<TABLE>
<CAPTION>
=============================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
Form 10-Q
(X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the Quarter Ended September 30, 1995
OR
( )TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the Transition Period from ______ to ______
<S> <C> <C>
Commission Registrant, State of Incorporation, I.R.S. Employer
File Number Address and Telephone Number Identification No.
33-92776 Mobile Energy Services Company, L.L.C. 66-1148953
(An Alabama Corporation)
900 Ashwood Parkway, Suite 300
Atlanta, Georgia 30338
(770) 673-7781
33-92776 Mobile Energy Services Holdings, Inc. 58-2133689
(An Alabama Corporation)
900 Ashwood Parkway, Suite 450
Atlanta, Georgia 30338
(770) 673-7730
Indicate by check mark whether the registrants (1) have 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
registrants were required to file such reports), and (2) have been subject to
such filing requirements for the past 90 days.
Yes No X
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C>
Description of Shares Outstanding
Registrant Common Stock at October 31, 1995
Mobile Energy Services Company, L.L.C. Not Applicable
Mobile Energy Services Holdings, Inc. Par Value $1 Per Share 1,000
============================================================================
</TABLE>
<PAGE>
Table of Contents
PART I
PAGE
Definitions 2
Mobile Energy Services Company, L.L.C.
Management's Opinion as to Fair Statement of Results 3
Condensed Statements of Income 4
Condensed Statements of Cash Flows 5
Condensed Balance Sheets 6
Mobile Energy Services Holdings, Inc.
Management's Opinion as to Fair Statement of Results 7
Condensed Statements of Income 8
Condensed Statements of Cash Flows 9
Condensed Balance Sheets 10
Combined Management's Discussion and Analysis of Results of Operations
and Financial Condition 11
Notes to the Condensed Financial Statements 15
PART II
Item 6. Exhibits and Reports on Form 8-K 17
Signatures 18
DEFINITIONS
TERM MEANING
Clean Air Act ....................... Clean Air Act Amendments of 1990
FASB................................. Financial Accounting Standards Board
Holdings............................. Mobile Energy Services Holdings, Inc.
Mobile Energy........................ Mobile Energy Services Company, L.L.C.
Scott Paper.......................... Scott Paper Company
SEC.................................. Securities and Exchange Commission
SEI.................................. Southern Electric International, Inc.
SOUTHERN............................. The Southern Company
2
<PAGE>
MOBILE ENERGY SERVICES COMPANY, L.L.C.
MANAGEMENT'S OPINION AS TO FAIR STATEMENT OF RESULTS
The condensed financial statements of Mobile Energy included herein have
been prepared by Mobile Energy without audit, pursuant to the rules and
regulations of the SEC. In the opinion of Mobile Energy's management, the
information furnished herein reflects all adjustments (which, except for the
termination of interest rate hedging agreements as described in Note (A) to the
Condensed Financial Statements herein, included only normal recurring
adjustments) necessary to present fairly the results for the periods ended
September 30, 1995. 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 Mobile Energy believes that the disclosures are adequate
to make the information presented not misleading. It is suggested that these
condensed financial statements be read in conjunction with the financial
statements and the notes thereto included in Mobile Energy's Registration
Statement on Form S-1, as amended.
3
<PAGE>
<TABLE>
<CAPTION>
MOBILE ENERGY SERVICES COMPANY, L.L.C.
CONDENSED STATEMENTS OF INCOME (UNAUDITED)
(Stated in Thousands of Dollars)
<S> <C> <C>
For the Three Months For the Nine Months
Ended September 30, 1995 Ended September 30, 1995
------------------------ ------------------------
OPERATING REVENUES:
Demand charges $14,678 $43,658
Processing charges 5,520 17,757
Other 125 347
------- -------
Total operating revenues 20,323 61,762
------- -------
OPERATING EXPENSES:
Operations and maintenance 6,974 19,024
Fuel 1,137 4,645
Depreciation 2,923 8,558
------- -------
Total operating expenses 11,034 32,227
------- -------
OPERATING INCOME 9,289 29,535
INTEREST EXPENSE 5,487 11,036
OTHER INCOME 546 589
------- -------
NET INCOME $ 4,348 $19,088
======= =======
The accompanying notes as they relate to Mobile Energy are an integral part of these condensed statements.
