Document_and_Entity_Informatio
Document and Entity Information | 3 Months Ended | |
Dec. 31, 2014 | Jan. 31, 2015 | |
Document And Entity Information [Abstract] | ||
Document Type | 10-Q | |
Amendment Flag | FALSE | |
Document Period End Date | 31-Dec-14 | |
Document Fiscal Year Focus | 2015 | |
Document Fiscal Period Focus | Q1 | |
Entity Registrant Name | RGC RESOURCES INC | |
Entity Central Index Key | 1069533 | |
Current Fiscal Year End Date | -21 | |
Entity Filer Category | Accelerated Filer | |
Entity Common Stock, Shares Outstanding | 4,722,352 |
Condensed_Consolidated_Balance
Condensed Consolidated Balance Sheets (USD $) | Dec. 31, 2014 | Sep. 30, 2014 |
CURRENT ASSETS: | ||
Cash and cash equivalents | $699,939 | $849,757 |
Accounts receivable (less allowance for uncollectibles of $203,942 and $70,747, respectively) | 10,957,568 | 3,730,173 |
Materials and supplies | 892,152 | 893,672 |
Gas in storage | 9,255,754 | 11,402,990 |
Prepaid income taxes | 1,942,827 | 1,144,214 |
Deferred income taxes | 1,660,011 | 1,704,320 |
Under-recovery of gas costs | 0 | 180,831 |
Other | 1,774,869 | 1,104,660 |
Total current assets | 27,183,120 | 21,010,617 |
UTILITY PROPERTY: | ||
In service | 161,273,321 | 155,360,200 |
Accumulated depreciation and amortization | -51,258,655 | -50,645,642 |
In service, net | 110,014,666 | 104,714,558 |
Construction work in progress | 1,904,941 | 4,029,019 |
Utility plant, net | 111,919,607 | 108,743,577 |
OTHER ASSETS: | ||
Regulatory assets | 9,279,994 | 9,273,389 |
Other | 322,402 | 293,139 |
Total other assets | 9,602,396 | 9,566,528 |
TOTAL ASSETS | 148,705,123 | 139,320,722 |
CURRENT LIABILITIES: | ||
Borrowings under line-of-credit | 15,523,936 | 9,045,050 |
Dividends payable | 909,053 | 873,326 |
Accounts payable | 5,511,277 | 5,367,299 |
Customer credit balances | 1,513,076 | 1,373,927 |
Customer deposits | 1,642,049 | 1,492,150 |
Accrued expenses | 1,664,641 | 2,200,882 |
Over-recovery of gas costs | 190,870 | 0 |
Total current liabilities | 26,954,902 | 20,352,634 |
LONG-TERM DEBT | 30,500,000 | 30,500,000 |
DEFERRED CREDITS AND OTHER LIABILITIES: | ||
Asset retirement obligations | 4,843,961 | 4,802,015 |
Regulatory cost of retirement obligations | 8,739,005 | 8,575,147 |
Benefit plan liabilities | 7,932,154 | 8,459,436 |
Deferred income taxes and investment tax credits | 16,641,118 | 14,610,643 |
Total deferred credits and other liabilities | 38,156,238 | 36,447,241 |
STOCKHOLDERS’ EQUITY: | ||
Common stock, $5 par value; authorized 10,000,000 shares; issued and outstanding 4,722,076 and 4,720,378, respectively | 23,610,380 | 23,601,890 |
Preferred stock, no par, authorized 5,000,000 shares; no shares issued and outstanding | 0 | 0 |
Capital in excess of par value | 8,277,211 | 8,237,228 |
Retained earnings | 22,336,378 | 21,321,055 |
Accumulated other comprehensive loss | -1,129,986 | -1,139,326 |
Total stockholders’ equity | 53,093,983 | 52,020,847 |
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY | $148,705,123 | $139,320,722 |
Condensed_Consolidated_Balance1
Condensed Consolidated Balance Sheets (Parenthetical) (USD $) | Dec. 31, 2014 | Sep. 30, 2014 |
Statement of Financial Position [Abstract] | ||
Accounts receivable, allowance for uncollectibles | $203,942 | $70,747 |
Common stock, par value (in dollars per share) | $5 | $5 |
Common stock, shares authorized | 10,000,000 | 10,000,000 |
Common stock, shares issued | 4,722,076 | 4,720,378 |
Common stock, share outstanding | 4,722,076 | 4,720,378 |
Preferred stock, par value (in dollars per share) | $0 | $0 |
Preferred stock, shares authorized | 5,000,000 | 5,000,000 |
Preferred stock, shares issued | 0 | 0 |
Preferred stock, share outstanding | 0 | 0 |
Condensed_Consolidated_Stateme
Condensed Consolidated Statements of Income (USD $) | 3 Months Ended | |
Dec. 31, 2014 | Dec. 31, 2013 | |
OPERATING REVENUES: | ||
Gas utilities | $20,998,278 | $19,760,987 |
Other | 251,787 | 250,207 |
Total operating revenues | 21,250,065 | 20,011,194 |
COST OF SALES: | ||
Gas utilities | 12,514,594 | 11,671,994 |
Other | 113,328 | 136,208 |
Total cost of sales | 12,627,922 | 11,808,202 |
GROSS MARGIN | 8,622,143 | 8,202,992 |
OTHER OPERATING EXPENSES: | ||
Operations and maintenance | 3,424,652 | 3,343,350 |
General taxes | 405,510 | 388,197 |
Depreciation and amortization | 1,277,629 | 1,198,799 |
Total other operating expenses | 5,107,791 | 4,930,346 |
OPERATING INCOME | 3,514,352 | 3,272,646 |
OTHER EXPENSE, Net | -5,879 | -25,135 |
INTEREST EXPENSE | 397,067 | 464,453 |
INCOME BEFORE INCOME TAXES | 3,111,406 | 2,783,058 |
INCOME TAX EXPENSE | 1,187,030 | 1,060,270 |
NET INCOME | $1,924,376 | $1,722,788 |
BASIC EARNINGS PER COMMON SHARE (in dollars per share) | $0.41 | $0.37 |
DILUTED EARNINGS PER COMMON SHARE (in dollars per share) | $0.41 | $0.37 |
DIVIDENDS DECLARED PER COMMON SHARE (in dollars per share) | $0.19 | $0.19 |
Condensed_Consolidated_Stateme1
Condensed Consolidated Statements of Comprehensive Income (USD $) | 3 Months Ended | |
Dec. 31, 2014 | Dec. 31, 2013 | |
Statement of Comprehensive Income [Abstract] | ||
NET INCOME | $1,924,376 | $1,722,788 |
Other comprehensive income, net of tax: | ||
Interest rate swaps | 0 | 134,396 |
Defined benefit plans | 9,340 | 6,490 |
OTHER COMPREHENSIVE INCOME, NET OF TAX | 9,340 | 140,886 |
COMPREHENSIVE INCOME | $1,933,716 | $1,863,674 |
Condensed_Consolidated_Stateme2
Condensed Consolidated Statements of Cash Flows (USD $) | 3 Months Ended | |
Dec. 31, 2014 | Dec. 31, 2013 | |
CASH FLOWS FROM OPERATING ACTIVITIES: | ||
Net income | $1,924,376 | $1,722,788 |
Adjustments to reconcile net income to net cash provided by operating activities: | ||
Depreciation and amortization | 1,305,693 | 1,247,260 |
Cost of removal of utility plant, net | -92,658 | -82,487 |
Stock option grants | 13,940 | 12,552 |
