. The current year's remaining drilling program has
been reduced and management continues to evaluate ways to further reduce
expenses.
Subject to final approval by the bankruptcy court, Penn Virginia has
settled its take-or-pay claims with Columbia Gas Transmission and expects to
receive in excess of $10 million in late 1995 or early 1996.
The Company continues to evaluate its investment in WCX and any
deterioration in WCX's financial condition that results in the carrying value
for that investment being in excess of fair value could result in additional
losses.
Except for matters discussed above, management is not presently aware
of any trends or demands which exist or uncertainties which are reasonably
likely to result in the Company's liquidity increasing or decreasing in any
material way.
<PAGE> 13
PART II. OTHER INFORMATION
ITEM 4. EXHIBITS AND REPORTS ON FORM 8-K.
(a) Exhibits
Exhibit 15: Letter Re: Unaudited interim financial information.
Exhibit 27: Financial data schedule.
(b) Reports on Form 8-K:
No reports on Form 8-K were filed for the quarter ended September 30,
1995.
<PAGE> 14
REVIEW BY INDEPENDENT CERTIFIED PUBLIC ACCOUNTANT
The accompanying condensed consolidated financial statements have been
reviewed by the Company's independent certified public accountants, KPMG Peat
Marwick LLP in accordance with the established professional standards and
procedures for such a limited review.
<PAGE> 15
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.
PENN VIRGINIA CORPORATION
(Registrant)
Date: November 14, 1995 STEVEN W. THOLEN
---------------------------------------------
(Steven W. Tholen, Vice President,Chief
Financial Officer)
(Principal Financial Officer)
Date: November 14, 1995 WILLIAM M. SWENSON
---------------------------------------------
(William M. Swenson, Asst. Controller)
(Principal Accounting Officer)
<PAGE> 16
KPMG Peat Marwick LLP
Certified Public Accountants
1600 Market Street
Philadelphia, PA 19103
INDEPENDENT ACCOUNTANTS' REPORT
The Board of Directors
Penn Virginia Corporation
We have reviewed the accompanying condensed consolidated balance sheet
of Penn Virginia Corporation and subsidiaries as of September 30, 1995 and the
related condensed consolidated statements of income for the three and nine
month periods ended September 30, 1995 and 1994, and condensed consolidated
statement of cash flows for the nine month periods ended September 30, 1995 and
1994. These financial statements are the responsibility of the Company's
management.
We conducted our review in accordance with standards established by the
American Institute of Certified Public Accountants. A review of interim
financial information consists principally of applying analytical review
procedures to financial data and making inquiries of persons responsible for
financial and accounting matters. It is substantially less in scope than an
audit conducted in accordance with generally accepted auditing standards, the
objective of which is the expression of an opinion regarding the financial
statements taken as a whole. Accordingly, we do not express such an opinion.
Based on our review, we are not aware of any material modifications
that should be made to the accompanying condensed consolidated financial
statements for them to be in conformity with generally accepted accounting
principles.
We have previously audited, in accordance with generally accepted
auditing standards, the consolidated balance sheet of Penn Virginia Corporation
and subsidiaries as of December 31, 1994, and the related consolidated
statements of income, shareholders' equity and cash flows for the year then
ended (not presented herein); and in our report dated March 1, 1995, we
expressed an unqualified opinion on those consolidated financial statements.
In our opinion, the information set forth in the accompanying condensed
consolidated balance sheet as of December 31, 1994, is fairly presented, in all
material respects in relation to the consolidated balance sheet from which it
has been derived.
KPMG Peat Marwick LLP
KPMG Peat Marwick LLP
Philadelphia, PA
October 30, 1995
<PAGE> 1
KPMG Peat Marwick LLP
Certified Public Accountants
1600 Market Street
Philadelphia, PA 19103
Exhibit 15
Penn Virginia Corporation
Suite 200
100 Matsonford Road
Radnor, PA 19807
RE: Registration Statement Nos. 2-67355, 2-77500, 33-40430,
33-59647 and 33-59651
Gentlemen:
With respect to the subject Registration Statements, we acknowledge our
awareness of the use therein of our report dated October 30, 1995 related to
our review of interim financial information.
Pursuant to Rule 436(c) under the Securities Act, such report is not
considered a part of a Registration Statement prepared or certified by an
accountant or a report prepared or certified by an accountant within the
meaning of Sections 7 and 11 of the Act.
Very truly yours,
KPMG Peat Marwick LLP
KPMG Peat Marwick LLP
November 14, 1995
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONDENSED CONSOLIDATED BALANCE SHEET AT SEPTEMBER 30, 1995 AND THE
CONDENSED CONSOLIDATED STATEMENT OF INCOME FOR THE NINE MONTHS ENDED
SEPTEMBER 30, 1995 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1994
<PERIOD-END> SEP-30-1995
<CASH> 3,056
<SECURITIES> 0
<RECEIVABLES> 5,796
<ALLOWANCES> 0
<INVENTORY> 623
<CURRENT-ASSETS> 11,193
<PP&E> 141,439
<DEPRECIATION> 38,663
<TOTAL-ASSETS> 214,101
<CURRENT-LIABILITIES> 7,870
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<COMMON> 27,734
0
0
<OTHER-SE> 117,485
<TOTAL-LIABILITY-AND-EQUITY> 214,101
<SALES> 9,997
<TOTAL-REVENUES> 27,267
<CGS> 2,319
<TOTAL-COSTS> 2,319
<OTHER-EXPENSES> 12,606
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1,480
<INCOME-PRETAX> 10,862
<INCOME-TAX> 1,780
<INCOME-CONTINUING> 9,082
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<EXTRAORDINARY> 0
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<NET-INCOME> 9,082
<EPS-PRIMARY> 2.13
<EPS-DILUTED> 2.13
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