</TABLE>
4
<PAGE>
<TABLE>
<CAPTION>
MOBILE ENERGY SERVICES COMPANY, L.L.C.
CONDENSED STATEMENTS OF CASH FLOWS (UNAUDITED)
(Stated in Thousands of Dollars)
<S> <C>
For the Nine Months
September 30, 1995
------------------
OPERATING ACTIVITIES:
Net income $ 19,088
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization 8,558
Change in certain current assets and liabilities:
Increase in trade accounts receivable (9,168)
Decrease in receivables from associated companies 1,403
Decrease in trade accounts payable (1,689)
Decrease in account payable - associated company (6,986)
Increase in accrued interest 2,505
Other, net (130)
---------
Net cash provided from operating activities 13,581
---------
INVESTING ACTIVITIES:
Property, plant, and equipment additions (680)
Construction work in process additions (4,065)
--------
Net cash used in investing activities (4,745)
--------
FINANCING ACTIVITIES:
Issuance of long-term debt 296,408
Equity contributions 3,057
Redemption of long-term debt (85,000)
Redemption of note payable - associated company (190,000)
Payment of member distributions (13,825)
---------
Net cash provided from financing activities 10,640
---------
INCREASE IN CASH AND CASH EQUIVALENTS 19,476
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 1,173
---------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 20,649
=========
The accompanying notes as they relate to Mobile Energy are an integral part of these condensed statements.
</TABLE>
5
<PAGE>
<TABLE>
<CAPTION>
MOBILE ENERGY SERVICES COMPANY, L.L.C.
CONDENSED BALANCE SHEETS
(Stated in Thousands of Dollars)
ASSETS
<S> <C> <C>
At September 30, 1995 At December 31,
(Unaudited) 1994
--------------------- ---------------
CURRENT ASSETS
Cash and cash equivalents $ 20,649 $ 1,173
Customer receivables 13,398 4,230
Receivables from associated companies 0 1,403
Materials and supplies 2,245 2,116
Prepaid expenses 235 1,102
Other 526 134
-------- --------
Total current assets 37,053 10,158
-------- --------
PROPERTY, PLANT AND EQUIPMENT 358,469 357,789
Less accumulated depreciation (8,949) (468)
Add construction work in process 4,065 0
-------- --------
Property, plant and equipment, net 353,585 357,321
-------- --------
DEFERRED LOAN COST
Net of accumulated amortization of $205 at September 30, 1995
and $0 at December 31, 1994 45,419 1,822
-------- --------
Total Assets $436,057 $369,301
======== ========
LIABILITIES AND MEMBERS' EQUITY
CURRENT LIABILITIES
Trade accounts payable $ 586 $ 2,275
Account payable - associated company 4,237 11,223
Note payable - associated company 0 190,000
Current portion - long-term debt 5,895 0
Accrued interest 2,824 319
Other 130 734
-------- --------
Total current liabilities 13,672 204,551
-------- --------
LONG-TERM DEBT 334,315 85,000
COMMITMENTS AND CONTINGENCIES (Note B)
MEMBERS' EQUITY 88,070 79,750
-------- --------
Total Liabilities and Members' Equity $436,057 $369,301
======== ========
The accompanying notes as they relate to Mobile Energy are an integral part of these condensed statements.
</TABLE>
6
<PAGE>
MOBILE ENERGY SERVICES HOLDINGS, INC. AND SUBSIDIARY
MANAGEMENT'S OPINION AS TO FAIR STATEMENT OF RESULTS
The condensed consolidated financial statements of Holdings included herein
have been prepared by Holdings without audit, pursuant to the rules and
regulations of the SEC. In the opinion of Holdings' management, the information
furnished herein reflects all adjustments (which, except for the termination of
interest rate hedging agreements as described in Note (A) to the Condensed
Consolidated Financial Statements herein, included only normal recurring
adjustments) necessary to present fairly the results for the periods ended
September 30, 1995. 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 Holdings believes that the disclosures are adequate to
make the information presented not misleading. It is suggested that these
condensed consolidated financial statements be read in conjunction with the
financial statements and the notes thereto included in Holdings Registration
Statement on Form S-1, as amended.