Changes in assets and liabilities which used cash, exclusive of changes and noncash transactions shown separately | -4,566,369 | -4,169,485 |
Net cash used in operating activities | -1,415,018 | -1,269,372 |
CASH FLOWS FROM INVESTING ACTIVITIES: | ||
Additions to utility plant and nonutility property | -4,377,176 | -4,083,171 |
Proceeds from disposal of equipment | 2,282 | 3,743 |
Net cash used in investing activities | -4,374,894 | -4,079,428 |
CASH FLOWS FROM FINANCING ACTIVITIES: | ||
Borrowings under line-of-credit agreement | 13,602,687 | 8,797,079 |
Repayments under line-of-credit agreement | -7,123,800 | -4,982,693 |
Proceeds from issuance of stock (1,698 and 1,721 shares, respectively) | 34,533 | 32,845 |
Cash dividends paid | -873,326 | -847,736 |
Net cash provided by financing activities | 5,640,094 | 2,999,495 |
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS | -149,818 | -2,349,305 |
BEGINNING CASH AND CASH EQUIVALENTS | 849,757 | 2,846,224 |
ENDING CASH AND CASH EQUIVALENTS | 699,939 | 496,919 |
SUPPLEMENTAL CASH FLOW INFORMATION: | ||
Interest paid | 296,086 | 603,458 |
Income taxes paid | $0 | $0 |
Condensed_Consolidated_Stateme3
Condensed Consolidated Statements of Cash Flows (Parenthetical) | 3 Months Ended | |
Dec. 31, 2014 | Dec. 31, 2013 | |
Statement of Cash Flows [Abstract] | ||
Issuance of stock, shares | 1,698 | 1,721 |
Basis_of_Presentation
Basis of Presentation | 3 Months Ended |
Dec. 31, 2014 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Basis of Presentation | Basis of Presentation |
RGC Resources, Inc. is an energy services company primarily engaged in the sale and distribution of natural gas. The consolidated financial statements include the accounts of RGC Resources, Inc. and its wholly owned subsidiaries (“Resources” or the “Company”): Roanoke Gas Company; Diversified Energy Company; and RGC Ventures of Virginia, Inc. | |
In the opinion of management, the accompanying unaudited condensed consolidated financial statements contain all adjustments (consisting of only normal recurring accruals) necessary to present fairly Resources financial position as of December 31, 2014 and the results of its operations, cash flows and comprehensive income for the three months ended December 31, 2014 and 2013. The results of operations for the three months ended December 31, 2014 are not indicative of the results to be expected for the fiscal year ending September 30, 2015 as quarterly earnings are affected by the highly seasonal nature of the business and weather conditions generally result in greater earnings during the winter months. | |
The unaudited condensed consolidated interim financial statements and condensed notes are presented as permitted under the rules and regulations of the Securities and Exchange Commission. Pursuant to those rules, certain information and note disclosures normally included in the annual financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted, although the Company believes that the disclosures made are adequate to make the information not misleading. Therefore, the condensed consolidated financial statements and condensed notes should be read in conjunction with the financial statements and notes contained in the Company’s Form 10-K for the year ended September 30, 2014. The September 30, 2014 balance sheet was included in the Company’s audited financial statements included in Form 10-K. | |
The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America 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. Actual results could differ from those estimates. | |
The Company’s significant accounting policies are described in Note 1 to the consolidated financial statements in Form 10-K for the year ended September 30, 2014. Newly adopted and newly issued accounting standards are discussed below. | |
Recently Issued Accounting Standards | |
In May 2014, the FASB issued guidance under FASB ASC No. 606 - Revenue from Contracts with Customers that affects any entity that enters into contracts with customers for the transfer of goods or services or transfer of non-financial assets. This guidance supersedes the revenue recognition requirements in Topic 605, Revenue Recognition, and most industry-specific guidance. The core principle of the new guidance is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. To achieve that core principle, an entity should apply the following steps: (1) identify the contract with the customer, (2) identify the performance obligations in the contract, (3) determine the transaction price, (4) allocate the transaction price to the performance obligations in the contract, and (5) recognize revenue when, or as, the entity satisfies the performance obligation. The new guidance is effective for the Company for the annual reporting period ended September 30, 2018 and interim periods within that annual period. Early application is not permitted. Management has not completed its evaluation of the new guidance. However, the Company does not currently expect the new guidance to have a material effect on its financial position, results of operations or cash flows. | |
Other accounting standards have been issued by the FASB or other standard-setting bodies that are not currently applicable to the Company or are not expected to have a material impact on the Company’s financial position, results of operations or cash flows. |
Rates_and_Regulatory_Matters
Rates and Regulatory Matters | 3 Months Ended |
Dec. 31, 2014 | |
Regulated Operations [Abstract] | |
Rates and Regulatory Matters | Rates and Regulatory Matters |
The State Corporation Commission of Virginia (“SCC”) exercises regulatory authority over the natural gas operations of Roanoke Gas. Such regulation encompasses terms, conditions, and rates to be charged to customers for natural gas service; safety standards; extension of service; and accounting and depreciation. | |
