-----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, PBND4Yr1zRJdXGpMLaJMonhTIaarN9/q/rAOsBBsQ+LaS8XLMBbldjxE0vIcGa3V qh3gAA2YUXvbvStATfc1mg== 0000910647-95-000003.txt : 19950517 0000910647-95-000003.hdr.sgml : 19950517 ACCESSION NUMBER: 0000910647-95-000003 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19941231 FILED AS OF DATE: 19950213 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: BERKSHIRE GAS CO /MA/ CENTRAL INDEX KEY: 0000317406 STANDARD INDUSTRIAL CLASSIFICATION: 4924 IRS NUMBER: 041731220 STATE OF INCORPORATION: MA FISCAL YEAR END: 0630 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-01857 FILM NUMBER: 95509245 BUSINESS ADDRESS: STREET 1: 115 CHESHIRE RD CITY: PITTSFIELD STATE: MA ZIP: 01201-1388 BUSINESS PHONE: 4134421511 10-Q 1 FORM 10-Q 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 the Quarter Ended December 31, 1994 Commission File No. 0-1857-3 THE BERKSHIRE GAS COMPANY Massachusetts 04-1731220 115 Cheshire Road, Pittsfield, Massachusetts 01201-1388 Registrant's telephone number, including Area Code 413:442-1511 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 filling requirements for the past 90 days. Yes [X] No [ ] At December 31, 1994, the Registrant had issued and outstanding 2,081,515 shares of Common Stock, par value $2.50. THE BERKSHIRE GAS COMPANY STATEMENT OF INCOME AND RETAINED EARNINGS - Unaudited (In Thousands Except Share Amounts)
Three Months Three Months Ended 12/31/94 Ended 12/31/93 Operating Revenues $ 12,086 $ 12,951 Cost of Gas Sold 6,375 6,918 Operating Margin 5,711 6,033 Other Operating Expenses 2,924 2,967 Depreciation Expense 912 847 Total 3,836 3,814 Utility Operating Income 1,875 2,219 Other Income - Net 503 662 Operating and Other Income 2,378 2,881 Interest Expense 938 895 Other Taxes 404 375 Pre-Tax Income 1,036 1,611 Income Taxes 380 598 NET INCOME 656 1,013 Retained Earnings at Beginning of Period 5,670 4,250 --------- --------- Total 6,326 5,263 Dividends Declared Preferred Stock 173 185 Common Stock 573 472 Total Dividends 746 657 Retained Earnings at End of Period $ 5,580 $ 4,606 Income Available for Common Stock $ 483 $ 828 Average Shares of Common Stock Outstanding 2,081,515 1,749,998 Income Per Share of Common Stock $ 0.23 $ 0.47 --------- ---------
See Independent Accountants' Report and Notes to Financial Statements. THE BERKSHIRE GAS COMPANY STATEMENT OF INCOME AND RETAINED EARNINGS - Unaudited (In Thousands Except Share Amounts)
Six Months Six Months Ended 12/31/94 Ended 12/31/93 Operating Revenues $ 16,918 $ 17,492 Cost of Gas Sold 8,757 9,136 Operating Margin 8,161 8,356 Other Operating Expenses 5,536 5,481 Depreciation Expense 1,222 1,174 Total 6,758 6,655 Utility Operating Income 1,403 1,701 Other Income - Net 851 942 Operating and Other Income 2,254 2,643 Interest Expense 1,860 1,708 Other Taxes 616 573 Pre-Tax Income/(Loss) (222) 362 Income Taxes/(Benefit) (112) 101 NET INCOME/(LOSS) (110) 261 Retained Earnings at Beginning of Period 7,098 5,658 Total 6,988 5,919 Dividends Declared: Preferred Stock 347 370 Common Stock 1,061 943 Total Dividends 1,408 1,313 Retained Earnings at End of Period $ 5,580 $ 4,606 ---------- ---------- Loss Attributable to Common Stock ($457) ($109) Average Shares of Common Stock Outstanding 1,922,339 1,744,901 Loss Per Share of Common Stock ($0.24) ($0.06) ---------- ----------
See Independent Accountants' Report and Notes to Financial Statements. THE BERKSHIRE GAS COMPANY STATEMENT OF INCOME AND RETAINED EARNINGS - Unaudited (In Thousands Except Share Amounts)
Twelve Months Twelve Months Ended 12/31/94 Ended 12/31/93 Operating Revenues $ 52,455 $ 47,339 Cost of Gas Sold 27,506 24,432 Operating Margin 24,949 22,907 Other Operating Expenses 12,964 11,405 Depreciation Expense 3,468 3,245 Total 16,432 14,650 Utility Operating Income 8,517 8,257 Other Income - Net 2,296 1,776 Operating and Other Income 10,813 10,033 Interest Expense 3,641 3,505 Other Taxes 1,670 1,595 Pre-Tax Income 5,502 4,933 Income Taxes 2,200 1,793 NET INCOME 3,302 3,140 Retained Earnings at Beginning of Period 4,606 4,084 Adjustment to Retained Earnings 390 0 Total 8,298 7,224 Dividends Declared: Preferred Stock 697 741 Common Stock 2,021 1,877 Total Dividends 2,718 2,618 Retained Earnings at End of Period $ 5,580 $ 4,606 --------- --------- Income Available for Common Stock $ 2,605 $ 2,399 Average Shares of Common Stock Outstanding 1,835,027 1,735,030 Income Per Share of Common Stock $1.42 $1.38 --------- ---------
