PG ENERGY INC.
TABLE OF CONTENTS
PAGE
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Consolidated Statements of Income for the three
months ended March 31, 1997 and 1996. . . . . . . . . . . 2
Consolidated Balance Sheets as of March 31, 1997,
and December 31, 1996 . . . . . . . . . . . . . . . . . . 3
Consolidated Statements of Cash Flows for
the three months ended March 31, 1997 and 1996. . . . . . 5
Notes to Consolidated Financial Statements. . . . . . . . . 6
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations. . . . . . . . . . . . 8
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K . . . . . . . . . . . . . . 13
-1-
<PAGE>
PART I. FINANCIAL INFORMATION
PG ENERGY INC.
CONSOLIDATED STATEMENTS OF INCOME
<TABLE>
<CAPTION>
Three Months Ended
March 31,
1997 1996
(Thousands of Dollars)
<S> <C> <C>
OPERATING REVENUES $ 79,939 $ 69,415
Cost of gas 49,139 39,978
OPERATING MARGIN 30,800 29,437
OTHER OPERATING EXPENSES:
Operation 6,462 6,557
Maintenance 1,126 1,214
Depreciation 2,211 1,899
Income taxes 5,831 5,927
Taxes other than income taxes 4,306 3,807
Total other operating expenses 19,936 19,404
OPERATING INCOME 10,864 10,033
OTHER INCOME, NET 239 150
INCOME BEFORE INTEREST CHARGES 11,103 10,183
INTEREST CHARGES:
Interest on long-term debt 2,191 1,772
Other interest 204 335
Allowance for borrowed funds used
during construction (66) (46)
Total interest charges 2,329 2,061
INCOME FROM CONTINUING OPERATIONS 8,774 8,122
LOSS WITH RESPECT TO DISCONTINUED OPERATIONS - (365)
NET INCOME 8,774 7,757
DIVIDENDS ON PREFERRED STOCK 353 637
EARNINGS APPLICABLE TO COMMON STOCK $ 8,421 $ 7,120
COMMON STOCK:
Earnings per share of common stock:
Continuing operations $ 2.54 $ 1.67
Discontinued operations - (.08)
Total $ 2.54 $ 1.59
Weighted average number of shares outstanding 3,314,155 4,468,130
Cash dividends per share $ - $ 10.217
The accompanying notes are an integral part of the consolidated financial statements.
</TABLE>
-2-
<PAGE>
PG ENERGY INC.
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
March 31, December 31,
1997 1996
(Thousands of Dollars)
<S> <C> <C>
ASSETS
UTILITY PLANT:
At original cost $ 329,179 $ 319,205
Accumulated depreciation (82,961) (79,783)
246,218 239,422
OTHER PROPERTY AND INVESTMENTS 4,644 4,894
CURRENT ASSETS:
Cash and cash equivalents 968 690
Accounts receivable -
Customers 29,250 17,183
Affiliates, net 7 58
Others 854 565
Reserve for uncollectible accounts (1,436) (1,140)
Accrued utility revenues 10,414 11,830
Materials and supplies, at average cost 2,705 2,460
Gas held by suppliers, at average cost 2,874 20,265
Natural gas transition costs collectible 1,637 2,525
Deferred cost of gas and supplier refunds, net 10,744 19,316
Prepaid expenses and other 4,048 1,313
62,065 75,065
DEFERRED CHARGES:
Regulatory assets -
Deferred taxes collectible 30,293 29,771
Other 4,460 4,274
Unamortized debt expense 1,118 1,153
Other 612 -
36,483 35,198
TOTAL ASSETS $ 349,410 $ 354,579
The accompanying notes are an integral part of the consolidated financial statements.
</TABLE>
-3-
<PAGE>
PG ENERGY INC.
