-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: keymaster@town.hall.org Originator-Key-Asymmetric: MFkwCgYEVQgBAQICAgADSwAwSAJBALeWW4xDV4i7+b6+UyPn5RtObb1cJ7VkACDq pKb9/DClgTKIm08lCfoilvi9Wl4SODbR1+1waHhiGmeZO8OdgLUCAwEAAQ== MIC-Info: RSA-MD5,RSA, c45zBtVY3abjMkSwdAOGp+PT7Esp2hBbHp1dh7/5inRNNsiEUFd3jwwD6nRP6XyC JJRYdgh2lpnJvNU25Vv6Tg== 0000031224-95-000032.txt : 19950517 0000031224-95-000032.hdr.sgml : 19950516 ACCESSION NUMBER: 0000031224-95-000032 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19950331 FILED AS OF DATE: 19950512 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: EASTERN UTILITIES ASSOCIATES CENTRAL INDEX KEY: 0000031224 STANDARD INDUSTRIAL CLASSIFICATION: ELECTRIC SERVICES [4911] IRS NUMBER: 041271872 STATE OF INCORPORATION: MA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-05366 FILM NUMBER: 95537908 BUSINESS ADDRESS: STREET 1: ONE LIBERTY SQ STREET 2: P O BOX 2333 CITY: BOSTON STATE: MA ZIP: 02109 BUSINESS PHONE: 6173579590 10-Q 1 EUA 1ST QUARTER 1995 10Q UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q (Mark one) [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 1995 OR [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period _________________ to ___________________ Commission File Number 1-5366 EASTERN UTILITIES ASSOCIATES (Exact name of registrant as specified in its charter) Massachusetts 04-1271872 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) One Liberty Square, Boston, Massachusetts (Address of principal executive offices) 02109 (Zip Code) (617)357-9590 (Registrant's telephone number including area code) 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 latest practical date. Class Outstanding at May 1, 1995 Common Shares, $5 par value 20,240,872 shares PART I - FINANCIAL INFORMATION Item 1. Financial Statements EASTERN UTILITIES ASSOCIATES CONSOLIDATED CONDENSED BALANCE SHEETS (In Thousands)
March 31, December 31, ASSETS 1995 1994 Utility Plant and Other Investments: Utility Plant in Service $ 1,023,625 $ 1,020,859 Less: Accumulated Provision for Depreciation and Amortization 312,833 304,034 Net Utility Plant in Service 710,792 716,825 Construction Work in Progress 15,534 8,389 Net Utility Plant 726,326 725,214 Investments in Jointly Owned Companies 69,925 70,675 Non-Utility Property - Net 111,331 107,803 Total Plant and Other Investments 907,582 903,692 Current Assets: Cash and Temporary Cash Investments 13,808 20,109 Accounts Receivable, Net 82,994 89,348 Notes Receivable 13,301 13,906 Materials and Supplies 13,926 15,168 Other Current Assets 8,019 8,517 Total Current Assets 132,048 147,048 Deferred Debits and Other Non-Current Assets 182,670 183,309 Total Assets $ 1,222,300 $ 1,234,049 LIABILITIES AND CAPITALIZATION Capitalization: Common Shares, $5 Par Value $ 100,308 $ 99,685 Other Paid-In Capital 213,616 212,990 Common Share Expense (3,880) (3,849) Retained Earnings 60,003 56,617 Total Common Equity 370,047 365,443 Non-Redeemable Preferred Stock - Net 6,900 6,900 Redeemable Preferred Stock - Net 25,630 25,390 Long-Term Debt - Net 452,414 455,412 Total Capitalization 854,991 853,145 Current Liabilities: Long-Term Debt Due Within One Year 42,402 41,601 Notes Payable 34,882 31,678 Preferred Stock Sinking Fund 50 50 Accounts Payable 27,838 33,442 Taxes Accrued 7,108 6,465 Interest Accrued 8,278 10,889 Other Current Liabilities 19,270 29,566 Total Current Liabilities 139,828 153,691 Deferred Credits and Other Non-Current Liabilities 86,965 89,313 Accumulated Deferred Taxes 140,516 137,900 Total Liabilities and Capitalization $ 1,222,300 $ 1,234,049 See accompanying notes to consolidated condensed financial statements.
