RGC RESOURCES INC - 10-Q Quarterly Report

SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

Form 10-Q

QUARTERLY REPORT UNDER SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934

For Quarter Ended December 31, 2002

Commission File Number 000-26591

RGC Resources, Inc.

(Exact name of Registrant as Specified in its Charter)

VIRGINIA		54-1909697

(State or Other Jurisdiction of Incorporation or Organization)		(I.R.S. Employer Identification No.)



519 Kimball Ave., N.E., Roanoke, VA		24016

(Address of Principal Executive Offices)		(Zip Code)


(540) 777-4427

(Registrant’s Telephone Number, Including Area Code)

None

(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

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the close of the period covered by this report.

Class			Outstanding at December 31, 2002

Common Stock, $5 Par Value			1,972,320

RGC RESOURCES, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

UNAUDITED

			December 31, 2002				September 30, 2002

ASSETS

CURRENT ASSETS:
	Cash and cash equivalents		$	285,197		$	288,030
	Accounts receivable - (less allowance for uncollectibles of $625,335 and and $155,062, respectively)			15,338,184			4,460,867
	Inventories			2,116,069			2,172,808
	Prepaid gas service			7,246,281			9,372,493
	Prepaid income taxes			—			1,189,154
	Deferred income taxes			1,323,677			2,579,879
	Under-recovery of gas costs			116,209			—
	Unrealized gains on marked-to-market transactions			1,531,050			1,779,891
	Other			1,020,176			453,804

		Total current assets		28,976,843			22,296,926

PROPERTY, PLANT AND EQUIPMENT:
	Utility plant in service			90,167,036			89,504,217
	Accumulated depreciation and amortization			(35,134,109	)		(34,386,639	)

		Utility plant in service, net		55,032,927			55,117,578
	Construction work in progress			2,001,946			1,810,520

		Utility Plant, Net		57,034,873			56,928,098

	Nonutility property			20,620,327			19,869,186
	Accumulated depreciation and amortization			(8,025,479	)		(7,659,087	)

		Nonutility property, net		12,594,848			12,210,099

		Total property, plant and equipment		69,629,721			69,138,197

OTHER ASSETS:
	Intangible assets, net of accumulated amortization			298,314			298,314
	Other assets			719,730			668,018

		Total other assets		1,018,044			966,332

TOTAL ASSETS			$	99,624,608		$	92,401,455

See notes to condensed consolidated financial statements.

RGC RESOURCES, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

UNAUDITED

			December 31, 2002			September 30, 2002

LIABILITIES AND STOCKHOLDERS’ EQUITY

CURRENT LIABILITIES:
	Current maturities of long-term debt		$	2,205,673		$	105,127
	Borrowings under lines of credit			15,595,000			8,991,000
	Dividends payable			562,437			559,069
	Accounts payable			9,131,322			7,897,084
	Income taxes payable			237,326			—
	Customer deposits			574,344			543,891
	Accrued expenses			3,837,354			3,961,174
	Refunds from suppliers - due customers			42,775			51,889
	Over-recovery of gas costs			761,761			1,742,905
	Unrealized losses on marked-to-market transactions			213,059			—

		Total current liabilities		33,161,051			23,852,139

LONG-TERM DEBT, EXCLUDING CURRENT MATURITIES				28,244,482			30,377,358

DEFERRED CREDITS:
	Deferred income taxes			4,823,884			5,802,417
	Deferred investment tax credits			292,234			300,544

		Total deferred credits		5,116,118			6,102,961

STOCKHOLDERS’ EQUITY:
	Common stock, $5 par value; authorized, 10,000,000 shares; issued and outstanding 1,972,320 and 1,960,418 shares, respectively			9,861,600			9,802,090
	Preferred stock, no par, authorized, 5,000,000 shares; 0 shares issued and outstanding, respectively			—			—
	Capital in excess of par value			11,529,733			11,374,173
	Retained earnings			11,734,191			10,758,491
	Accumulated comprehensive income (loss)			(22,567	)		134,243

		Total stockholders’ equity		33,102,957			32,068,997

TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY			$	99,624,608		$	92,401,455

See notes to condensed consolidated financial statements.

RGC RESOURCES, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF INCOME
FOR THE THREE-MONTH PERIODS ENDED DECEMBER 31, 2002 AND 2001

UNAUDITED

		Three Months Ended December 31,

		2002		2001

OPERATING REVENUES:
Gas utilities		$	21,093,267	$	16,582,414
Propane operations			4,449,776		2,920,708
Energy marketing			2,716,562		3,125,038
Other			196,522		226,447

	Total operating revenues		28,456,127		22,854,607

COST OF SALES:
Gas utilities			14,931,493		11,174,538
Propane operations			2,104,523		1,429,778
Energy marketing			2,643,631		3,060,324
Other			110,683		136,056

	Total cost of sales		19,790,330		15,800,696

OPERATING MARGIN			8,665,797		7,053,911

OTHER OPERATING EXPENSES:
Operations			3,410,902		3,018,429
Maintenance			360,906		362,892
General taxes			459,076		399,601
Depreciation and amortization			1,335,529		1,313,371

	Total other operating expenses		5,566,413		5,094,293

OPERATING INCOME			3,099,384		1,959,618
OTHER EXPENSES, NET			39,309		31,285
INTEREST EXPENSE			554,576		563,518

INCOME BEFORE INCOME TAXES			2,505,499		1,364,815
INCOME TAX EXPENSE			967,362		524,040

NET INCOME		$	1,538,137	$	840,775

BASIC AND DILUTED EARNINGS PER COMMON SHARE		$	0.78	$	0.44

See notes to condensed consolidated financial statements.

RGC RESOURCES, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
FOR THE THREE-MONTH PERIODS ENDED DECEMBER 31, 2002 AND 2001

UNAUDITED

		Three Months Ended December 31,

		2002			2001

NET INCOME		$	1,538,137		$	840,775
	Reclassification of loss /(gain) transferred to net income		(73,772	)		43,846
	Unrealized loss on derivative financial instruments		(83,038