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
March 31, December 31,
1997 1996
(Thousands of Dollars)
<S> <C> <C>
CAPITALIZATION AND LIABILITIES
CAPITALIZATION:
Common shareholder's investment $ 104,461 $ 96,005
Preferred stock of PGE -
Not subject to mandatory redemption, net 18,804 18,851
Subject to mandatory redemption 739 739
Long-term debt 65,392 55,000
189,396 170,595
CURRENT LIABILITIES:
Current portion of long-term debt -
Parent 28,600 31,400
Other 29,679 38,721
Preferred stock subject to repurchase or
mandatory redemption 80 115
Note payable - 10,000
Accounts payable -
Suppliers 10,088 17,831
Parent 752 348
Accrued general business and realty taxes 1,264 2,239
Accrued income taxes 19,845 14,559
Accrued interest 2,351 1,936
Accrued natural gas transition costs 1,506 2,095
Other 3,097 3,375
97,262 122,619
DEFERRED CREDITS:
Deferred income taxes 50,322 49,119
Unamortized investment tax credits 4,725 4,767
Operating reserves 3,046 3,086
Other 4,659 4,393
62,752 61,365
COMMITMENTS AND CONTINGENCIES (Note 3)
TOTAL CAPITALIZATION AND LIABILITIES $ 349,410 $ 354,579
The accompanying notes are an integral part of the consolidated financial statements.
</TABLE>
-4-
<PAGE>
PG ENERGY INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
Three Months Ended
March 31,
1997 1996
(Thousands of Dollars)
<S> <C> <C>
CASH FLOW FROM OPERATING ACTIVITIES:
Income from continuing operations $ 8,774 $ 8,122
Effects of noncash charges to income -
Depreciation 2,225 1,912
Deferred income taxes, net 351 92
Provisions for self insurance 140 241
Other, net 350 530
Changes in working capital, exclusive of cash
and current portion of long-term debt -
Receivables and accrued utility revenues (9,903) (5,037)
Gas held by suppliers 17,391 13,414
Accounts payable (9,181) (1,885)
Deferred cost of gas and supplier refunds, net 8,751 (2,955)
Other current assets and liabilities, net 1,295 4,995
Other operating items, net (585) (2,895)
Net cash provided by continuing operations 19,608 16,534
Net cash provided by discontinued operations - 2,133
Net cash provided by operating activities 19,608 18,667
CASH FLOW FROM INVESTING ACTIVITIES:
Additions to utility plant (6,529) (2,973)
Proceeds from the sale of discontinued operations - 261,752
Acquisition of regulated business (2,009) -
Other, net 423 68
Net cash provided by (used for) investing
activities (8,115) 258,847
CASH FLOW FROM FINANCING ACTIVITIES:
Issuance of common stock - 339
Repurchase of common stock - (85,000)
Repurchase of preferred stock (82) -
Dividends on common and preferred stock (356) (34,407)
Repayment of long-term debt (2,941) (50,000)
Net decrease in bank borrowings (7,874) (76,443)
Other, net 38 (80)
Net cash used for financing activities (11,215) (245,591)
NET INCREASE IN CASH AND CASH EQUIVALENTS 278 31,923
CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR 690 328
CASH AND CASH EQUIVALENTS AT END OF YEAR $ 968 $ 32,251
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Cash paid during the period for:
Interest (net of amount capitalized) $ 1,716 $ 3,082
Income taxes $ 610 $ 445
The accompanying notes are an integral part of the consolidated financial statements.
</TABLE>
-5-
<PAGE>
PG ENERGY INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Nature of the Business. PG Energy Inc. ("PGE") a wholly-owned subsidiary of
Pennsylvania Enterprises, Inc. ("PEI"), and Honesdale Gas Company ("Honesdale")
a wholly-owned subsidiary of PGE acquired on February 14, 1997, are regulated
public utilities. Together PGE and Honesdale distribute natural gas to a
twelve-county area in northeastern Pennsylvania, a territory that includes 129
municipalities, in addition to the cities of Scranton, Wilkes-Barre and
Williamsport.
Principles of Consolidation. The consolidated financial statements include
the accounts of PGE and its subsidiary, Honesdale, beginning February 14, 1997,
the date Honesdale was acquired by PGE. All material intercompany accounts have
been eliminated in consolidation.
Both PGE and Honesdale are subject to the jurisdiction of the Pennsylvania
Public Utility Commission ("PPUC") for rate and accounting purposes. The
financial statements of PGE and Honesdale that are incorporated in these
consolidated financial statements have been prepared in accordance with
generally accepted accounting principles, including the provisions of Financial
Accounting Standards Board ("FASB") Statement 71, "Accounting for the Effects of
Certain Types of Regulation," which give recognition to the rates and accounting
practices of regulatory agencies such as the PPUC.