7
<PAGE>
<TABLE>
<CAPTION>
MOBILE ENERGY SERVICES HOLDINGS, INC. AND SUBSIDIARY
CONDENSED CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
(Stated in Thousands of Dollars)
<S> <C> <C>
For the Three Months For the Nine Months
Ended September 30, 1995 Ended September 30, 1995
------------------------ ------------------------
OPERATING REVENUES:
Demand charges $14,678 $43,658
Processing charges 5,520 17,757
Other 125 347
------- -------
Total operating revenues 20,323 61,762
------- -------
OPERATING EXPENSES:
Operations and maintenance 6,974 19,024
Fuel 1,137 4,645
Depreciation 2,923 8,558
------- -------
Total operating expenses 11,034 32,227
------- -------
OPERATING INCOME 9,289 29,535
INTEREST EXPENSE 5,487 11,036
OTHER INCOME 546 589
MINORITY INTEREST 26 117
------- -------
INCOME BEFORE INCOME TAXES 4,322 18,971
PROVISION FOR INCOME TAXES 1,663 7,301
------- -------
NET INCOME $ 2,659 $11,670
======= =======
The accompanying notes as they relate to Holdings are an integral part of these condensed statements.
</TABLE>
8
<PAGE>
<TABLE>
<CAPTION>
MOBILE ENERGY SERVICES HOLDINGS, INC. AND SUBSIDIARY
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
(Stated in Thousands of Dollars)
<S> <C>
For the Nine Months
September 30, 1995
-------------------
OPERATING ACTIVITIES:
Net income $ 11,670
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization 8,558
Minority interest 117
Change in certain current assets and liabilities:
Increase in trade accounts receivable (9,168)
Decrease in trade accounts payable (1,689)
Decrease in account payable - associated company (6,965)
Increase in accrued interest 2,505
Increase in deferred income taxes 15,985
Other, net 704
--------
Net cash provided from operating activities 21,717
--------
INVESTING ACTIVITIES:
Property, plant, and equipment (680)
Construction work in process (4,065)
-------
Net cash used in investing activities (4,745)
-------
FINANCING ACTIVITIES:
Issuance of long-term debt 296,408
Redemption of long-term debt (85,000)
Redemption of note payable - associated company (190,000)
Payment of dividends (14,694)
--------
Net cash provided from financing activities 6,714
--------
INCREASE IN CASH AND EQUIVALENTS 23,686
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 1,173
--------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 24,859
========
SUPPLEMENTAL CASH FLOW INFORMATION:
Cash paid during the period for--
Interest (net of amount capitalized) $ 6,805
Income taxes (refunded) (7,268)
The accompanying notes as they relate to Holdings are an integral part of these condensed statements.
