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, 2004
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 x No ¨
Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the close of the period covered by this report.
| Class |
Outstanding at December 31, 2004 | |
| Common Stock, $5 Par Value |
2,067,142 |
RGC RESOURCES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
UNAUDITED
| December 31, 2004 |
September 30, 2004 |
|||||||
| ASSETS |
||||||||
| Current Assets: |
||||||||
| Cash and cash equivalents |
$ | 4,422,299 | $ | 9,461,217 | ||||
| Short-term investments |
— | 4,991,460 | ||||||
| Accounts receivable - (less allowance for uncollectibles of $386,579 and and $38,525, respectively) |
18,938,046 | 5,978,065 | ||||||
| Materials and supplies |
693,659 | 731,225 | ||||||
| Gas in storage |
17,136,198 | 1,739,024 | ||||||
| Prepaid gas service |
— | 15,923,177 | ||||||
| Prepaid income taxes |
1,306,151 | 2,278,361 | ||||||
| Deferred income taxes |
1,940,384 | 1,818,280 | ||||||
| Under-recovery of gas costs |
803,094 | 580,166 | ||||||
| Other |
1,264,058 | 306,966 | ||||||
| Total current assets |
46,503,889 | 43,807,941 | ||||||
| Property, Plant And Equipment: |
||||||||
| Utility plant in service |
104,217,189 | 102,086,697 | ||||||
| Accumulated depreciation and amortization |
(34,584,116 | ) | (34,493,087 | ) | ||||
| Utility plant in service, net |
69,633,073 | 67,593,610 | ||||||
| Construction work in progress |
1,561,160 | 2,405,107 | ||||||
| Utility Plant, Net |
71,194,233 | 69,998,717 | ||||||
| Nonutility property |
794,013 | 794,013 | ||||||
| Accumulated depreciation and amortization |
(195,745 | ) | (184,624 | ) | ||||
| Nonutility property, net |
598,268 | 609,389 | ||||||
| Total property, plant and equipment |
71,792,501 | 70,608,106 | ||||||
| Other assets |
534,695 | 556,509 | ||||||
| Total Assets |
$ | 118,831,085 | $ | 114,972,556 | ||||
See notes to condensed consolidated financial statements.
RGC RESOURCES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
UNAUDITED
| December 31, 2004 |
September 30, 2004 |
|||||||
| LIABILITIES AND STOCKHOLDERS’ EQUITY |
||||||||
| Current Liabilities: |
||||||||
| Current maturities of long-term debt |
$ | 10,011,523 | $ | 19,987 | ||||
| Borrowings under lines of credit |
17,878,000 | 12,742,000 | ||||||
| Dividends payable |
609,869 | 9,903,993 | ||||||
| Accounts payable |
16,851,632 | 10,740,943 | ||||||
| Customer deposits |
927,943 | 712,892 | ||||||
| Accrued expenses |
3,951,589 | 4,356,680 | ||||||
| Refunds from suppliers - due customers |
11,811 | 22,292 | ||||||
| Overrecovery of gas costs |
2,551,571 | 2,174,313 | ||||||
| Fair value of marked to market transactions |
358,949 | 73,356 | ||||||
| Total current liabilities |
53,152,887 | 40,746,456 | ||||||
| Long-term Debt, Excluding Current Maturities |
16,000,000 | 26,000,000 | ||||||
| Deferred Credits: |
||||||||
| Asset retirement obligations |
6,383,296 | 6,197,549 | ||||||
| Deferred income taxes |
5,360,351 | 5,174,829 | ||||||
| Deferred investment tax credits |
223,908 | 232,200 | ||||||
| Total deferred credits |
11,967,555 | 11,604,578 | ||||||
| Stockholders’ Equity: |
||||||||
| Common stock, $5 par value; authorized, 10,000,000 shares; issued and outstanding 2,067,142 and 2,065,408 shares, respectively |
10,335,710 | 10,327,040 | ||||||
| Preferred stock, no par, authorized, 5,000,000 shares; no shares issued and outstanding |
— | — | ||||||
| Capital in excess of par value |
13,097,072 | 13,064,566 | ||||||
| Retained earnings |
14,290,951 | 13,275,426 | ||||||
| Accumulated other comprehensive loss |
(13,090 | ) | (45,510 | ) | ||||
| Total stockholders’ equity |
37,710,643 | 36,621,522 | ||||||
| Total Liabilities and Stockholders’ Equity |
$ | 118,831,085 | $ | 114,972,556 | ||||
RGC RESOURCES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
FOR THE THREE-MONTH PERIODS ENDED DECEMBER 31, 2004 AND 2003
UNAUDITED
| Three Months Ended December 31, |
||||||||