See Independent Accountants' Report and Notes to Financial Statements. THE BERKSHIRE GAS COMPANY BALANCE SHEETS (In Thousands)
December 31, June 30, 1994 1994 (Unaudited) (Audited) ASSETS Utility Plant: Utility Plant - at original cost $89,485 $86,098 Less: Accumulated Depreciation 20,461 19,907 Utility Plant - Net 69,024 66,191 Other Property: Other Property - at original cost 10,372 9,957 Less: Accumulated Depreciation 4,527 4,242 Other Property - Net 5,845 5,715 Current Assets: Cash 120 65 Accounts Receivable: Utility Service (less allowance for doubtful accounts: 7,511 8,133 Dec. 1994-$703; June 1994-$727) Merchandise & Liquefied Petroleum 766 554 (less allowance for doubtful accounts: Dec 1994-$84; June 1994-$89) Other Receivables 209 133 Inventories (at the lower of average cost or market): Natural Gas 2,616 2,088 Liquefied Petroleum 298 184 Materials and Supplies 1,259 1,357 Prepayments 260 146 Recoverable Gas Costs 1,113 (502) Total Current Assets 14,152 12,158 Deferred Debits: Unamortized Debt Expense 601 624 Capital Stock Expense 715 340 Environmental Cleanup Costs 1,197 1,030 Other 812 1,537 Total Deferred Debits 3,325 3,531 Recoverable Environmental Cleanup Costs 2,894 2,894 TOTAL ASSETS $95,240 $90,489 ------- -------
See Independent Accountants' Report and Notes to Financial Statements. THE BERKSHIRE GAS COMPANY BALANCE SHEETS (In Thousands)
December 31, 1994 June 30, 1994 (Unaudited) (Audited) LIABILITIES AND OTHER CREDITS Common Shareholders' Equity: Common Stock $ 5,204 $ 4,417 Premium on Common Stock 15,448 11,431 Retained Earnings 5,580 7,098 Total Common Shareholders' Equity 26,232 22,946 Redeemable Cumulative Preferred Stock 8,448 8,491 Long-Term Debt (less current maturities) 31,003 31,083 Current Liabilities: Notes Payable to Banks 8,270 6,580 Current Maturities of Long-Term Debt 900 900 Accounts Payable 3,746 2,776 Taxes Accrued (1,134) (155) Other Current Liabilities 4,441 5,261 Total Current Liabilities 16,223 15,362 Unamortized Investment Tax Credit 1,393 1,430 Deferred Income Taxes 9,047 8,283 Reserve for Recoverable Environmental Cleanup Costs 2,894 2,894 TOTAL LIABILITIES AND OTHER CREDITS $95,240 $90,489 ======= =======
See Independent Accountants' Report and Notes to Financial Statements. THE BERKSHIRE GAS COMPANY STATEMENT OF CASH FLOWS - Unaudited (In Thousands)
Six Months Six Months Ended 12/31/94 Ended 12/31/93 Cash flows from Operating Activities: Net Income/(Loss) $ (110) $ 261 Adjustments to Reconcile Net Income/(Loss) to Net Cash Used in Operating Activities: Depreciation and Amortization 1,642 1,499 Provision for Losses on Accounts Receivable 255 293 Deferred Gas Costs (1,615) (2,695) Deferred Income Taxes 764 416 Changes in Assets and Liabilities Which Provided (Used) Cash: Accounts Receivable 155 (2,322) Other Receivables (76) 65 Inventories (544) (1,186) Capital Stock Expense (440) 0 Accounts Payable 970 1,107 Taxes Accrued (979) (1,222) Other Assets and Current Liabilities (376) 120 Total Adjustments (244) (3,925) Net Cash Used in Operating Activities (354) (3,664) Cash Flows from Investing Activities: Construction Expenditures (4,554) (3,311) Net Cash Used in Investing Activities (4,554) (3,311) Cash Flows from Financing Activities: Dividends Paid (1,408) (1,313) Current Maturities of Long-Term Debt 0 (40) Principal Payments on Long-Term Debt (80) (310) Proceeds from Note Payable Borrowings - Net 1,690 8,430 Proceeds from Sale of Common Stock 4,499 0 Proceeds from Other Stock Transactions - Net 262 212 Net Cash Provided by Financing Activities 4,963 6,979 Net Increase in Cash 55 4 Cash at Beginning of Period 65 59 Cash at End of Period $ 120 $ 63 ========= ========