On June 25, 2014, the SCC approved the Company's application requesting approval to extend its authority to incur short-term indebtedness of up to $30,000,000 and to issue up to $60,000,000 in long-term debt securities. The short-term indebtedness authority allows the Company to continue to access its line-of-credit to provide seasonal funding of its working capital needs as well as provide temporary bridge financing for its capital expenditures. The authorization extends through September 30, 2019. | |
Roanoke Gas Company has had in place a weather normalization adjustment tariff (“WNA”) based on a weather measurement band around the most recent 30-year temperature average. Prior to April 2014, the WNA provided for a weather band of 3% above or below the 30-year temperature average whereby the Company would recover from its customers the lost margin (excluding gas costs) from the impact of weather that was more than 3% warmer than the 30-year average or refund to customers the excess earned from weather that was more than 3% colder than the 30-year average. No adjustment was made for weather that fell within the 3% weather band. Effective with the WNA period that began April 1, 2014, the SCC removed the 3% weather band from the WNA calculation. This change will now result in either a recovery or refund of revenues due to weather variations from the 30-year average. For the quarter ended December 31, 2014, weather was nearly 3% colder than the 30-year average resulting in a reduction in revenue of approximately $109,000 compared to the quarter ended December 31, 2013 which had no WNA revenue adjustment as the weather was 1% colder than the 30-year average and within the 3% weather band then in effect. The Company applied the provisions of FASB ASC No. 980, Regulated Operations, in recording the effect of the WNA adjustment on revenue. |
ShortTerm_Debt
Short-Term Debt | 3 Months Ended |
Dec. 31, 2014 | |
Short-term Debt [Abstract] | |
Short-Term Debt | Short-Term Debt |
The Company has an unsecured line-of-credit agreement dated March 31, 2014. The agreement has a variable interest rate based on 30-day LIBOR plus 100 basis points and availability fee of 15 basis points. The agreement also includes multi-tiered borrowing limits to accommodate seasonal borrowing demands and minimize borrowing costs. The Company’s total available borrowing limits during the term of the line-of-credit agreement range from $1,000,000 to $19,000,000. The line-of-credit agreement will expire March 31, 2015, unless extended. The Company anticipates being able to extend or replace the credit line upon expiration. As of December 31, 2014, the Company had $15,523,936 outstanding under its line-of-credit agreement. |
Derivatives_and_Hedging
Derivatives and Hedging | 3 Months Ended |
Dec. 31, 2014 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
Derivatives and Hedging | Derivatives and Hedging |
The Company’s risk management policy allows management to enter into derivatives for the purpose of managing the commodity and financial market risks of its business operations. The Company’s risk management policy specifically prohibits the use of derivatives for speculative purposes. The key market risks that the Company seeks to hedge include the price of natural gas and the cost of borrowed funds. | |
The Company had two interest rate swaps associated with its variable rate notes. These swaps were terminated when the Company refinanced the corresponding notes on September 18, 2014. The Company has no derivative instruments outstanding at December 31, 2014. |
Other_Comprehensive_Income
Other Comprehensive Income | 3 Months Ended | |||||||||||
Dec. 31, 2014 | ||||||||||||
Equity [Abstract] | ||||||||||||
Comprehensive Income | Comprehensive Income | |||||||||||
A summary of other comprehensive income and loss is provided below: | ||||||||||||
Before-Tax | Tax | Net-of-Tax | ||||||||||
Amount | (Expense) | Amount | ||||||||||
or Benefit | ||||||||||||
Three Months Ended December 31, 2014 | ||||||||||||
Defined benefit plans: | ||||||||||||
Amortization of actuarial losses | $ | 15,055 | $ | (5,715 | ) | $ | 9,340 | |||||
Other comprehensive income | $ | 15,055 | $ | (5,715 | ) | $ | 9,340 | |||||
Three Months Ended December 31, 2013 | ||||||||||||
Interest rate swaps: | ||||||||||||
Unrealized losses | $ | (25,088 | ) | $ | 9,523 | $ | (15,565 | ) | ||||
Transfer of realized losses to interest expense | 241,716 | (91,755 | ) | 149,961 | ||||||||
Net interest rate SWAPs | 216,628 | (82,232 | ) | 134,396 | ||||||||
Defined benefit plans: | ||||||||||||
Amortization of actuarial losses | 10,461 | (3,971 | ) | 6,490 | ||||||||
Other comprehensive income | $ | 227,089 | $ | (86,203 | ) | $ | 140,886 | |||||
The amortization of actuarial losses is included as a component of net periodic pension and postretirement benefit cost in operations and maintenance expense. | ||||||||||||
Reconciliation of Other Accumulated Comprehensive Income (Loss) | ||||||||||||
Accumulated | ||||||||||||
Other | ||||||||||||
Comprehensive | ||||||||||||
Income (Loss) | ||||||||||||
Balance at September 30, 2014 | $ | (1,139,326 | ) | |||||||||
Other comprehensive income | 9,340 | |||||||||||
Balance at December 31, 2014 | $ | (1,129,986 | ) |
Earnings_Per_Share
Earnings Per Share | 3 Months Ended | |||||||
Dec. 31, 2014 | ||||||||
Earnings Per Share [Abstract] | ||||||||
Earnings Per Share | Earnings Per Share | |||||||
Basic earnings per common share for the three months ended December 31, 2014 and 2013 were calculated by dividing net income by the weighted average common shares outstanding during the period. Diluted earnings per common share were calculated by dividing net income by the weighted average common shares outstanding during the period plus potential dilutive common shares. A reconciliation of basic and diluted earnings per share is presented below: | ||||||||