Interim Financial Statements. The interim consolidated financial statements
included herein have been prepared by PGE without audit, pursuant to the rules
and regulations of the Securities and Exchange Commission. Certain information
and footnote disclosures normally included in financial statements prepared in
accordance with generally accepted accounting principles have been condensed or
omitted pursuant to such rules and regulations, although PGE believes that the
disclosures are adequate to make the information presented not misleading.
The results for the interim periods are not indicative of the results to be
expected for the year, primarily due to the effect of seasonal variations in
weather on the sale of natural gas. However, in the opinion of management, all
adjustments, consisting of only normal recurring accruals, necessary to present
fairly the results for the interim periods have been reflected in the
consolidated financial statements. It is suggested that these consolidated
financial statements be read in conjunction with the consolidated financial
statements and the notes thereto included in PGE's latest annual report on Form
10-K.
Use of Accounting Estimates. The preparation of financial statements in
conformity with generally accepted accounting principles requires management to
make estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date of
the financial statements and the reported amounts of revenues and expenses
during the reporting period. These estimates involve judgments with respect to,
among other things, various future economic factors and regulatory matters which
are difficult to predict and are beyond the control of PEI. Therefore, actual
amounts could differ from these estimates.
-6-
<PAGE>
(2) RATE MATTERS
<TABLE>
<CAPTION>
<S> <C> >c?
Rate Increase. By Order adopted December 19, 1996, the PPUC approved an
overall 5.3% increase in PGE's base gas rates, designed to produce $7.5 million
of additional annual revenue, effective January 15, 1997. Under the terms of
the Order, the billing for the impact of the rate increase relative to PGE's
residential heating customers (which it is estimated will total $6.6 million on
an annual basis) is being deferred, without carrying charges, until July, 1997.
</TABLE>
Gas Cost Adjustments. The provisions of the Pennsylvania Public Utility
Code require that the tariffs of local gas distribution companies ("LDCs") be
adjusted on an annual basis, and, in the case of larger LDCs such as PGE, on an
interim basis when circumstances dictate, to reflect changes in their purchased
gas costs. The procedure includes a process for the reconciliation of actual
gas costs incurred and actual revenues received and also provides for the refund
of any overcollections, plus interest thereon, or the recoupment of any
undercollections of gas costs.
In accordance with these procedures, PGE has been permitted to make the
following changes since January 1, 1996, to the gas costs contained in its gas
tariff rates:
[CAPTION]
Change in Calculated
Effective Rate per MCF Increase (Decrease)
Date From To in Annual Revenue
[S] [C] [C] [C]
March 1, 1997 $4.18 $4.49 $ 8,300,000
December 1, 1996 3.01 4.18 32,400,000
September 1, 1996 2.88 3.01 3,600,000
June 1, 1996 2.75 2.88 3,400,000
The changes in gas rates on account of purchased gas costs have no effect on
earnings since the change in revenue is offset by a corresponding change in the
cost of gas.
(3) COMMITMENTS AND CONTINGENCIES
Environmental Matters. PGE, like many gas distribution companies, once
utilized manufactured gas plants in connection with providing gas service to its
customers. None of these plants has been in operation since 1960, and several
of the plant sites are no longer owned by PGE. Pursuant to the Comprehensive
Environmental Response, Compensation and Liability Act of 1980 ("CERCLA"), PGE
filed notices with the United States Environmental Protection Agency (the "EPA")
with respect to the former plant sites. None of the sites is or was formerly on
the proposed or final National Priorities List. The EPA has conducted site
inspections and made preliminary assessments of each site and has concluded that
no further remedial action is planned. While this conclusion does not
constitute a legal prohibition against further regulatory action under CERCLA or
other applicable federal or state law, PGE does not believe that additional
costs, if any, related to these manufactured gas plant sites would be material
to its financial position or results of operations since environmental
remediation costs generally are recoverable through rates over a period of time.