See Independent Accountants' Report and Notes to Financial Statements. The balance sheet as of December 31, 1994, the related statements of income and retained earnings for the three six and twelve month periods ended December 31, 1994 and 1993, and the statements of cash flows for the six month period ended December 31, 1994 and 1993 have been reviewed, prior to filing, by the Registrants independent public accountants, Deloitte & Touche LLP, whose report covering their review of the financial statements is presented below. Deloitte & Touche LLP - - - - ------------------------------------------------------------------------------ City Place Telephone: (203) 280-3000 185 Asylum Street Facsimile: (203) 280-3051 Hartford, Connecticut 06103-3402 INDEPENDENT ACCOUNTANTS' REPORT The Berkshire Gas Company: We have reviewed the accompanying balance sheet of The Berkshire Gas Company as of December 31, 1994, the related statements of income and retained earnings for the three month, six month and twelve month periods ended December 31, 1994 and 1993, and the statements of cash flows for the six month periods ended December 31, 1994 and 1993. These financial statements are the responsibility of the Company's management. We conducted our review in accordance with standards established by the American Institute of Certified Public Accountants. A review of interim financial information consists principally of applying analytical procedures to financial data and making inquiries of persons responsible for financial and accounting matters. It is substantially less in scope than an audit conducted in accordance with generally accepted auditing standards, the objective of which is the expression of an opinion regarding the financial statements as a whole. Accordingly, we do not express such an opinion. Based on our review, we are not aware of any material modifications that should be made to such financial statements for them to be in conformity with generally accepted accounting principles. We have previously audited, in accordance with generally accepted auditing standards, the balance sheet of The Berkshire Gas Company as of June 30, 1994, and the related statements of income and retained earnings and of cash flows for the year then ended (not presented herein); and in our report dated August 16, 1994, we expressed an unqualified opinion on those financial statements. In our opinion, the information set forth in the accompanying balance sheet as of June 30, 1994 is fairly stated, in all material respects, in relation to the balance sheet from which it has been derived. Deloitte & Touche LLP February 9, 1995 The Berkshire Gas Company Notes to Financial Statements December 31, 1994 - - - - ------------------------------------------------------------------------------ (Dollars in Thousands Except Share Amounts) NOTES: OTHER FINANCIAL INFORMATION: The accompanying unaudited financial statements have been prepared with the instructions to Form 10-Q and do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. All adjustments, which in the opinion of management are necessary to a fair presentation of the operations for the interim periods presented, have been made. These adjustments are of a normal recurring nature. The results of operations for such interim periods are not necessary indicative of results of operations for a full year. These financial statements should be read in conjunction with the summary of accounting policies and notes to financial statements included in the Company's Annual Report on Form 10-K for the year ended June 30, 1994. CONTINGENCIES: ENVIRONMENTAL: Federal, state and local laws and regulations establishing standards and requirements for protection of the environment have increased in number and scope in recent years. The Berkshire Gas Company (the "Company") cannot predict the future impact of such standards and requirements, which are subject to