</TABLE>
9
<PAGE>
<TABLE>
<CAPTION>
MOBILE ENERGY SERVICES HOLDINGS, INC. AND SUBSIDIARY
CONDENSED CONSOLIDATED BALANCE SHEETS
(Stated in Thousands of Dollars)
ASSETS
<S> <C> <C>
At September 30, 1995 At December 31,
(Unaudited) 1994
--------------------- ---------------
CURRENT ASSETS
Cash and cash equivalents $ 24,859 $ 1,173
Customer receivables 13,398 4,230
Receivables from associated companies 0 1,403
Materials and supplies 2,245 2,116
Prepaid expenses 235 1,102
Other 634 134
-------- --------
Total current assets 41,371 10,158
-------- --------
PROPERTY, PLANT AND EQUIPMENT 358,469 357,789
Less accumulated depreciation (8,949) (468)
Add construction work in process 4,065 0
-------- --------
Property, plant and equipment, net 353,585 357,321
-------- --------
DEFERRED LOAN COST
Net of accumulated amortization of $205
at September 30, 1995 and $0 at December 31, 1994 45,419 1,822
-------- --------
Total assets $440,375 $369,301
======== ========
LIABILITIES AND STOCKHOLDER'S EQUITY
CURRENT LIABILITIES
Trade accounts payable $ 586 $ 2,275
Account payable - associated company 4,258 11,223
Note payable - associated company 0 190,000
Current portion - long-term debt 5,895 0
Accrued interest 2,824 319
Other 138 1,169
-------- --------
Total current liabilities 13,701 204,986
-------- --------
LONG-TERM DEBT 334,315 85,000
DEFERRED INCOME TAXES 18,959 2,974
MINORITY INTEREST 881 798
COMMITMENTS AND CONTINGENCIES (Note B)
STOCKHOLDER'S EQUITY:
Common stock, $1 par value 1,000 shares issued and outstanding 1 1
Paid-in capital 74,249 74,249
Retained earnings (deficit) (1,731) 1,293
-------- --------
Total Liabilities and Stockholder's Equity $440,375 $369,301
======== ========
The accompanying notes as they relate to Holdings are an integral part of these condensed statements.
</TABLE>
10
<PAGE>
Mobile Energy Services Company, L.L.C.
Mobile Energy Services Holdings, Inc.
Management's Discussion and Analysis of
Results of Operations and Financial Condition
Results of Operations
Background
Mobile Energy and Holdings were formed to acquire, own and manage the energy and
black liquor recovery complex (the Energy Complex) located at an integrated
pulp, paper and tissue manufacturing facility in Mobile, Alabama. Mobile Energy
acquired the Energy Complex and commenced operations on December 16, 1994. Its
sole business consists exclusively of the ownership and management of the Energy
Complex. Holdings, which owns 99% of the equity interests in Mobile Energy, does
not conduct any independent operations. SEI owns the remaining equity interest
in Mobile Energy.
The manufacturing facility is a physically integrated complex that produces
tissue and paper products from timber that is processed into bleached and
unbleached pulp by the pulp mill. The pulp, paper and tissue mills currently
obtain all of their aggregate steam processing needs and 98 percent of their
aggregate power processing needs from the Energy Complex. In addition, the
Energy Complex processes black liquor delivered by the pulp mill owner into
green liquor, a necessary component of the pulp making process. The conversion
of black liquor into green liquor involves a combustion process which provides
heat that is further used to generate steam used for steam processing services.
Mobile Energy's revenues are comprised primarily of demand and processing
charges for services provided to the three mills.
Demand charges represent compensation to Mobile Energy for dedicating a
portion of the Energy Complex's capacity to the three mills. Demand charges were
designed to cover, among other things, fixed costs, including debt service.
Processing charges are paid by each mill owner to Mobile Energy based on
formulary usage charges which vary from month to month, based on the amount of
processing services required by, and provided to, each mill owner, and on Mobile
Energy's efficiency with respect to fuel usage. Processing charges were designed
to cover variable operating costs not covered by demand charges, including fuel
expenses.
Because the Energy Complex was not operated as an independent business
prior to Mobile Energy's acquisition, no financial statements are available with
respect to periods prior to December 16, 1994. Accordingly, this discussion will
not include financial comparisons of current and prior year periods.
Additionally, as a consequence of the relatively short time period since Mobile
Energy began operations, discussion and analysis of its results of operations is
necessarily limited in scope, and may not be indicative of the results of
operations and financial condition over a long period of time.
11
<PAGE>
Mobile Energy Services Company, L.L.C.
Mobile Energy Services Holdings, Inc.
Management's Discussion and Analysis of
Results of Operations and Financial Condition
Results of Operations (Continued)
Revenues
Operating revenues for the third quarter were $20.3 million , including demand
charges of $14.7 million and processing charges of $5.5 million. Operating
revenues year-to-date were $61.8 million, including demand charges of $43.7
million and processing charges of $17.8 million.