-7-
<PAGE>
PG ENERGY INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
RESULTS OF CONTINUING OPERATIONS
The following table expresses certain items in PGE's consolidated statements
of income as percentages of operating revenues for each of the three-month
period ended March 31, 1997 and 1996:
[CAPTION]
Three Months Ended
March 31,
1997 1996
[S] [C] [C]
OPERATING REVENUES.................................... 100.0% 100.0%
Cost of gas......................................... 61.5 57.6
OPERATING MARGIN...................................... 38.5 42.4
OTHER OPERATING EXPENSES:
Operation........................................... 8.1 9.4
Maintenance......................................... 1.4 1.8
Depreciation........................................ 2.7 2.7
Income taxes........................................ 7.3 8.5
Taxes other than income taxes....................... 5.4 5.5
Total operating expenses.......................... 24.9 27.9
OPERATING INCOME...................................... 13.6 14.5
OTHER INCOME, NET..................................... 0.3 0.2
INTEREST CHARGES...................................... (2.9) (3.0)
INCOME FROM CONTINUING OPERATIONS..................... 11.0 11.7
LOSS WITH RESPECT TO DISCONTINUED OPERATIONS.......... - (0.5)
NET INCOME ........................................... 11.0 11.2
DIVIDENDS ON PREFERRED STOCK (1)...................... (0.5) (0.9)
EARNINGS APPLICABLE TO COMMON STOCK................... 10.5% 10.3%
(1) None of the dividends on preferred stock was allocated to the discontinued
operations.
o Three Months Ended March 31, 1997, Compared With Three Months Ended
March 31, 1996
Operating Revenues. Operating revenues increased $10.5 million (15.2%) from
$69.4 million for the quarter ended March 31, 1996, to $79.9 million for the
quarter ended March 31, 1997, primarily as a result of higher levels in PG
Energy Inc.'s ("PGE") gas cost rate and the effect of the rate increase granted
PGE by the Pennsylvania Public Utility Commission (the "PPUC") which became
effective on January 15, 1997 (see "Rate Matters"). The effect of the increase
in rates was partially offset by a 1.2 billion cubic feet (9.3%) decrease in
-8-
<PAGE>
sales to PGE's residential and commercial heating customers. There was a 331
(10.0%) decrease in heating degree days from 3,321 (104.1% of normal) during the
first quarter of 1996 to 2,990 (93.7% of normal) during the first quarter of
1997. Operating revenues of Honesdale Gas Company ("Honesdale") totaling
$834,000 from Honesdale's February 14, 1997, acquisition date through March 31,
1997, also contributed to the increased operating revenues.
Cost of Gas. The cost of gas increased $9.2 million (22.9%) from $40.0
million for the first quarter of 1996 to $49.1 million for the first quarter of
1997, primarily because of higher levels in PGE's gas cost rate (see "-Rate
Matters") and the inclusion in the first quarter of 1997 of $574,000 of gas
costs with respect to Honesdale from its February 14, 1997, acquisition date
through March 31, 1997.
Operating Margin. The operating margin increased $1.4 million (4.6%) from
$29.4 million in the first quarter of 1996 to $30.8 million in the first quarter
of 1997, primarily because of the aforementioned increase in PGE's gas rates
effective January 15, 1997 (see "-Rate Matters") and the inclusion of
Honesdale's operating margin from its February 14, 1997, acquisition date. As a
percentage of operating revenues, the margin decreased from 42.4% in the first
quarter of 1996 to 38.5% in the first quarter of 1997 as a result of the
proportionately higher cost of gas during the period.
Other Operating Expenses. Other operating expenses increased $532,000
(2.7%) from $19.4 million for the quarter ended March 31, 1996, to $19.9 million
for the quarter ended March 31, 1997. This increase was primarily attributable
to a $312,000 (16.4%) increase in depreciation expense, as a result of additions
to PGE's utility plant, and a $499,000 (13.1%) increase in taxes other than
income taxes resulting from a higher level of gross receipts tax because of the
increased sales by PGE and the sales by Honesdale from its acquisition date.
The effects of these increases were partially offset by lower levels of
operation and maintenance expense. As a percentage of operating revenues, other
operating expenses decreased from 27.9% during the quarter ended March 31, 1996,
to 24.9% during the quarter ended March 31, 1997, primarily as a result of the
significantly greater increase in operating revenues during the period.