EASTERN UTILITIES ASSOCIATES CONSOLIDATED CONDENSED STATEMENTS OF INCOME (In Thousands Except Number of Shares and Per Share Amounts)
Three Months Ended March 31, 1995 1994 Operating Revenues $ 137,967 $ 150,197 Operating Expenses: Fuel 22,284 23,183 Purchased Power 31,974 34,902 Other Operation and Maintenance 41,300 44,313 Depreciation and Amortization 11,757 11,395 Taxes - Other Than Income 6,557 6,849 - Current Income 3,951 5,822 - Deferred Income 2,061 2,163 Total 119,884 128,627 Operating Income 18,083 21,570 Other Income - Net 4,153 5,310 Income Before Interest Charges 22,236 26,880 Interest Charges: Interest on Long-Term Debt 9,660 9,773 Other Interest Expense 1,248 1,279 Allowance for Borrowed Funds Used During Construction (Credit) (558) (345) Net Interest Charges 10,350 10,707 Net Income 11,886 16,173 Preferred Dividends of Subsidiaries 581 583 Consolidated Net Earnings $ 11,305 $ 15,590 Weighted Average Number of Common Shares Outstanding 19,998,331 19,388,017 Consolidated Earnings Per Average Common Share $ 0.57 $ 0.80 Dividends Paid $ 0.385 $ 0.36 See accompanying notes to consolidated condensed financial statements.
EASTERN UTILITIES ASSOCIATES CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS (In Thousands) Three Months Ended March 31, 1995 1994 CASH FLOW FROM OPERATING ACTIVITIES: Net Income $ 11,886 $ 16,173 Adjustments to Reconcile Net Income to Net Cash Provided from Operating Activities: Depreciation and Amortization 14,721 14,011 Deferred Taxes 2,262 2,293 Non-cash (Gains)/Expenses on Sales of Investments in Energy Savings Projects (278) 2,056 Investment Tax Credit, Net (303) (295) Allowance for Funds Used During Construction (146) (69) Collections and sales of project notes and leases receivables 1,427 1,312 Other - Net 359 (917) Change in Operating Assets and Liabilities (9,773) (3,540) Net Cash Provided From Operating Activities 20,155 31,024 CASH FLOW FROM INVESTING ACTIVITIES: Construction Expenditures (21,147) (11,507 Collections on Notes and Lease Receivables of EUA Cogenex 487 193 Acquisition of Northeast Energy Management, Inc. (8,567) Increase in Other Investments (81) Net Cash (Used in) Investment Activities (20,660) (19,962 CASH FLOW FROM FINANCING ACTIVITIES: Issuances: Common Stock 1,509 2,295 Long-Term Debt 7,926 Redemptions: Long-Term Debt (2,219) (9,042) Premium on Reacquisition and Financing Expenses (30) (396) EUA Common Share Dividends Paid (7,679) (7,021) Subsidiary Preferred Dividends Paid (581) (583) Net Increase in Short-Term Debt 3,204 8,880 Net Cash Provided from (Used in) Financing Activities (5,796) 2,059 Net Increase (Decrease) in Cash and Temp. Cash Investments (6,301) 13,121 Cash and Temporary Cash Investments at Beginning of Period 20,109 4,180 Cash and Temporary Cash Investments at End of Period $ 13,808 $ 17,301 Supplemental disclosures of cash flow information: Cash paid during the period for: Interest (Net of Capitalized Interest) $ 11,980 $ 10,759 Income Taxes $ 1,914 $ 1,607 Supplemental schedule of non-cash investing activities: Conversion of Investments in Energy Savings Projects to Notes and Leases Receivable $ 933 $ 1,986 See accompanying notes to consolidated condensed financial statements.