Three Months Ended | ||||||||
December 31, | ||||||||
2014 | 2013 | |||||||
Net Income | $ | 1,924,376 | $ | 1,722,788 | ||||
Weighted average common shares | 4,721,490 | 4,710,467 | ||||||
Effect of dilutive securities: | ||||||||
Options to purchase common stock | 4,107 | 132 | ||||||
Diluted average common shares | 4,725,597 | 4,710,599 | ||||||
Earnings Per Share of Common Stock: | ||||||||
Basic | $ | 0.41 | $ | 0.37 | ||||
Diluted | $ | 0.41 | $ | 0.37 | ||||
Commitments_and_Contingencies
Commitments and Contingencies | 3 Months Ended |
Dec. 31, 2014 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | Commitments and Contingencies |
Roanoke Gas currently holds the only franchises and/or certificates of public convenience and necessity to distribute natural gas in its service area. These franchises are effective through January 1, 2016. Certificates of public convenience and necessity in Virginia are exclusive and are intended for perpetual duration. | |
Due to the nature of the natural gas distribution business, the Company has entered into agreements with both suppliers and pipelines for natural gas commodity purchases, storage capacity and pipeline delivery capacity. The Company obtains most of its regulated natural gas supply from an asset manager. The Company uses an asset manager to assist in optimizing the use of its transportation, storage rights, and gas supply in order to provide a secure and reliable source of natural gas to its customers. The Company also has storage and pipeline capacity contracts to store and deliver natural gas to the Company’s distribution system. Roanoke Gas is served directly by two primary pipelines. These two pipelines deliver all of the natural gas supplied to the Company’s customers. Depending on weather conditions and the level of customer demand, failure of one or both of these transmission pipelines could have a major adverse impact on the Company. |
Employee_Benefit_Plans
Employee Benefit Plans | 3 Months Ended | ||||||||
Dec. 31, 2014 | |||||||||
Compensation and Retirement Disclosure [Abstract] | |||||||||
Employee Benefit Plans | Employee Benefit Plans | ||||||||
The Company has both a defined benefit pension plan (the “pension plan”) and a postretirement benefit plan (the “postretirement plan”). The pension plan covers substantially all of the Company’s employees and provides retirement income based on years of service and employee compensation. The postretirement plan provides certain health care and supplemental life insurance benefits to retired employees who meet specific age and service requirements. Net pension plan and postretirement plan expense recorded by the Company is detailed as follows: | |||||||||
Three Months Ended | |||||||||
December 31, | |||||||||
2014 | 2013 | ||||||||
Components of net periodic pension cost: | |||||||||
Service cost | $ | 163,696 | $ | 138,323 | |||||
Interest cost | 256,477 | 255,076 | |||||||
Expected return on plan assets | (360,212 | ) | (328,089 | ) | |||||
Recognized loss | 64,345 | 34,099 | |||||||
Net periodic pension cost | $ | 124,306 | $ | 99,409 | |||||
Three Months Ended | |||||||||
December 31, | |||||||||
2014 | 2013 | ||||||||
Components of postretirement benefit cost: | |||||||||
Service cost | $ | 41,895 | $ | 42,159 | |||||
Interest cost | 150,024 | 150,671 | |||||||
Expected return on plan assets | (129,164 | ) | (124,119 | ) | |||||
Recognized loss | 49,265 | 22,379 | |||||||
Net postretirement benefit cost | $ | 112,020 | $ | 91,090 | |||||
The Company contributed $400,000 to its pension plan and $250,000 to its postretirement medical plan during the three-month period ended December 31, 2014. The Company currently expects to contribute an additional $400,000 to its pension plan and $250,000 to its postretirement benefit plan prior to the end of its fiscal year. |
Fair_Value_Measurements
Fair Value Measurements | 3 Months Ended | |||||||||||||||
Dec. 31, 2014 | ||||||||||||||||
Fair Value Disclosures [Abstract] | ||||||||||||||||
Fair Value Measurements | Fair Value Measurements | |||||||||||||||
FASB ASC No. 820, Fair Value Measurements and Disclosures, established a fair value hierarchy that prioritizes each input to the valuation method used to measure fair value of financial and nonfinancial assets and liabilities that are measured and reported on a fair value basis into one of the following three broad levels: | ||||||||||||||||
Level 1 – Unadjusted quoted prices in active markets for identical assets or liabilities that the Company has the ability to access at the measurement date. | ||||||||||||||||
Level 2 – Inputs other than quoted prices in Level 1 that are either for similar assets or liabilities in active markets, quoted prices for identical or similar assets or liabilities in markets that are not active, inputs other than quoted prices that are observable for the asset or liability, or inputs that are derived principally from or corroborated by observable market data by correlation or other means. | ||||||||||||||||
Level 3 – Unobservable inputs for the asset or liability where there is little, if any, market activity for the asset or liability at the measurement date. | ||||||||||||||||
The fair value hierarchy gives the highest priority to unadjusted quoted prices in active markets (Level 1) and the lowest priority to unobservable inputs (Level 3). | ||||||||||||||||
The following table summarizes the Company’s financial assets and liabilities that are measured at fair value on a recurring basis as required by existing guidance and the fair value measurements by level within the fair value hierarchy as of December 31, 2014 and September 30, 2014: | ||||||||||||||||
Fair Value Measurements - December 31, 2014 | ||||||||||||||||
Fair | Quoted | Significant | Significant | |||||||||||||