Operating Income. As a result of the above, operating income increased by
$831,000 (8.3%) from $10.0 million for the first quarter of 1996 to $10.9
million for the first quarter of 1997. However, as a percentage of total
operating revenues, operating income decreased for such periods from 14.5% in
the first quarter of 1996 to 13.6% in the first quarter of 1997, primarily
because of the proportionately higher cost of gas in 1997.
Other Income, Net. Other income, net increased $89,000 (59.3%) from
$150,000 for the three-month period ended March 31, 1996, to $239,000 for the
three-month period ended March 31, 1997, largely as a result of a gain on the
condemnation of certain property of PGE for highway construction.
Interest Charges. Interest charges increased by $268,000 (13.0%) from $2.1
million for the first quarter of 1996 to $2.3 million for the first quarter of
1997. This increase was largely attributable to bank borrowings by PGE to
finance construction expenditures and for other working capital needs and the
reduction in PGE's interest expense in the first quarter of 1996 resulting from
the repayment of its $50.0 million term loan and all of its then outstanding
bank borrowings on February 16, 1996, with proceeds from the sale of its
regulated water utility operations on such date.
-9-
<PAGE>
Income From Continuing Operations. Income from continuing operations
increased $652,000 (8.0%) from $8.1 million for the quarter ended March 31,
1996, to $8.8 million for the quarter ended March 31, 1997. This increase was
largely the result of the matters discussed above, principally the increase in
operating margin, the effects of which were partially offset by the higher
levels of other operating expenses and interest charges.
Net Income. The increase in net income of $1.0 million (13.1%) from $7.8
million for the first quarter of 1996 to $8.8 million for the first quarter of
1997, was largely the result of the higher income from continuing operations, as
discussed above, and the absence of any loss with respect to discontinued
operations.
Dividends on Preferred Stock. Dividends on preferred stock decreased
$284,000 (44.6%) from $637,000 for the first quarter of 1996 to $353,000 for the
first quarter of 1997, primarily as a result of the repurchase by PGE in 1996 of
134,359 shares of its 9% cumulative preferred stock, 9,408 shares of its 5.75%
cumulative preferred stock and 20,330 shares of its 4.10% cumulative preferred
stock, largely during the second quarter of the year.
Earnings Applicable to Common Stock. The increase in earnings applicable to
common stock of $1.3 million (18.3%) from $7.1 million for the three-month
period ended March 31, 1996, to $8.4 million for the three-month period ended
March 31, 1997, as well as the increase in earnings per share of common stock of
$.95 (59.7%) from $1.59 per share for the three-month period ended March 31,
1996, to $2.54 per share for the three-month period ended March 31, 1997, were
the result of the higher income from continuing operations and reduced dividends
on preferred stock, as discussed above, and the absence of any loss with respect
to discontinued operations. The increase in earnings applicable to common stock
also reflected a 25.8% decrease in the weighted average number of shares
outstanding as a result of the repurchase by PGE of shares of its common stock
on February 16, 1996, with proceeds from the sale of its regulated water utility
operations.
RATE MATTERS
<TABLE>
<CAPTION>
<S> <C> <C>
Rate Increase. By Order adopted December 19, 1996, the PPUC approved an
overall 5.3% increase in PGE's base gas rates, designed to produce $7.5 million
of additional annual revenue, effective January 15, 1997. Under the terms of
the Order, the billing for the impact of the rate increase relative to PGE's
residential heating customers (which it is estimated will total $6.6 million on
an annual basis) is being deferred, without carrying charges, until July, 1997.
</TABLE>
Gas Cost Adjustments. The provisions of the Pennsylvania Public Utility
Code require that the tariffs of local gas distribution companies ("LDCs") be
adjusted on an annual basis, and, in the case of larger LDCs such as PGE, on an
interim basis when circumstances dictate, to reflect changes in their purchased
gas costs. The procedure includes a process for the reconciliation of actual
gas costs incurred and actual revenues received and also provides for the refund
of any overcollections, plus interest thereon, or the recoupment of any
undercollections of gas costs.