EASTERN_UTILITIES_ASSOCIATES NOTES_TO_CONSOLIDATED_CONDENSED_FINANCIAL_STATEMENTS The accompanying Notes should be read in conjunction with the Notes to Consolidated Financial Statements incorporated in the Eastern Utilities Associates (EUA or the Company) 1994 Annual Report on Form 10-K. Note A - In the opinion of the Company, the accompanying unaudited consolidated condensed financial statements contain all adjustments (consisting of only normal recurring accruals) necessary to present fairly its financial position as of March 31, 1995 and the results of operations and cash flows for the three months ended March 31, 1995 and 1994. Certain reclassifications have been made to prior period financial statements to conform to current period classifications. The year-end consolidated condensed balance sheet data was derived from audited financial statements but does not include all disclosures required under generally accepted accounting principles. Note B - Results shown above for the respective interim periods are not neces- sarily indicative of results to be expected for the fiscal years due to seasonal factors which are inherent in electric utilities in New England. A greater proportionate amount of revenues is earned in the first and fourth quarters (winter season) of most years because more electricity is sold due to weather conditions, fewer day-light hours, etc. Note C - Commitments and Contingencies: Rate Activity On March 21, 1994, Montaup Electric Company (Montaup), the wholesale electric generating and transmission subsidiary of EUA, filed an application with the Federal Energy Regulatory Commission (FERC) for authorization to reduce its wholesale rates by $10.1 million, or three percent. Montaup supplies electricity at wholesale to EUA's retail electric utilities - Eastern Edison Company (Eastern Edison), Blackstone Valley Electric Company (Blackstone) and Newport Electric Corporation (Newport) - and to two non-affiliated municipal utilities. This application is designed to match more closely Montaup's revenues with its decreasing cost of doing business resulting from, among other things, a reduced rate base, lower interest costs and successful cost control efforts. On May 21, 1994, Montaup began billing the reduced rates, and on April 14, 1995 FERC approved a settlement agreement between Montaup and the intervenors in the case calling for an annual reduction of approximately $13.9 million (inclusive of the filed $10.1 million reduction). Montaup will refund to its customers the difference collected between the $10.1 million filed reduction and the $13.9 million settled reduction in the second quarter of 1995. Montaup has previously reserved for this refund. Maine Yankee During the refueling-and-maintenance shutdown of the Maine Yankee Nuclear Generating plant that started in early February of 1995, Maine Yankee Atomic Power Company (Maine Yankee), the owner of the plant, detected an increased rate of degradation of the plant's steam generator tubes in excess of the number expected and started evaluating several courses of action. On April 7, 1995, Maine Yankee announced its intention to further explore sleeving all 17,000 steam generator tubes. Although testing of all tubes revealed that approximately 40% of the tubes are free of defects, Maine Yankee plans to sleeve all of the tubes as a preventative safety measure. Sleeving involves the inserting of a tube of slightly smaller diameter into the defective tube, the sleeve is welded in place and acts as a new tube. Sleeving is a proven technology and must meet rigorous federal standards of safety and licensing. If the sleeving option is approved and implemented, Maine Yankee projects that the plant could return to service in the final quarter of 1995. Montaup owns 4% of the Common Stock of Maine Yankee, and its share of the current estimated cost of the sleeving option could be approximately $1.6 million. At this time, EUA cannot predict whether this option will be approved for implementation or the ultimate impact on EUA, if any, of this option or any other course of action which may be taken with respect to the plant. Item_2. Management's_Discussion_and_Analysis_of_Financial_Condition_and_Results of_Operations The following is Management's discussion and analysis of certain significant factors affecting the Company's earnings and financial condition for the interim periods presented in this Form 10-Q. Overview Consolidated net earnings for the quarter ended March 31, 1995 were $11.3 million. Net Earnings for the same period of 1994 amounted