-----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, HeKac3EvOutADh0xaNXLjsbkNLkdVVZJheVKNHlL+smLqyKXiGC4TTUlP5lbo7aO /P6snjovSRGWcoGb3NNg3w== 0000910647-95-000017.txt : 19950517 0000910647-95-000017.hdr.sgml : 19950516 ACCESSION NUMBER: 0000910647-95-000017 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19950331 FILED AS OF DATE: 19950512 SROS: AMEX FILER: COMPANY DATA: COMPANY CONFORMED NAME: BERKSHIRE GAS CO /MA/ CENTRAL INDEX KEY: 0000317406 STANDARD INDUSTRIAL CLASSIFICATION: NATURAL GAS DISTRIBUTION [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: 95537624 BUSINESS ADDRESS: STREET 1: 115 CHESHIRE RD CITY: PITTSFIELD STATE: MA ZIP: 01201-1388 BUSINESS PHONE: 4134421511 10-Q 1 BODY OF 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 March 31, 1995 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 of 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 ] N [ ] At March 31, 1995, the Registrant had issued and outstanding 2,091,304 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 3/31/95 Ended 3/31/94 Operating Revenues $21,615 $25,948 Cost of Gas Sold 11,218 13,823 Operating Margin 10,397 12,125 Other Operating Expenses 3,396 3,972 Depreciation Expense 1,680 1,546 Total 5,076 5,518 Utility Operating Income 5,321 6,607 Other Income - Net 548 683 Operating and Other Income 5,869 7,290 Interest Expense 946 959 Other Taxes 743 679 Pre-Tax Income 4,180 5,652 Income Taxes 1,624 2,145 NET INCOME 2,556 3,507 Retained Earnings at Beginning of Period 5,580 4,606 Total 8,136 8,113 Dividends Declared: Preferred Stock 174 176 Common Stock 575 474 Total Dividends 749 650 Retained Earnings at End of Period $7,387 $7,463 Income Available for Common Stock $2,382 $3,331 Average Shares of Common Stock Outstanding 2,091,304 1,758,186 Income Per Share of Common Stock $1.14 $1.89
See Independent Auditors' Report and Notes to Financial Statements. THE BERKSHIRE GAS COMPANY STATEMENT OF INCOME AND RETAINED EARNINGS - Unaudited (In Thousands Except Share Amounts)
Nine Months Nine Months Ended 3/31/95 Ended 3/31/94 Operating Revenues $38,533 $43,441 Cost of Gas Sold 19,975 22,959 Operating Margin 18,558 20,482 Other Operating Expenses 8,932 9,453 Depreciation Expense 2,902 2,721 Total 11,834 12,174 Utility Operating Income 6,724 8,308 Other Income - Net 1,399 1,626 Operating and Other Income 8,123 9,934 Interest Expense 2,806 2,667 Other Taxes 1,359 1,252 Pre-Tax Income 3,958 6,015 Income Taxes 1,512 2,246 NET INCOME 2,446 3,769 Retained Earnings at Beginning of Period 7,098 5,658 Total 9,544 9,427 Dividends Declared: Preferred Stock 521 546 Common Stock 1,636 1,418 Total Dividends 2,157 1,964 Retained Earnings at End of Period $7,387 $7,463 Income Available for Common Stock $1,925 $3,223 Average Shares of Common Stock Outstanding 1,978,316 1,749,093 Income Per Share of Common Stock $0.97 $1.84
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 3/31/95 Ended 3/31/94 Operating Revenues $48,122 $52,250 Cost of Gas Sold 24,901 27,471 Operating Margin 23,221 24,779 Other Operating Expenses 12,388 12,089 Depreciation Expense 3,603 3,428 Total 15,991 15,517 Utility Operating Income 7,230 9,262 Other Income - Net 2,160 1,876 Operating and Other Income 9,390 11,138 Interest Expense 3,628 3,519 Other Taxes 1,734 1,627 Pre-Tax Income 4,028 5,992 Income Taxes 1,678 2,208 NET INCOME 2,350 3,784 Retained Earnings at Beginning of Period 7,463 6,296 Adjustment to Retained Earnings 390 0 Total 10,203 10,080 Dividends Declared: Preferred Stock 694 731 Common Stock 2,122 1,886 Total Dividends 2,816 2,617 Retained Earnings at End of Period $7,387 $7,463 Income Available for Common Stock $1,656 $3,053 Average Shares of Common Stock Outstanding 1,912,455 1,743,378 Income Per Share of Common Stock $0.87 $1.75