Demand charges represent reimbursement to Mobile Energy of fixed operating
costs and, as a result, will not fluctuate based on the level of processing
services provided to the mills. Processing charges for these same periods
reflect utilization of the Energy Complex near capacity levels. Demand and
processing charges for the third quarter and year-to-date 1995 in thousands of
dollars and expressed as a percent of total revenues, were as follows:
Quarter Ended Nine Months Ended
September 30, 1995 September 30, 1995
Dollars Percent Dollars Percent
------- ------- ------- -------
Demand charges $14,678 72.2% $43,658 70.7%
Processing charges
Pulp Mill 877 4.3 3,326 5.4
Tissue Mill 2,339 11.5 7,206 11.7
Paper Mill 2,304 11.4 7,225 11.7
Other revenues 125 .6 347 .5
------- ----- ------- -----
Total revenues $20,323 100.0% $61,762 100.0%
======= ===== ======= =====
Operating Expenses
Total operating expenses for the third quarter and year-to-date 1995 aggregated
$11.0 million and $32.2 million, respectively. Operating expenses are comprised
of operations and maintenance expenses, fuel, and depreciation and amortization
and aggregated $7.0 million, $1.1 million and $2.9 million, respectively for
the third quarter and $19.0 million, $4.6 million and $8.6 million for the nine
months ended September 30, 1995.
Interest expense for the third quarter and year-to-date 1995 was $5.5
million and $11.0 million, respectively. Interest expense reflects the issuance
of $255.2 million first mortgage bonds in August 1995 bearing a coupon interest
rate of 8.665 % in addition to the amortization of swap breakage costs relative
to interest rate hedging agreements entered into in connection with the
acquisition. These interest rate hedging agreements are discussed further under
"Use of Proceeds" in Mobile Energy's Registration Statement on Form S-1, as
amended, and in Note A to the condensed financial statements herein.
Mobile Energy's net income for the third quarter was $4.3 million.
Holdings' net income for this same period was $2.7 million after deducting
12
<PAGE>
Mobile Energy Services Company, L.L.C.
Mobile Energy Services Holdings, Inc.
Management's Discussion and Analysis of
Results of Operations and Financial Condition
Results of Operations (Continued)
minority interest of $.02 million and income taxes of $1.7 million. For the
nine months ended September 30, 1995 Mobile Energy's net income was $19.1
million. Holdings' net income for this same period was $11.7 million after
deducting minority interest of $.1 million and income taxes of $7.3 million.
Income taxes for both periods were accrued based on a combined 38.25% state and
federal rate applied to pre-tax income.
Future Earnings Potential
The results of operations discussed above are not necessarily indicative of
future earnings. The level of future earnings depends on numerous factors
including the demand for processing services and the ability of Mobile Energy to
operate its facility efficiently.
Under the energy service agreements with mill owners, demand charges are
payable on a monthly basis regardless of whether a mill actually utilizes any or
all of the processing services corresponding to its dedicated demand. The
operating agreements generally provide that the aggregate demand level of the
mills (and, therefore, the aggregate demand charges payable by the mills) for
any processing service is subject to reduction only in December 1999, and on
each second anniversary thereafter. Each such two-year period is referred to as
a Demand Period. Subsequent to December 1999, demand charge reductions could
occur only if a mill's peak usage of a particular processing service in the
current Demand Period is less than its corresponding peak usage in the
immediately preceeding Demand Period. If this condition is met, a mill is
permitted to select a lower demand level for the ensuing Demand Period. Such
lower demand level, however, cannot be less than such mill's peak usage of the
particular processing service during the just concluded Demand Period.
Aggregate demand levels for processing services are subject to increase
periodically when a mill owner elects to increase its then applicable
requirement for processing service. However, because aggregate demand levels for
each processing service are currently equal to or approximate maximum capacity,
no increases over current demand levels can occur. Engineering estimates
indicate that between 65% and 67% of Mobile Energy's total operating revenues
through December 1999 will be attributable to demand charges and that the
remainder will be attributed to processing charges.