to $15.6 million. Net Earnings contributions by Business Unit for the first three months of 1995 and 1994 were as follows (000's): Three Months Ended March 31, 1995 1994 Core Electric Business $10,636 $13,227 Energy Related Business 507 2,249 Corporate 162 114 Consolidated $11,305 $15,590 ======= ======= Net Earnings of the Core Electric Business for the first quarter of 1995 decreased by $2.6 million primarily due to decreased kilowatthour (kwh) sales and a full quarter's impact of Montaup's wholesale rate reduction implemented on May 21, 1994. The first quarter of 1995 was 18% warmer than the same period of a year ago causing a 3.8% decrease in total primary kWh sales. However, while total primary sales dropped, sales to industrial customers posted a 3.7% gain signaling a continuation of the slow but steady economic recovery in the Core Electric service territories. Net Earnings of our Energy Related Business Unit decreased by approximately $1.7 million in the first quarter of 1995 as compared to the same period of a year ago. This decrease is due primarily to a $1.3 million decrease in EUA Energy Investment Corporation (EUA Energy) earnings resulting mainly from additional research and development expenses recorded in the first quarter of 1995. EUA Cogenex Corporation's (EUA Cogenex) earnings contribution fell approximately $400,000 in the first quarter due primarily to lower project sales. Operating_Revenues Operating Revenues for the first three months of 1995 decreased by $12.2 million to approximately $138.0 million when compared to the same period of 1994. Operating Revenues by Business Unit for the first quarter of 1995 and 1994 were as follows (000's): Three Months Ended March 31, 1995 1994 Core Electric Business $122,738 $132,448 Energy Related Business 15,229 17,749 Corporate 0 0 Consolidated $137,967 $150,197 ======== ======== Core Electric Business revenues decreased $9.7 million due primarily to a reduction of approximately $3.9 million in Montaup's wholesale revenues resulting from a full quarter's impact of its wholesale rate reduction implemented on May 21, 1994, recoveries of decreased fuel, purchased power and conservation and load management expenses aggregating $5.2 million as discussed below and the impacts of lower kWh sales. EUA Cogenex revenues, which account for all of the Energy Related Business Unit revenues, decreased by $2.5 million. Operating_Expenses Fuel expense of the Core Electric Business for the first quarter of 1995 decreased from that of the same period in 1994 by approximately $900,000 or 3.9% due primarily to the decrease in kWh sales, offset somewhat by a 9.7% increase in the average cost of fuel in the first quarter of 1995 as compared to the same period of 1994. Also offsetting the impact of lower kWh sales was approximately $1.2 million of purchased power-energy previously recorded as purchased power expense by Newport now recorded as fuel expense by Montaup as a result of Newport becoming an all-requirements customer of Montaup effective May 21, 1994. Purchased Power expense for the first quarter of 1995 decreased $2.9 million or 8.4% as compared to last year's first quarter due primarily to a decrease of approximately $2.1 million resulting from contracts which expired in October 1994 aggregating 41 mw. The reclassification of Purchased Power expense to fuel expense as discussed above also contributed to this decrease. Other Operation and Maintenance (O&M) expenses for the quarter ended March 31, 1995 decreased approximately $3.0 million or 6.8% from the same period in 1994 due to the following: Core Electric Business O&M expenses decreased by $1.9 million due primarily to decreased direct expenses such as wages, benefits, distribution and production expenses aggregating $1.4 million and decreased conservation and load management expenses of $1.4 million. Offsetting these decreases somewhat were increases in indirect expenses totaling $800,000 related to jointly owned unit expenses and FAS106 expenses. O&M expenses of the Energy Related Business decreased by approximately $900,000 resulting from decreased EUA Cogenex O&M expenses of approximately $2.7 million offset by additional development and operating expenses of EUA Energy aggregating approximately $1.8 million. Other_Income_and (Deductions) -_Net Other Income and (Deductions)-Net decreased $1.2 million in the first quarter of 1995 as compared to the corresponding period in the prior year due primarily to a one-time settlement received in 1994 by Eastern Utilities Associates (the Parent