-10-
<PAGE>
In accordance with these procedures, PGE has been permitted to make the
following changes since January 1, 1996, to the gas costs contained in its gas
tariff rates:
[CAPTION]
Change in Calculated
Effective Rate per MCF Increase (Decrease)
Date From To in Annual Revenue
[S] [C] [C] [C]
March 1, 1997 $4.18 $4.49 $ 8,300,000
December 1, 1996 3.01 4.18 32,400,000
September 1, 1996 2.88 3.01 3,600,000
June 1, 1996 2.75 2.88 3,400,000
The changes in gas rates on account of purchased gas costs have no effect on
earnings since the change in revenue is offset by a corresponding change in the
cost of gas.
Recovery of FERC Order 636 Transition Costs. By Order of the PPUC entered
August 26, 1994, PGE began recovering the Non-Gas Transition Costs (i.e. Gas
Supply Realignment and Stranded Costs) that it estimates it will ultimately be
billed pursuant to Federal Energy Regulatory Commission Order 636 through the
billing of a surcharge to its customers effective September 12, 1994. It is
currently estimated that $10.2 million of Non-Gas Transition Costs will be
billed to PGE, generally over a six-year period extending through January 1,
1999, of which $8.7 million had been billed to PGE and $8.5 million had been
recovered from its customers as of March 31, 1997. PGE has recorded the
estimated Non-Gas Transition Costs that remain to be billed to it and the
amounts remaining to be recovered from its customers.
LIQUIDITY AND CAPITAL RESOURCES
Liquidity
The primary capital needs of PGE continue to be the funding of its
construction program and the seasonal funding of its gas purchases and increases
in its customer accounts receivable. PGE's revenues are highly seasonal and
weather-sensitive, with approximately 75% of its revenues normally being
realized in the first and fourth quarters of the calendar year when the
temperatures in its service area are the coldest.
The cash flow from PGE's operations is generally sufficient to fund a
portion of its construction expenditures. However, to the extent external
financing is required, it is the practice of PGE to use bank borrowings to fund
such expenditures, pending the periodic issuance of stock and long-term debt.
Bank borrowings are also used by PGE for the seasonal funding of its gas
purchases and increases in customer accounts receivable.
In order to finance construction expenditures and to meet its seasonal
borrowing requirements, PGE has made arrangements for a total of $70.5 million
of unsecured revolving bank credit, which is deemed adequate for its immediate
needs. Specifically, PGE currently has six bank lines of credit with an
aggregate borrowing capacity of $70.5 million which provide for borrowings at
interest rates generally less than prime and which mature at various times
during 1997 and 1998. As of May 1, 1997, PGE had $39.4 million of borrowings
outstanding under these bank lines of credit.
-11-
<PAGE>
In addition, as of March 31, 1997, PGE had borrowed $28.6 million from PEI.
The terms and conditions regarding such borrowing provide for the payment of
interest at rates generally less than prime and the repayment of principal on
December 31, 1997. PGE plans to arrange new and replacement bank lines of
credit when the funds that are available for borrowing from PEI are no longer
available and as it requires additional funding for working capital and other
purposes.
PGE, as well as Honesdale, believe that they will be able to raise in a
timely manner such funds as are required for their future construction
expenditures, refinancings and other working capital requirements.
Long-Term Debt and Capital Stock Financings
PGE periodically engages in long-term debt and capital stock financings in
order to obtain funds required for construction expenditures, the refinancing of
existing debt and various working capital purposes. No long-term debt or
capital stock financings were consummated by PGE during the three-month period
ended March 31, 1997. A $40.0-$50.0 million long-term debt financing, the
proceeds from which will be used to repay bank borrowings is, however, planned
by PGE for later in 1997.
Construction Expenditures and Related Financings
Expenditures for the construction of utility plant totaled $6.5 million
during the first three months of 1997 and are currently estimated to be $27.2
million during the remainder of the year. It is anticipated that such
expenditures will be financed with internally generated funds and bank
borrowings, pending the periodic issuance of stock and long-term debt.
Current Maturities of Long-Term Debt and Preferred Stock
As of March 31, 1997, $29.7 million of PGE's long-term debt, and $80,000 of
PGE's preferred stock was required to be repaid within twelve months.