See Independent Accountants' Report and Notes to Financial Statements. THE BERKSHIRE GAS COMPANY BALANCE SHEETS (In Thousands)
March 31, 1995 June 30, 1994 (Unaudited) (Audited) ASSETS Utility Plant: Utility Plant - at original cost $90,485 $86,098 Less: Accumulated Depreciation 21,994 19,907 Utility Plant - Net 68,491 66,191 Other Property: Other Property - at original cost 10,664 9,957 Less: Accumulated Depreciation 4,675 4,242 Other Property - Net 5,989 5,715 Current Assets: Cash 75 65 Accounts Receivable: Utility Service 10,338 8,133 (less allowance for doubtful accounts: Mar. 1995-$778; June 1994-$727) Merchandise & Liquefied Petroleum 818 554 (less allowance for doubtful accounts: Mar 1995-$107; June 1994-$89) Other Receivables 74 133 Inventories (at the lower of average cost or market): Natural Gas 1,013 2,088 Liquefied Petroleum 247 184 Materials and Supplies 1,222 1,357 Prepayments 31 146 Total Current Assets 13,818 12,660 Deferred Debits: Unamortized Debt Expense 589 624 Capital Stock Expense 679 340 Environmental Cleanup Costs 1,210 1,030 Other 703 1,537 Total Deferred Debits 3,181 3,531 Recoverable Environmental Cleanup Costs 2,894 2,894 TOTAL ASSETS $94,373 $90,991 LIABILITIES AND OTHER CREDITS Common Shareholders' Equity: Common Stock $ 5,228 $ 4,417 Premium on Common Stock 15,565 11,431 Retained Earnings 7,387 7,098 Total Common Shareholders' Equity 28,180 22,946 Redeemable Cumulative Preferred Stock 8,448 8,491 Long-Term Debt (less current maturities) 30,983 31,083 Current Liabilities: Notes Payable to Banks 0 6,580 Current Maturities of Long-Term Debt 900 900 Accounts Payable 2,679 2,776 Taxes Accrued 3,076 (155) Other Current Liabilities 5,309 5,261 Recoverable Gas Costs 3,571 502 Total Current Liabilities 15,535 15,864 Unamortized Investment Tax Credit 1,374 1,430 Deferred Income Taxes 6,959 8,283 Reserve for Recoverable Environmental Cleanup Costs 2,894 2,894 TOTAL LIABILITIES AND OTHER CREDITS $94,373 $90,991
See Independent Accountants' Report and Notes to Financial Statements. THE BERKSHIRE GAS COMPANY STATEMENT OF CASH FLOWS - Unaudited (In Thousands)
Nine Months Nine Months Ended 3/31/95 Ended 3/31/94 Cash flows from Operating Activities: Net Income $2,446 $3,769 Adjustments to Reconcile Net Income/(Loss) to Net Cash Provided by Operating Activities: Depreciation and Amortization 3,536 3,235 Provision for Losses on Accounts Receivable 602 1,027 Deferred Gas Costs 3,069 1,553 Deferred Income Taxes (1,324) (1,514) Changes in Assets and Liabilities Which Provided (Used) Cash: Accounts Receivable (3,071) (8,351) Other Receivables 59 (318) Inventories 1,147 1,549 Accrued Consumer Rebate 1,838 0 Capital Stock Expense (440) 0 Accounts Payable (97) 706 Taxes Accrued 3,231 1,722 Other Assets and Current Liabilities (1,020) 373 Total Adjustments 7,530 (18) Net Cash Provided by Operating Activities 9,976 3,751 Cash Flows from Investing Activities: Construction Expenditures (6,031) (3,899) Net Cash Used in Investing Activities (6,031) (3,899) Cash Flows from Financing Activities: Dividends Paid (2,157) (1,964) Current Maturities of Long-Term Debt 0 (250) Proceeds on Long-term Debt (100) 5,670 Repayment of Note Payable Borrowings-Net (6,580) (2,671) Proceeds from Sale of Common Stock 4,449 0 Proceeds from Other Stock Transactions - Net 453 (104) Net Cash (Used in) Provided by Financing Activities (3,935) 681 Net Increase in Cash 10 533 Cash at Beginning of Period 65 59 Cash at End of Period $ 75 $ 592