Value | Prices | Other | Unobservable | |||||||||||||
in Active | Observable | Inputs | ||||||||||||||
Markets | Inputs | (Level 3) | ||||||||||||||
(Level 1) | (Level 2) | |||||||||||||||
Liabilities: | ||||||||||||||||
Natural gas purchases | $ | 842,586 | $ | — | $ | 842,586 | $ | — | ||||||||
Total | $ | 842,586 | $ | — | $ | 842,586 | $ | — | ||||||||
Fair Value Measurements - September 30, 2014 | ||||||||||||||||
Fair | Quoted | Significant | Significant | |||||||||||||
Value | Prices | Other | Unobservable | |||||||||||||
in Active | Observable | Inputs | ||||||||||||||
Markets | Inputs | (Level 3) | ||||||||||||||
(Level 1) | (Level 2) | |||||||||||||||
Liabilities: | ||||||||||||||||
Natural gas purchases | $ | 795,019 | $ | — | $ | 795,019 | $ | — | ||||||||
Total | $ | 795,019 | $ | — | $ | 795,019 | $ | — | ||||||||
Under the asset management contract, a timing difference can exist between the payment for natural gas purchases and the actual receipt of such purchases. Payments are made based on a predetermined monthly volume with the price based on weighted average first of the month index prices corresponding to the month of the scheduled payment. At December 31, 2014 and September 30, 2014, the Company had recorded in accounts payable the estimated fair value of the liability valued at the corresponding first of month index prices for which the liability is expected to be settled. | ||||||||||||||||
The Company’s nonfinancial assets and liabilities that are measured at fair value on a nonrecurring basis consist of its asset retirement obligations. The asset retirement obligations are measured at fair value at initial recognition based on expected future cash flows required to settle the obligation. | ||||||||||||||||
The carrying value of cash and cash equivalents, accounts receivable, accounts payable (with the exception of the timing difference under the asset management contract), customer credit balances and customer deposits is a reasonable estimate of fair value due to the short-term nature of these financial instruments. The following table summarizes the fair value of the Company’s financial assets and liabilities that are not adjusted to fair value in the financial statements as of December 31, 2014 and September 30, 2014. | ||||||||||||||||
Fair Value Measurements - December 31, 2014 | ||||||||||||||||
Carrying | Quoted | Significant | Significant | |||||||||||||
Value | Prices | Other | Unobservable | |||||||||||||
in Active | Observable | Inputs | ||||||||||||||
Markets | Inputs | (Level 3) | ||||||||||||||
(Level 1) | (Level 2) | |||||||||||||||
Liabilities: | ||||||||||||||||
Long-term debt | $ | 30,500,000 | $ | — | $ | — | $ | 31,161,658 | ||||||||
Total | $ | 30,500,000 | $ | — | $ | — | $ | 31,161,658 | ||||||||
Fair Value Measurements - September 30, 2014 | ||||||||||||||||
Carrying | Quoted | Significant | Significant | |||||||||||||
Value | Prices | Other | Unobservable | |||||||||||||
in Active | Observable | Inputs | ||||||||||||||
Markets | Inputs | (Level 3) | ||||||||||||||
(Level 1) | (Level 2) | |||||||||||||||
Liabilities: | ||||||||||||||||
Long-term debt | $ | 30,500,000 | $ | — | $ | — | $ | 30,622,664 | ||||||||
Total | $ | 30,500,000 | $ | — | $ | — | $ | 30,622,664 | ||||||||
The fair value of long-term debt is estimated by discounting the future cash flows of the debt based on current market rates and corresponding interest rate spread. | ||||||||||||||||
FASB ASC 825, Financial Instruments, requires disclosures regarding concentrations of credit risk from financial instruments. Cash equivalents are investments in high-grade, short-term securities (original maturity less than three months), placed with financially sound institutions. Accounts receivable are from a diverse group of customers including individuals and small and large companies in various industries. As of December 31, 2014 and September 30, 2014, no single customer accounted for more than 5% of the total accounts receivable balance. The Company maintains certain credit standards with its customers and requires a customer deposit if such evaluation warrants. |
Stock_Options_Stock_Options
Stock Options Stock Options | 3 Months Ended |
Dec. 31, 2014 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
Stock Options | Stock Options |
On December 4, 2014, the Board of Directors granted 17,000 options to certain officers of the Company. In accordance with the Key Employee Stock Option Plan, the grant price of $21.60 was the closing price of the Company's stock on the grant date. The options become exercisable six months from the grant date and expire after ten years from the date of issuance. | |
Fair value at the grant date was $4.92 per option as calculated using the Black-Scholes option pricing model. Compensation expense will be recognized over the vesting period. Total compensation expense recognized through December 31, 2014 was $13,940. |
Subsequent_Events
Subsequent Events | 3 Months Ended |
Dec. 31, 2014 | |
Subsequent Events [Abstract] | |
Subsequent Events | Subsequent Events |
The Company has evaluated subsequent events through the date the financial statements were issued. There were no items not otherwise disclosed which would have materially impacted the Company’s condensed consolidated financial statements. |
Basis_of_Presentation_Policy
Basis of Presentation (Policy) | 3 Months Ended |
Dec. 31, 2014 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Basis of Presentation | Basis of Presentation |
RGC Resources, Inc. is an energy services company primarily engaged in the sale and distribution of natural gas. The consolidated financial statements include the accounts of RGC Resources, Inc. and its wholly owned subsidiaries (“Resources” or the “Company”): Roanoke Gas Company; Diversified Energy Company; and RGC Ventures of Virginia, Inc. | |