change and can have retroactive effects. During fiscal 1990, the Massachusetts Department of Public Utilities (MDPU) issued a generic ruling on cost recovery for environmental cleanup with respect to former gas manufacturing sites. Under the ruling, the Company may recover annual cleanup costs, excluding carrying costs, over a seven year period through the Cost of Gas Adjustment Clause (CGAC). This ruling also provides for the sharing of any proceeds received from insurance carriers equally between the Company and its ratepayers, and establishes maximum amounts that can be recovered from customers in any one year. During the period ended December 31, 1994, the Company continued the analysis and field review of two parcels of real estate formerly used for gas manufacturing operations, which had been found to contain coal tar deposits and other substances associated with by-products of the gas manufacturing process. The review and assessment process began in 1985 with respect to the first site which is owned by the Company, and in 1989 with respect to the second site, which was formerly owned by the Company. With the review and approval of the Massachusetts Department of Environmental Protection ("MDEP"), at the first site, the investigative work is near completion and remedial alternatives are being examined. At the second site, investigative activities are commencing. It is difficult to predict the potential financial impact of the sites until first, the nature and risk is fully characterized and second, the remedial strategies and related technologies are determined. The general philosophy of the Company is one of source removal and/or reduction coupled with risk minimization. Assuming successful implementation, it is anticipated that through 2009 the level of expenditures for the site will range from $2,894 to $8,777. The Company has recorded the lesser amount of the range in accordance with SFAS No. 5. Ultimate expenditures cannot be determined until a remedial action plan can be developed and approved by the MDEP. The Company's unamortized costs at December 31, 1994 were $1,197 and should be recovered using the formula discussed above. TRANSPORTATION PIPELINE: Claims against the Company have been asserted by a general contractor and certain subcontractors involved in the construction of a transportation pipeline for which the Company served as developer, and are in the early stages of proceedings. Although the Company cannot predict the ultimate outcome of the claims, which the Company believes are without merit, it intends to contest the claims vigorously and believes that the outcome will not have a material adverse impact on the overall financial condition or results of operations of the Company. Management's Discussion and Analysis of Financial Condition and Results of Operations - - - - ------------------------------------------------------------------------------ Results of Operations - Second Quarter Ended December 31, 1994 versus Second Quarter Ended December 31, 1993 - - - - ------------------------------------------------------------------------------ Berkshire Gas Company considers Operating Margin (Operating Margin or Gross Profit = Operating Revenues Net of Cost of Gas Sold) to be a more pertinent measure of operating results than operating revenues because income is not significantly affected by changes in revenue due to similar fluctuations in gas costs. Operating Margin decreased $322,000 or 5.3% as compared with the three months ended December 31, 1993. Operating Margin is primarily affected by the change in the level of firm gas sold and transported. Interruptible gas sold and transported has no affect on Operating Margin since those margins are flowed back to the customer. The decrease from 1993 is primarily due to lower volumes of firm gas sold due to 9.9% warmer weather than 1993, partially offset by higher volumes of gas sold and transported at slightly lower margins from increased firm transportation volumes to industrial customers.