| 2004 |
2003 |
|||||||
| Operating Revenues: |
||||||||
| Gas utilities |
$ | 28,931,905 | $ | 25,232,488 | ||||
| Energy marketing |
5,454,725 | 4,493,413 | ||||||
| Other |
278,844 | 141,997 | ||||||
| Total operating revenues |
34,665,474 | 29,867,898 | ||||||
| Cost of Sales: |
||||||||
| Gas utilities |
21,929,127 | 18,632,493 | ||||||
| Energy marketing |
5,255,026 | 4,436,987 | ||||||
| Other |
170,182 | 64,851 | ||||||
| Total cost of sales |
27,354,335 | 23,134,331 | ||||||
| Gross Margin |
7,311,139 | 6,733,567 | ||||||
| Other Operating Expenses: |
||||||||
| Operations |
2,443,329 | 2,669,763 | ||||||
| Maintenance |
322,749 | 326,927 | ||||||
| General taxes |
381,652 | 399,574 | ||||||
| Depreciation and amortization |
1,021,429 | 992,658 | ||||||
| Total other operating expenses |
4,169,159 | 4,388,922 | ||||||
| Operating Income |
3,141,980 | 2,344,645 | ||||||
| Other Income, net |
(33,700 | ) | (899 | ) | ||||
| Interest Expense |
544,718 | 500,219 | ||||||
| Income from Continuing Operations Before Income Taxes |
2,630,962 | 1,845,325 | ||||||
| Income Tax Expense from Continuing Operations |
1,005,567 | 701,789 | ||||||
| Income from Continuing Operations |
1,625,395 | 1,143,536 | ||||||
| Discontinued operations: |
||||||||
| Income from discontinued operations, net of income taxes of $286,395 |
— | 455,867 | ||||||
| Net Income |
$ | 1,625,395 | $ | 1,599,403 | ||||
| Basic Earnings Per Common Share: |
||||||||
| Income from continuing operations |
$ | 0.79 | $ | 0.57 | ||||
| Discontinued operations |
— | 0.23 | ||||||
| Net income |
$ | 0.79 | $ | 0.80 | ||||
| Diluted Earnings Per Common Share: |
||||||||
| Income from continuing operations |
$ | 0.78 | $ | 0.56 | ||||
| Discontinued operations |
— | 0.23 | ||||||
| Net income |
$ | 0.78 | $ | 0.79 | ||||
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, 2004 AND 2003
UNAUDITED
| Three Months Ended December 31, | ||||||
| 2004 |
2003 | |||||
| Net Income |
$ | 1,625,395 | $ | 1,599,403 | ||
| Reclassification of loss transferred to net income |
14,495 | 19,650 | ||||
| Unrealized gain on derivatiave financial instruments |
17,925 | 40,229 | ||||
| Other comprehensive income, net of tax |
32,420 | 59,879 | ||||
| Comprehensive Income |
$ | 1,657,815 | $ | 1,659,282 | ||
RGC RESOURCES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE THREE-MONTH PERIODS ENDED DECEMBER 31, 2004 AND 2003
UNAUDITED
| Three Months Ended December 31, |
||||||||
| 2004 |
2003 |
|||||||
| CASH FLOWS FROM OPERATING ACTIVITIES: |
||||||||
| Net income from continuing operations |
$ | 1,625,395 | $ | 1,143,536 | ||||
| Adjustments to reconcile net earnings to net cash provided by operating activities: |
||||||||
| Depreciation and amortization |
1,095,058 | 1,051,897 | ||||||
| Cost of removal of utility plant |
(75,442 | ) | (26,239 | ) | ||||
| Changes in assets and liabilities which used cash, exclusive of changes and noncash transactions shown separately |
(5,921,841 | ) | (3,984,499 | ) | ||||
| Net cash used in continuing operating activities |
(3,276,830 | ) | (1,815,305 | ) | ||||
| Net cash used in discontinued operations |
— | (21,558 | ) | |||||
| Net cash used in operating activities |
(3,276,830 | ) | (1,836,863 | ) | ||||
| CASH FLOWS FROM INVESTING ACTIVITIES: |
||||||||
| Additions to utility plant and nonutility property |
(2,054,243 | ) | (1,263,032 | ) | ||||
| Proceeds from disposal of equipment |
35,979 | 20,499 | ||||||
| Cash flows used in Investing activities |
(2,018,264 | ) | (1,242,533 | ) | ||||
| Net cash used in Investing activities of discontinued operations |
— | (411,827 | ) | |||||
| Net cash used in investing activities |
(2,018,264 | ) | (1,654,360 | ) | ||||
| CASH FLOWS FROM FINANCING ACTIVITIES: |
||||||||
| Proceeds from issuance of long-term debt |
— | 2,000,000 | ||||||
| Retirement of long-term debt and capital leases |
(8,464 | ) | (2,132,876 | ) | ||||
| Net borrowings under lines of credit |
5,136,000 | |||||||