In the opinion of management, the accompanying unaudited condensed consolidated financial statements contain all adjustments (consisting of only normal recurring accruals) necessary to present fairly Resources financial position as of December 31, 2014 and the results of its operations, cash flows and comprehensive income for the three months ended December 31, 2014 and 2013. The results of operations for the three months ended December 31, 2014 are not indicative of the results to be expected for the fiscal year ending September 30, 2015 as quarterly earnings are affected by the highly seasonal nature of the business and weather conditions generally result in greater earnings during the winter months. | |
The unaudited condensed consolidated interim financial statements and condensed notes are presented as permitted under the rules and regulations of the Securities and Exchange Commission. Pursuant to those rules, certain information and note disclosures normally included in the annual financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted, although the Company believes that the disclosures made are adequate to make the information not misleading. Therefore, the condensed consolidated financial statements and condensed notes should be read in conjunction with the financial statements and notes contained in the Company’s Form 10-K for the year ended September 30, 2014. The September 30, 2014 balance sheet was included in the Company’s audited financial statements included in Form 10-K. | |
The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America 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. Actual results could differ from those estimates. | |
The Company’s significant accounting policies are described in Note 1 to the consolidated financial statements in Form 10-K for the year ended September 30, 2014. Newly adopted and newly issued accounting standards are discussed below. | |
Recently Issued Accounting Standards | Recently Issued Accounting Standards |
In May 2014, the FASB issued guidance under FASB ASC No. 606 - Revenue from Contracts with Customers that affects any entity that enters into contracts with customers for the transfer of goods or services or transfer of non-financial assets. This guidance supersedes the revenue recognition requirements in Topic 605, Revenue Recognition, and most industry-specific guidance. The core principle of the new guidance is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. To achieve that core principle, an entity should apply the following steps: (1) identify the contract with the customer, (2) identify the performance obligations in the contract, (3) determine the transaction price, (4) allocate the transaction price to the performance obligations in the contract, and (5) recognize revenue when, or as, the entity satisfies the performance obligation. The new guidance is effective for the Company for the annual reporting period ended September 30, 2018 and interim periods within that annual period. Early application is not permitted. Management has not completed its evaluation of the new guidance. However, the Company does not currently expect the new guidance to have a material effect on its financial position, results of operations or cash flows. | |
Other accounting standards have been issued by the FASB or other standard-setting bodies that are not currently applicable to the Company or are not expected to have a material impact on the Company’s financial position, results of operations or cash flows. |
Other_Comprehensive_Income_Tab
Other Comprehensive Income (Tables) | 3 Months Ended | |||||||||||
Dec. 31, 2014 | ||||||||||||
Equity [Abstract] | ||||||||||||
Schedule of Other Comprehensive Income and Loss | A summary of other comprehensive income and loss is provided below: | |||||||||||
Before-Tax | Tax | Net-of-Tax | ||||||||||
Amount | (Expense) | Amount | ||||||||||
or Benefit | ||||||||||||
Three Months Ended December 31, 2014 | ||||||||||||
Defined benefit plans: | ||||||||||||
Amortization of actuarial losses | $ | 15,055 | $ | (5,715 | ) | $ | 9,340 | |||||
Other comprehensive income | $ | 15,055 | $ | (5,715 | ) | $ | 9,340 | |||||
Three Months Ended December 31, 2013 | ||||||||||||
Interest rate swaps: | ||||||||||||
Unrealized losses | $ | (25,088 | ) | $ | 9,523 | $ | (15,565 | ) | ||||
Transfer of realized losses to interest expense | 241,716 | (91,755 | ) | 149,961 | ||||||||
Net interest rate SWAPs | 216,628 | (82,232 | ) | 134,396 | ||||||||
Defined benefit plans: | ||||||||||||
Amortization of actuarial losses | 10,461 | (3,971 | ) | 6,490 | ||||||||
Other comprehensive income | $ | 227,089 | $ | (86,203 | ) | $ | 140,886 | |||||
Schedule of Components of Other Comprehensive Income | ||||||||||||
Accumulated | ||||||||||||
Other | ||||||||||||
Comprehensive | ||||||||||||
Income (Loss) | ||||||||||||
Balance at September 30, 2014 | $ | (1,139,326 | ) | |||||||||
Other comprehensive income | 9,340 | |||||||||||
Balance at December 31, 2014 | $ | (1,129,986 | ) |
Earnings_Per_Share_Tables
Earnings Per Share (Tables) | 3 Months Ended | |||||||
Dec. 31, 2014 | ||||||||
Earnings Per Share [Abstract] | ||||||||
Schedule of Basic and Diluted Earnings Per Share Reconciliation | A reconciliation of basic and diluted earnings per share is presented below: | |||||||
Three Months Ended | ||||||||
December 31, | ||||||||
2014 | 2013 | |||||||
Net Income | $ | 1,924,376 | $ | 1,722,788 | ||||
Weighted average common shares | 4,721,490 | 4,710,467 | ||||||
Effect of dilutive securities: | ||||||||
Options to purchase common stock | 4,107 | 132 | ||||||
Diluted average common shares | 4,725,597 | 4,710,599 | ||||||
Earnings Per Share of Common Stock: | ||||||||
Basic | $ | 0.41 | $ | 0.37 | ||||
Diluted | $ | 0.41 | $ | 0.37 | ||||
Employee_Benefit_Plans_Tables
Employee Benefit Plans (Tables) | 3 Months Ended | ||||||||