1994 1993 3 Month Firm MCF Sold & Transported 1,436,772 1,504,466 3 Month Operating Margin $5,711,000 $6,033,000 3 Month Average Operating Margin Per Firm MCF $3.97 $4.01
Depreciation Expense increased $65,000 or 7.7% due to an increase in the level of depreciable assets. Other Income decreased $159,000 or 24% primarily due to lower income from propane and jobbing operations. Propane volumes were lower due to warmer weather and higher expenses for maintenance and depreciation, partially offset by a 6% increase in the number of customers. Jobbing revenues were less than 1993 due to lower levels of activity. Interest Expense increased $43,000 or 4.8% due primarily to a gas supplier refund being returned to the ratepayers through CGAC, and, to a lesser extent, increased borrowing rate. Other Taxes increased $29,000 or 7.7% due to higher personal property valuations and rates. The decrease in Income Taxes of $218,000 resulted from lower net income. Management's Discussion and Analysis of Financial Condition and Results of Operations - - - - ------------------------------------------------------------------------------ Results of Operations - Six Months Ended December 31, 1994 versus Six Months Ended December 31, 1993 - - - - ------------------------------------------------------------------------------ Operating Margin decreased $195,000 or 2.3% as compared with the six months ended December 31, 1993. The decrease from 1993 resulted from warmer weather causing lower volumes of firm gas sold, partially offset by increased volumes and margins on transportation revenues to industrial customers.
1994 1993 6 Month Firm MCF Sold & Transported 2,188,640 2,187,807 6 Month Operating Margin $8,161,000 $8,356,000 6 Month Average Operating Margin Per Firm MCF $3.73 $3.82
Depreciation Expense increased $48,000 or 4.1% due to an increase in the level of depreciable assets. Other Income decreased $91,000 or 9.7%; Interest Expense was higher by $152,000 or 8.9%; Other Taxes increased $43,000 or 7.5%; and Income Taxes decreased $213,000 all for the same reasons as noted in the three month explanation above. Management's Discussion and Analysis of Financial Condition and Results of Operations - - - - ------------------------------------------------------------------------------ Results of Operations - Twelve Months Ended December 31, 1994 versus Twelve Months Ended December 31, 1993 - - - - ------------------------------------------------------------------------------ Operating Margin increased $2,042,000 or 8.9% over the twelve months ended December 31, 1994. The increase over 1993 is primarily due to higher volumes of firm transportation gas used by industrial customers. During this period, firm volumes of gas sold and transported increased 8.0%.