Company) totaling $900,000 related to Seabrook Nuclear Project payments previously withheld by the Vermont Electric Generation and Transmission Cooperative, Inc. Liquidity_and_Sources_of_Capital The EUA System's need for permanent capital is primarily related to investments in facilities required to meet the needs of its existing and future customers. Traditionally, cash construction requirements not met with internally generated funds are financed through short-term borrowings which are ultimately funded with permanent capital. At March 31, 1995, EUA System companies maintained short-term lines of credit with various banks aggregating approxi- mately $150 million. Outstanding short-term Debt at March 31, 1995 and December 31, 1994 by Business Unit was as follows (000's): March 31, 1995 December 31, 1994 Core Electric Business $ 650 $ 0 Energy Related Business 27,633 23,476 Corporate 6,599 8,202 Consolidated $34,882 $31,678 ======= ======= For the three months ended March 31, 1995, internally generated funds available after the payment of dividends amounted to approximately $22.1 million while the EUA System's cash construction requirements amounted to approximately $21.1 million for the same period. Various laws, regulations and contract provisions limit the use of EUA's internally generated funds such that the funds generated by one subsidiary are not generally available to fund the operations of another subsidiary. On April 17, 1995, the Trustees of EUA voted to increase the quarterly dividend 1.5 cents per share from 38.5 cents per share to 40 cents per share. The first quarterly dividend at the new rate of will be payable May 15, 1995 to shareholders of record on May 1, 1995. Voluntary Retirement Incentive Offer On March 15, 1995, EUA announced a corporate reorganization which, among other things, will consolidate management of Eastern Edison, Blackstone and Newport. David H. Gulvin, formerly President of Blackstone and Newport, was named Senior Vice President of Eastern Edison, Blackstone and Newport. John D. Carney, President of Eastern Edison was named President of Blackstone and Newport, also. As part of the reorganization, a voluntary retirement incentive effective June 1, 1995, was offered to sixty-six EUA System employees. EUA expects a majority of the eligible personnel to accept and anticipates taking a one-time charge to earnings in the second quarter of this year to reflect the cost of this early retirement incentive. The final amount of this charge will depend on the final number of eligible employees that accept the offer. The estimated payback period is approximately 18 months. PART II - OTHER INFORMATION Item 5. Other Information On March 29, 1995, the Federal Energy Regulatory Commission (FERC) issued a Notice of Proposed Rulemaking (NOPR) which will require public utilities that own or control interstate transmission facilities to offer to other utilities "open access" transmission service on a non-discriminatory basis and file open access transmission tariffs. FERC also proposes to allow in certain circumstances the collection of charges for the recovery of stranded costs associated with requiring open access tariffs when former wholesale or retail customers change power suppliers. The Commission's purpose in proposing the new rules is to encourage competition in the bulk power market. At this time, management is unable to predict the ultimate impact, if any, of the NOPR on the EUA System. On May 1, 1995 EUA Cogenex completed the acquisition of Highland Energy Group, Inc. (Highland) of Boulder, Colorado in exchange for $4.2 million of EUA Common Shares (176,258 shares) plus a possible deferred payment of up to $3.8 million in EUA Common Shares contingent upon post acquisition performance. Highland is an energy services and demand side management company operating as a wholly-owned subsidiary of EUA Cogenex. Item_6. Exhibits_and_Reports_on_Form_8-K (a) Exhibits - None (b) Reports on Form 8-K - None 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. Eastern_Utilities_Associates______ (Registrant) Date: May_12,_1995 /s/ Clifford J. Hebert, Jr. Clifford J. Hebert, Jr., Treasurer (on behalf of the Registrant and as Chief Financial Officer) EX-27 2 FINANCIAL DATA SCHEDULE
OPUR1 1000 3-MOS DEC-31-1994 MAR-31-1995 PER-BOOK 726326 181256 132048 116856 65814 1222300 100308 209736 60003 370047 25497 7033 452414 0 34882 0 42402 50 0 0 289975 1222300 137967 6012 113872 119884 18083 4153 22236 10350 11886 581 11305 7679 9660 20155 .57 0
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