Dec. 31, 2014 | |||||||||
Defined Benefit Plans [Member] | |||||||||
Schedule of Components of Net Periodic Pension and Postretirement Benefit Cost | |||||||||
Three Months Ended | |||||||||
December 31, | |||||||||
2014 | 2013 | ||||||||
Components of net periodic pension cost: | |||||||||
Service cost | $ | 163,696 | $ | 138,323 | |||||
Interest cost | 256,477 | 255,076 | |||||||
Expected return on plan assets | (360,212 | ) | (328,089 | ) | |||||
Recognized loss | 64,345 | 34,099 | |||||||
Net periodic pension cost | $ | 124,306 | $ | 99,409 | |||||
Postretirement Benefit Plan [Member] | |||||||||
Schedule of Components of Net Periodic Pension and Postretirement Benefit Cost | |||||||||
Three Months Ended | |||||||||
December 31, | |||||||||
2014 | 2013 | ||||||||
Components of postretirement benefit cost: | |||||||||
Service cost | $ | 41,895 | $ | 42,159 | |||||
Interest cost | 150,024 | 150,671 | |||||||
Expected return on plan assets | (129,164 | ) | (124,119 | ) | |||||
Recognized loss | 49,265 | 22,379 | |||||||
Net postretirement benefit cost | $ | 112,020 | $ | 91,090 | |||||
Fair_Value_Measurements_Tables
Fair Value Measurements (Tables) | 3 Months Ended | |||||||||||||||
Dec. 31, 2014 | ||||||||||||||||
Fair Value Disclosures [Abstract] | ||||||||||||||||
Schedule of Fair Value of Financial Assets and Liabilities Measured on a Recurring Basis | The following table summarizes the Company’s financial assets and liabilities that are measured at fair value on a recurring basis as required by existing guidance and the fair value measurements by level within the fair value hierarchy as of December 31, 2014 and September 30, 2014: | |||||||||||||||
Fair Value Measurements - December 31, 2014 | ||||||||||||||||
Fair | Quoted | Significant | Significant | |||||||||||||
Value | Prices | Other | Unobservable | |||||||||||||
in Active | Observable | Inputs | ||||||||||||||
Markets | Inputs | (Level 3) | ||||||||||||||
(Level 1) | (Level 2) | |||||||||||||||
Liabilities: | ||||||||||||||||
Natural gas purchases | $ | 842,586 | $ | — | $ | 842,586 | $ | — | ||||||||
Total | $ | 842,586 | $ | — | $ | 842,586 | $ | — | ||||||||
Fair Value Measurements - September 30, 2014 | ||||||||||||||||
Fair | Quoted | Significant | Significant | |||||||||||||
Value | Prices | Other | Unobservable | |||||||||||||
in Active | Observable | Inputs | ||||||||||||||
Markets | Inputs | (Level 3) | ||||||||||||||
(Level 1) | (Level 2) | |||||||||||||||
Liabilities: | ||||||||||||||||
Natural gas purchases | $ | 795,019 | $ | — | $ | 795,019 | $ | — | ||||||||
Total | $ | 795,019 | $ | — | $ | 795,019 | $ | — | ||||||||
Summary of the Fair Value of Financial Assets and Liabilities Not Adjusted to Fair Value | The following table summarizes the fair value of the Company’s financial assets and liabilities that are not adjusted to fair value in the financial statements as of December 31, 2014 and September 30, 2014. | |||||||||||||||
Fair Value Measurements - December 31, 2014 | ||||||||||||||||
Carrying | Quoted | Significant | Significant | |||||||||||||
Value | Prices | Other | Unobservable | |||||||||||||
in Active | Observable | Inputs | ||||||||||||||
Markets | Inputs | (Level 3) | ||||||||||||||
(Level 1) | (Level 2) | |||||||||||||||
Liabilities: | ||||||||||||||||
Long-term debt | $ | 30,500,000 | $ | — | $ | — | $ | 31,161,658 | ||||||||
Total | $ | 30,500,000 | $ | — | $ | — | $ | 31,161,658 | ||||||||
Fair Value Measurements - September 30, 2014 | ||||||||||||||||
Carrying | Quoted | Significant | Significant | |||||||||||||
Value | Prices | Other | Unobservable | |||||||||||||
in Active | Observable | Inputs | ||||||||||||||
Markets | Inputs | (Level 3) | ||||||||||||||
(Level 1) | (Level 2) | |||||||||||||||
Liabilities: | ||||||||||||||||
Long-term debt | $ | 30,500,000 | $ | — | $ | — | $ | 30,622,664 | ||||||||
Total | $ | 30,500,000 | $ | — | $ | — | $ | 30,622,664 | ||||||||
Rates_and_Regulatory_Matters_D
Rates and Regulatory Matters (Details) (USD $) | 3 Months Ended | 12 Months Ended | ||
Dec. 31, 2014 | Dec. 31, 2013 | Sep. 30, 2014 | Jun. 25, 2014 | |
Regulated Operations [Abstract] | ||||
Approved short-term indebtedness authority | $30,000,000 | |||
Approved long-term indebtedness authority | 60,000,000 | |||
WNA weather band percentage | 3.00% | |||
Heating degree day variance | 3.00% | 1.00% | ||
Additional revenues to reflect estimated impact of WNA | $109,000 | $0 |
ShortTerm_Debt_Details
Short-Term Debt (Details) (USD $) | 3 Months Ended | |
Dec. 31, 2014 | Sep. 30, 2014 | |
Short-term Debt [Line Items] | ||
Issuance date | 31-Mar-14 | |
Variable rate description | 30-day LIBOR | |
Variable rate basis points | 1.00% | |
Availability fee, percent | 0.15% | |
Line-of-credit facility, expiration date | 31-Mar-15 | |
Borrowings under line-of-credit | $15,523,936 | $9,045,050 |
Minimum [Member] | ||
Short-term Debt [Line Items] | ||
Line of credit facility, maximum borrowing limit | 1,000,000 | |
Maximum [Member] | ||
Short-term Debt [Line Items] | ||
Line of credit facility, maximum borrowing limit | $19,000,000 |
Derivatives_and_Hedging_Narrat
Derivatives and Hedging (Narrative) (Details) | Dec. 31, 2014 | Sep. 30, 2014 |
instruments_held | instruments_held | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | ||
Number of interest rate swaps | 0 | 2 |
Other_Comprehensive_Income_Sch
Other Comprehensive Income (Schedule of Other Comprehensive Income and Loss) (Details) (USD $) | 3 Months Ended | |
Dec. 31, 2014 | Dec. 31, 2013 | |
Before-Tax Amount | ||
Unrealized losses | ($25,088) | |
Transfer of realized losses to interest expense | 241,716 | |
Net interest rate SWAPs | 216,628 | |
Amortization of actuarial losses | 15,055 | 10,461 |
OTHER COMPREHENSIVE INCOME, BEFORE TAX | 15,055 | 227,089 |
Tax (Expense) or Benefit | ||
Unrealized losses | 9,523 | |