1994 1993 12 Month Firm MCF Sold & Transported 6,338,020 5,867,502 12 Month Operating Margin $24,949,000 $22,907,000 12 Month Average Operating Margin Per Firm MCF $3.94 $3.90
Other Operating Expenses increased $1,559,000 or 13.7% over the twelve months ended December 31,1993. The increase is primarily due to a $752,000 increase in costs associated with maintaining customer records due to higher level of uncollectible accounts, higher payroll and collection costs. Administrative and General Costs increased $594,000 primarily due to higher legal expense of $187,000, regulatory costs of $171,000, injuries and damages costs of $143,000, and salaries and related benefits of $62,000. Expenses for transmission and distribution increased $261,000 due to additional maintenance of mains and services. Production expenses decreased $63,000 due to less costs associated with restructuring supply contracts brought about by the Federal Energy Regulatory Commission ("FERC") Order 636 during 1993. Depreciation Expense increased $223,000 due to an increase in the level of depreciable assets. Interest Expense increased $136,000 primarily due to less interest capitalized than 1993 and, to a lesser extent, an increased borrowing rate. Other Income increased $520,000 over the twelve months ended December 31,1993. The increase resulted primarily from the settlement of an insurance claim relating to a line of business that was discontinued in the 1970's in the amount of $403,000 (net of taxes and amounts previously recorded). The increase in Other Income was partially offset by lower rental income of $102,000 due to higher depreciation expense reflecting an adjustment for the change in the lives of rental assets during 1993, and lower propane income of $45,000. Other Taxes increased $75,000 or 4.7% due to higher personal property tax as well as increased payroll taxes. Income Taxes increased due to higher net income. Management's Discussion and Analysis of Financial Condition and Results of Operations - - - - ------------------------------------------------------------------------------ Liquidity and Capital Resources - December 31, 1994 - - - - ------------------------------------------------------------------------------ The Company added approximately $4,554,000 to Plant assets during the six months ended December 31, 1994. These construction expenditures primarily represent investments in new and replacement mains and services. The Company initially finances construction expenditures and other funding needs primarily with short-term bank borrowings, and to a lesser extent with the reinvestment of dividends. The Company continually evaluates its short-term borrowing position and based on prevailing interest rates, market conditions, etc., makes determinations regarding conversion of short- term borrowings to long-term debt or equity. As part of the continuing financing, the Company sold 295,000 shares of Common Stock during the second quarter of fiscal 1995, netting proceeds of $4,212,600 to repay short-term obligations. Funds for environmental clean-up costs are initially financed through short-term borrowings and all such costs will be recovered over a seven year period under a ruling issued by the MDPU. The capital structure of the Company at December 31, 1994 was 39.9% Common Equity, 12.9% Preferred Stock and 47.2% Long-Term Debt. PART II - OTHER INFORMATION Item 1. Legal Proceedings - - - - ---------------------------- No developments during the quarter. Item 2. Changes in Securities - - - - -------------------------------- Not Applicable Item 3. Defaults Upon Senior Securities - - - - ------------------------------------------ Not Applicable Item 4. Submission of Matters to a Vote of Security Holders - - - - -------------------------------------------------------------- On November 15, 1994, the Annual Meeting of the Shareholders of the Berkshire Gas Company was held at the Berkshire Hilton Inn, Pittsfield, Massachusetts at 10:00 a.m. Proxies for said annual meeting were solicited pursuant to Regulation 14A. There was no solicitation in opposition to Management's nominees, as listed in the Proxy statement, for the election of Directors. All nominees were duly elected. Item 5. Other Information - - - - ---------------------------- During the second quarter of fiscal 1995, the Company sold 295,000 shares of Common Stock in a public offering, netting proceeds of $4,212,600. Item 6. Exhibits and Reports on Form 8 - K - - - - --------------------------------------------- None SIGNATURES Pursuant to the requirements of the Securities and Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. THE BERKSHIRE GAS COMPANY Registrant /s/ SCOTT S. ROBINSON Scott S. Robinson President & Chief Executive Officer /s/ MICHAEL J. MARRONE Michael J. Marrone Vice President, Treasurer & Chief Financial Officer Dated: February 9, 1995 EX-27 2 FINANCIAL DATA SCHEDULE-UT
UT 0000317406 BERKSHIRE GAS CO /MA/ 6-MOS JUN-30-1995 DEC-31-1994 PER-BOOK 69,024 5,845 14,152 3,325 2,894 95,240 5,204 15,448 5,580 26,232 0 8,448 31,003 8,270 0 0 900 0 0 0 20,387 95,240 16,918 (112) 5,536 6,758 1,403 851 2,254 1,860 (110) 347 (457) 1,061 0 55 (.24) 0
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