There is no requirement for a mill owner to purchase any particular
quantity of processing service at any given time. Therefore, Mobile Energy's
revenues from processing charges can be affected by seasonal and cyclical
fluctuations in the pulp, tissue and paper industry that affect the mills'
requirements for processing services. The markets for certain of the mills'
products have been highly cyclical, characterized by periods of supply and
demand imbalance. Mobile Energy expects, however, that a reduction in the
quantity of processing services provided to the mill owners as a result of such
imbalance would reduce variable operating expenses.
Pursuant to the implementation of a computer model that will compute, among
other things, the fuel cost component of the processing charges, Mobile Energy
will be permitted to charge mill owners, as a component of the processing
charges, for only those quantities of coal and gas that are
13
<PAGE>
Mobile Energy Services Company, L.L.C.
Mobile Energy Services Holdings, Inc.
Management's Discussion and Analysis of
Results of Operations and Financial Condition
Results of Operations (Continued)
contractually determined to be efficient (coal) and within specified protocol
for boiler dispatch (gas). If the Energy Complex uses more coal or gas than
amounts contractually includable as processing charges in the computer model,
the costs attributable to the excess quantities will be borne solely by Mobile
Energy. By contrast, if the Energy Complex uses less coal or gas than is
includable as a component of the processing charges in the computer model, net
income will be favorably impacted. Mobile Energy believes that it generally will
be able to operate the Energy Complex as efficiently as the standards set forth
in the computer model. Currently, Mobile Energy charges mill owners the actual
cost of fuel incurred.
Increases in compliance costs related to the Clean Water Act, the Clean Air
Act, the Resource Conservation and Recovery Act and similar State of Alabama
requirements will reduce earnings if such increased costs cannot be offset.
These matters are discussed under "Environmental Conditions" and "Environmental
Reports" in the "Business" section in Mobile Energy's Registration Statement on
Form S-1, as amended.
Financial Condition
Overview
As of September 30, 1995, Mobile Energy had $20.6 million in cash and cash
equivalents and total debt outstanding of $340.2 million. Outstanding debt
includes $255.2 million of first mortgage bonds issued on August 24, 1995, the
proceeds of which were used in part to repay a $190 million bridge loan to
SOUTHERN. The remaining debt consists of $85 million in tax-exempt bonds of The
Industrial Development Board of the City of Mobile, Alabama, the proceeds of
which were used to refund a 1984 tax-exempt bond previously issued by Scott
Paper and assumed by Mobile Energy as part of the acquisition of the Energy
Complex.
Mobile Energy's projected obligations for required payments of principal
and interest on long-term debt total approximately $33.6 million, $34.4 million
and $34.3 million for the years 1996, 1997 and 1998, respectively. There are no
interim principal maturities of the $85 million tax-exempt bonds which mature
January 1, 2020. Management believes cash flow from operations, together with
Mobile Energy's other available sources of liquidity, will be adequate to
provide for debt service, working capital and anticipated capital expenditures.
Capital Requirements
Estimated capital expenditures for the years 1996 through 1998 are $15.5
million, $5.5 million and $6.2 million, respectively. The capital budget is
subject to periodic review and revision. Capital costs incurred may vary from
estimates because of several factors, including changes in business conditions,
changes in environmental regulations and increasing costs of labor, equipment
and materials.
14
<PAGE>
Mobile Energy Services Company, L.L.C.
Mobile Energy Services Holdings, Inc.
Management's Discussion and Analysis of
Results of Operations and Financial Condition
Financial Condition (Continued)
Sources of Funds
Mobile Energy expects to meet future capital requirements primarily by using
funds from operations and, if needed, by utilizing a line of credit guaranteed
by SOUTHERN in the amount of $11 million.
To meet short-term cash needs and contingencies, Mobile Energy will rely on
cash flow from operations and short term borrowings under a $15 million working
capital facility.