Transfer of realized losses to interest expense | -91,755 | |
Net interest rate SWAPs | -82,232 | |
Amortization of actuarial losses | -5,715 | -3,971 |
OTHER COMPREHENSIVE INCOME, (TAX EXPENSE) OR BENEFIT | -5,715 | -86,203 |
Net-of-Tax Amount | ||
Unrealized losses | -15,565 | |
Transfer of realized losses to interest expense | 149,961 | |
Net interest rate SWAPs | 0 | 134,396 |
Amortization of actuarial losses | 9,340 | 6,490 |
OTHER COMPREHENSIVE INCOME, NET OF TAX | $9,340 | $140,886 |
Other_Comprehensive_Income_Sch1
Other Comprehensive Income (Schedule of Components of Accumulated Comprehensive Loss) (Details) (USD $) | 3 Months Ended | |
Dec. 31, 2014 | Dec. 31, 2013 | |
Increase (Decrease) in Other Accumulated Comprehensive Income (Loss) [Roll Forward] | ||
Balance at beginning of period | ($1,139,326) | |
Other comprehensive income | 9,340 | 140,886 |
Balance at end of period | ($1,129,986) |
Earnings_Per_Share_Schedule_of
Earnings Per Share (Schedule of Basic and Diluted Earnings Per Share Reconciliation) (Details) (USD $) | 3 Months Ended | |
Dec. 31, 2014 | Dec. 31, 2013 | |
Earnings Per Share [Abstract] | ||
Net income | $1,924,376 | $1,722,788 |
Weighted average common shares | 4,721,490 | 4,710,467 |
Effect of dilutive securities: | ||
Options to purchase common stock (in shares) | 4,107 | 132 |
Diluted average common shares | 4,725,597 | 4,710,599 |
Earnings Per Share of Common Stock: | ||
Basic (in dollars per share) | $0.41 | $0.37 |
Diluted (in dollars per share) | $0.41 | $0.37 |
Commitments_and_Contingencies_
Commitments and Contingencies (Narrative) (Details) | 3 Months Ended |
Dec. 31, 2014 | |
pipeline | |
Commitments and Contingencies Disclosure [Abstract] | |
Franchise effective date | 1-Jan-16 |
Number of pipelines | 2 |
Employee_Benefit_Plans_Schedul
Employee Benefit Plans (Schedule of Components of Net Periodic Pension and Postretirement Benefit Cost) (Details) (USD $) | 3 Months Ended | |
Dec. 31, 2014 | Dec. 31, 2013 | |
Defined Benefit Plans [Member] | ||
Defined Benefit Plan Disclosure [Line Items] | ||
Service cost | $163,696 | $138,323 |
Interest cost | 256,477 | 255,076 |
Expected return on plan assets | -360,212 | -328,089 |
Recognized loss | 64,345 | 34,099 |
Net periodic/postretirement pension/benefit cost | 124,306 | 99,409 |
Postretirement Benefit Plan [Member] | ||
Defined Benefit Plan Disclosure [Line Items] | ||
Service cost | 41,895 | 42,159 |
Interest cost | 150,024 | 150,671 |
Expected return on plan assets | -129,164 | -124,119 |
Recognized loss | 49,265 | 22,379 |
Net periodic/postretirement pension/benefit cost | $112,020 | $91,090 |
Employee_Benefit_Plans_Narrati
Employee Benefit Plans (Narrative) (Details) (USD $) | 3 Months Ended |
Dec. 31, 2014 | |
Defined Benefit Plans [Member] | |
Defined Benefit Plan Disclosure [Line Items] | |
Defined benefit plan, contributions by employer | $400,000 |
Estimated future contribution during remainder of fiscal year | 400,000 |
Postretirement Benefit Plan [Member] | |
Defined Benefit Plan Disclosure [Line Items] | |
Defined benefit plan, contributions by employer | 250,000 |
Estimated future contribution during remainder of fiscal year | $250,000 |
Fair_Value_Measurements_Schedu
Fair Value Measurements (Schedule of Fair Value of Financial Assets and Liabilities Measured on a Recurring Basis) (Details) (USD $) | Dec. 31, 2014 | Sep. 30, 2014 |
Schedule of Fair Value Assets and Liabilities Measured on Recurring Basis and Fair Value Measurement Inputs [Line Items] | ||
Natural gas purchases | $842,586 | $795,019 |
Total | 842,586 | 795,019 |
Quoted Prices in Active Markets (Level 1) [Member] | ||
Schedule of Fair Value Assets and Liabilities Measured on Recurring Basis and Fair Value Measurement Inputs [Line Items] | ||
Natural gas purchases | 0 | 0 |
Total | 0 | 0 |
Significant Other Observable Inputs (Level 2) [Member] | ||
Schedule of Fair Value Assets and Liabilities Measured on Recurring Basis and Fair Value Measurement Inputs [Line Items] | ||
Natural gas purchases | 842,586 | 795,019 |
Total | 842,586 | 795,019 |
Significant Unobservable Inputs (Level 3) [Member] | ||
Schedule of Fair Value Assets and Liabilities Measured on Recurring Basis and Fair Value Measurement Inputs [Line Items] | ||
Natural gas purchases | 0 | 0 |
Total | $0 | $0 |
Fair_Value_Measurements_Summar
Fair Value Measurements (Summary of the Fair Value of Financial Assets and Liabilities Not Adjusted to Fair Value) (Details) (USD $) | Dec. 31, 2014 | Sep. 30, 2014 |
Quoted Prices in Active Markets (Level 1) [Member] | ||
Liabilities: | ||
Long-term debt | $0 | $0 |
Total | 0 | 0 |
Significant Other Observable Inputs (Level 2) [Member] | ||
Liabilities: | ||
Long-term debt | 0 | 0 |
Total | 0 | 0 |
Significant Unobservable Inputs (Level 3) [Member] | ||
Liabilities: | ||
Long-term debt | 31,161,658 | 30,622,664 |
Total | 31,161,658 | 30,622,664 |
Carrying Value [Member] | ||
Liabilities: | ||
Long-term debt | 30,500,000 | 30,500,000 |
Total | $30,500,000 | $30,500,000 |
Fair_Value_Measurements_Narrat
Fair Value Measurements (Narrative) (Details) | 3 Months Ended | 12 Months Ended |
Dec. 31, 2014 | Sep. 30, 2014 | |
customer | customer | |
Fair Value Disclosures [Abstract] | ||
Concentration risk, number of customers | 0 | 0 |
Maximum percentage of accounts receivable from a single customer | 5.00% | 5.00% |
Stock_Options_Details
Stock Options (Details) (USD $) | 0 Months Ended | 3 Months Ended | ||
Dec. 04, 2014 | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 04, 2014 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | ||||
Options granted | 17,000 | |||
Grant price (in dollars per share) | $21.60 | |||
Option vesting period | 6 months | |||
Option expiration period | 10 years | |||
Fair value at the grant date (in dollars per share) | $4.92 | |||
Total compensation expense | $13,940 | $12,552 |