On April 18, 1997, PGE announced an offer to purchase any and all of the
78,853 outstanding shares of its 4.10% cumulative preferred stock at a price of
$70.00 per share for an aggregate consideration of $5.5 million, exclusive of
fees and other expenses. The offer, which is not conditioned upon any minimum
number of shares being tendered by shareholders, will expire on May 16, 1997,
unless extended at the option of PGE. Although PGE cannot presently determine
the number of shares which will be tendered by shareholders pursuant to the
offer, it is anticipated that payment for any shares tendered will be financed
with borrowings under PGE's bank lines of credit.
Forward-Looking Statements
Certain statements made above relating to plans, conditions, objectives and
economic performance go beyond historical information and may provide an
indication of future results. To that extent, they are forward-looking
statements within the meaning of Section 21E of the Securities Exchange Act of
1934, and each is subject to factors that could cause actual results to differ
from those in the forward-looking statement, such as the nature of Pennsylvania
legislation restructuring the natural gas industry and general economic
conditions and uncertainties.
-12-
<PAGE>
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
27-1 Financial Data Schedule -- filed herewith.
(b) Reports on Form 8-K
No reports on Form 8-K were filed during the quarter for which this report
is filed.
-13-
<PAGE>
PG ENERGY INC.
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.
PG ENERGY INC.
(Registrant)
[CAPTION]
[S] [C] [C]
Date: May 13, 1997 By: /s/ Thomas J. Ward
Thomas J. Ward
Secretary
Date: May 13, 1997 By: /s/ John F. Kell, Jr.
John F. Kell, Jr.
Vice President, Financial Services
(Principal Financial Officer and
Principal Accounting Officer)
-14-
<PAGE>
<TABLE> <S> <C>
<ARTICLE> UT
<LEGEND>
THIS STATEMENT CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE BALANCE
SHEET, STATEMENTS OF INCOME AND CASH FLOW, AND IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO SUCH STATEMENTS.
</LEGEND>
<CIK> 0000077242
<NAME> PG ENERGY INC.
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> MAR-31-1997
<BOOK-VALUE> PER-BOOK
<TOTAL-NET-UTILITY-PLANT> 246,218,000
<OTHER-PROPERTY-AND-INVEST> 4,644,000
<TOTAL-CURRENT-ASSETS> 62,065,000
<TOTAL-DEFERRED-CHARGES> 36,483,000
<OTHER-ASSETS> 0
<TOTAL-ASSETS> 349,410,000
<COMMON> 33,142,000
<CAPITAL-SURPLUS-PAID-IN> 32,678,000
<RETAINED-EARNINGS> 38,641,000
<TOTAL-COMMON-STOCKHOLDERS-EQ> 104,461,000
739,000
18,804,000
<LONG-TERM-DEBT-NET> 65,392,000
<SHORT-TERM-NOTES> 0
<LONG-TERM-NOTES-PAYABLE> 0
<COMMERCIAL-PAPER-OBLIGATIONS> 0
<LONG-TERM-DEBT-CURRENT-PORT> 58,279,000
80,000
<CAPITAL-LEASE-OBLIGATIONS> 0
<LEASES-CURRENT> 0
<OTHER-ITEMS-CAPITAL-AND-LIAB> 101,655,000
<TOT-CAPITALIZATION-AND-LIAB> 349,410,000
<GROSS-OPERATING-REVENUE> 79,939,000
<INCOME-TAX-EXPENSE> 5,831,000
<OTHER-OPERATING-EXPENSES> 63,244,000
<TOTAL-OPERATING-EXPENSES> 69,075,000
<OPERATING-INCOME-LOSS> 10,864,000
<OTHER-INCOME-NET> 239,000
<INCOME-BEFORE-INTEREST-EXPEN> 11,103,000
<TOTAL-INTEREST-EXPENSE> 2,329,000
<NET-INCOME> 8,774,000
353,000
<EARNINGS-AVAILABLE-FOR-COMM> 8,421,000
<COMMON-STOCK-DIVIDENDS> 3,000
<TOTAL-INTEREST-ON-BONDS> 4,837,000
<CASH-FLOW-OPERATIONS> 19,608,000
<EPS-PRIMARY> 2.54
<EPS-DILUTED> 2.54
</TABLE>