15
<PAGE>
NOTES TO THE CONDENSED FINANCIAL STATEMENTS
FOR
MOBILE ENERGY SERVICES COMPANY L.L.C.
MOBILE ENERGY SERVICES HOLDINGS, INC.
INDEX TO APPLICABLE NOTES TO
FINANCIAL STATEMENTS BY REGISTRANT
Registrant Applicable Notes
MOBILE ENERGY A, B
HOLDINGS A, B
16
<PAGE>
MOBILE ENERGY SERVICES COMPANY L.L.C.
MOBILE ENERGY SERVICES HOLDINGS, INC.
NOTES TO CONDENSED FINANCIAL STATEMENTS:
(A) On December 19, 1994, Mobile Energy entered into two swaps with a bank.
The purpose of the swaps was to reduce the potential impact of interest
rate fluctuations between December 19, 1994 and the date the rates on
Mobile Energy's outstanding industrial revenue bonds and first mortgage
bonds are fixed. On August 24, 1995, Mobile Energy paid approximately
$32.3 million from the proceeds of its first mortgage bond offering to
terminate the swaps. This payment is deferred and amortized to interest
expense over the period of the related debt.
(B) Mobile Energy is contractually obligated under three energy service
agreements (the "Agreements") to provide power processing services and
steam processing services to the mills and liquor processing services to
the pulp mill for a period of 25 years beginning December 16, 1994. Under
the terms of the agreements, the mill owners are obligated to pay monthly
fixed demand charges for dedicated capacity of the Energy Complex and
also variable charges for actual amounts purchased.
In connection with the acquisition, Mobile Energy entered into
noncancelable land leases (the "Leases") with Scott Paper. Rent expense
under the Leases approximates $1 per year from 1995 through 2019. Also
contained in the Leases is an option to purchase the land from Scott
Paper at the end of the lease term for $10. However, retention of the
property is not under the control of Mobile Energy due to Scott's
superseding option to repurchase the Energy Complex from Mobile Energy at
the end of the lease term at fair market value. Accordingly, Mobile
Energy's repurchase option is not reasonably assured and therefore is not
considered a bargain purchase option under FASB No. 13, "Accounting for
Leases."
17
<PAGE>
PART II - OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibits.
Exhibit 27 - Financial Data Schedules
(a) Mobile Energy
(b) Holdings
(b) Reports on Form 8-K.
Neither registrant filed a Form 8-K during the third quarter of 1995.
18
<PAGE>
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. The signature of the undersigned company
shall be deemed to relate only to matters having reference to such company and
any subsidiaries thereof.
MOBILE ENERGY SERVICES COMPANY L.L.C.
By Thomas G. Boren
/s/ Thomas G. Boren
President and Chief Executive Officer
(Principal Executive Officer)
By Raymond D. Hill
/s/ Raymond D. HIll
Vice President and Chief Financial Officer
(Principal Financial Officer)
Date: November 10, 1995
-----------------------------------------------------------------------------
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. The signature of the undersigned company
shall be deemed to relate only to matters having reference to such company and
any subsidiaries thereof.
MOBILE ENERGY SERVICES HOLDINGS, INC.
By Thomas G. Boren
/s/ Thomas G. Boren
President and Chief Executive Officer
By Raymond D. Hill
/s/ Raymond D. Hill
Vice President and Chief Financial Officer
(Principal Financial Officer)
Date: November 10, 1995
19
<PAGE>
<TABLE> <S> <C>
<ARTICLE> UT
<LEGEND>
This schedule contains summary financial information extracted
from the Form 10-Q for September 30, 1995, and is qualified in its
entirety by reference to such financial statements.
</LEGEND>
<CIK> 0000945979
<NAME> MOBILE ENERGY SERVICES HOLDINGS INC
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1994
<PERIOD-END> SEP-30-1995
<BOOK-VALUE> PER-BOOK
<TOTAL-NET-UTILITY-PLANT> 353,585
<OTHER-PROPERTY-AND-INVEST> 0
<TOTAL-CURRENT-ASSETS> 41,371
<TOTAL-DEFERRED-CHARGES> 45,419
<OTHER-ASSETS> 0
<TOTAL-ASSETS> 440,375
<COMMON> 1
<CAPITAL-SURPLUS-PAID-IN> 74,249
<RETAINED-EARNINGS> (1,731)
<TOTAL-COMMON-STOCKHOLDERS-EQ> 72,519
0
0
<LONG-TERM-DEBT-NET> 340,210
<SHORT-TERM-NOTES> 0
<LONG-TERM-NOTES-PAYABLE> 0
<COMMERCIAL-PAPER-OBLIGATIONS> 0
<LONG-TERM-DEBT-CURRENT-PORT> (5,895)
0
<CAPITAL-LEASE-OBLIGATIONS> 0
<LEASES-CURRENT> 0
<OTHER-ITEMS-CAPITAL-AND-LIAB> 33,541
<TOT-CAPITALIZATION-AND-LIAB> 440,375
<GROSS-OPERATING-REVENUE> 61,762
<INCOME-TAX-EXPENSE> 7,301
<OTHER-OPERATING-EXPENSES> 32,344
<TOTAL-OPERATING-EXPENSES> 39,645
<OPERATING-INCOME-LOSS> 22,117
<OTHER-INCOME-NET> 589
<INCOME-BEFORE-INTEREST-EXPEN> 22,706
<TOTAL-INTEREST-EXPENSE> 11,036
<NET-INCOME> 11,670
0
<EARNINGS-AVAILABLE-FOR-COMM> 11,670
<COMMON-STOCK-DIVIDENDS> 14,694
<TOTAL-INTEREST-ON-BONDS> 0
<CASH-FLOW-OPERATIONS> 21,717
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> UT
<LEGEND>
This schedule contains summary financial information extracted
from the Form 10-Q for September 30, 1995, and is qualified in its
entirety by reference to such financial statements.
</LEGEND>
<CIK> 0000948362
<NAME> MOBILE ENERGY SERVICES CO LLC
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1994
<PERIOD-END> SEP-30-1995
<BOOK-VALUE> PER-BOOK
<TOTAL-NET-UTILITY-PLANT> 353,585
<OTHER-PROPERTY-AND-INVEST> 0
<TOTAL-CURRENT-ASSETS> 37,053
<TOTAL-DEFERRED-CHARGES> 45,419
<OTHER-ASSETS> 0
<TOTAL-ASSETS> 436,057
<COMMON> 0
<CAPITAL-SURPLUS-PAID-IN> 0
<RETAINED-EARNINGS> 88,070
<TOTAL-COMMON-STOCKHOLDERS-EQ> 88,070
0
0
<LONG-TERM-DEBT-NET> 340,210
<SHORT-TERM-NOTES> 0
<LONG-TERM-NOTES-PAYABLE> 0
<COMMERCIAL-PAPER-OBLIGATIONS> 0
<LONG-TERM-DEBT-CURRENT-PORT> (5,895)
0
<CAPITAL-LEASE-OBLIGATIONS> 0
<LEASES-CURRENT> 0
<OTHER-ITEMS-CAPITAL-AND-LIAB> 13,672
<TOT-CAPITALIZATION-AND-LIAB> 436,057
<GROSS-OPERATING-REVENUE> 61,762
<INCOME-TAX-EXPENSE> 0
<OTHER-OPERATING-EXPENSES> 32,227
<TOTAL-OPERATING-EXPENSES> 32,227
<OPERATING-INCOME-LOSS> 29,535
<OTHER-INCOME-NET> 589
<INCOME-BEFORE-INTEREST-EXPEN> 30,124
<TOTAL-INTEREST-EXPENSE> 11,036
<NET-INCOME> 19,088
0
<EARNINGS-AVAILABLE-FOR-COMM> 19,088
<COMMON-STOCK-DIVIDENDS> 13,825
<TOTAL-INTEREST-ON-BONDS> 0
<CASH-FLOW-OPERATIONS> 13,581
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