See Independent Accountants' Report and Notes to Financial Statements. The balance sheet as of March 31,1995, the related statements of income and retained earnings for the three, nine and twelve month periods ended March 31, 1995 and 1994, and the statements of cash flows for the nine month period ended March 31, 1995 and 1994 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 March 31, 1995, the related statements of income and retained earnings for the three month, nine month and twelve month periods ended March 31, 1995 and 1994, and the statements of cash flows for the nine month periods ended March 31, 1995 and 1994. 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 May 9, 1995 The Berkshire Gas Company Notes to Financial Statements March 31, 1995 (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 March 31, 1995, 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 the requirements of 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 March 31, 1995 were $1,210 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 - Third Quarter Ended March 31, 1995 versus Third Quarter Ended March 31, 1994 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. The Company is regulated to recover from or return to the customers, any changes in the cost of natural gas. Operating Margin decreased $1,728,000 or 14.3% as compared with the quarter ended March 31, 1994. 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 firm customer. The Company's sales are affected by weather as the majority of its firm customers use natural gas for heating. The decrease from 1994 is primarily due to lower volumes of firm gas sold due to 18% warmer weather than 1994, partially offset by higher volumes of gas sold and transported at slightly lower margins from increased firm transportation volumes to industrial customers.
1995 1994 Firm MCF Sold & Transported 2,470,615 2,833,995 Operating Margin $10,397,000 $12,125,000 Average Operating Margin Per Firm MCF $4.21 $4.28
Other Operating Expenses decreased $576,000 or 14.5% as compared to the quarter ended March 31, 1994 due to a lower provision for bad debts, decreased gas production due to less demand for gas, maintenance costs due to the warmer weather, and lower employee welfare expense due to fewer medical claims. Depreciation Expense increased $134,000 or 8.7% due to an increase in the level of depreciable assets. Other Income decreased $135,000 or 19.8% primarily due to lower income from propane operations. Propane is sold primarily as a heating fuel and volumes were lower due to significantly warmer weather, partially offset by a 6% increase in the number of customers. Other Taxes increased $64,000 or 9.4% due to higher personal property valuations and rates. The decrease in Income Taxes of $521,000 resulted from lower net income. Dividends Declared on Common Stock increased $101,000 due to additional shares outstanding. The Company sold 295,000 shares of Common Stock during the second quarter of fiscal 1995. Results of Operations - Nine Months Ended March 31, 1995 versus Nine Months Ended March 31, 1994 Operating Margin decreased $1,924,000 or 9.4% as compared with the nine months ended March 31, 1994. The decrease from 1994 resulted from 15% warmer weather causing lower volumes of firm gas sold, partially offset by increased volumes and margins on transportation revenues to industrial customers.
1995 1994 Firm MCF Sold & Transported 4,659,255 5,021,802 Operating Margin $18,558,000 $20,482,000 Average Operating Margin Per Firm MCF $3.98 $4.08
Other Operating Expenses decreased $521,000 or 5.5% as compared to the nine months ended March 31, 1994. Reasons for this decrease are the same as those discussed for the quarter ended March 31, 1995. Depreciation Expense increased $181,000 or 6.7% due to an increase in the level of depreciable assets. Other Income decreased $227,000 or 14%; Other Taxes increased $107,000 or 8.5%; Dividends Declared on Common Stock increased $218,000; and Income Taxes decreased $734,000 all for the same reasons as noted in the three month explanation above. Interest Expense increased $139,000 or 5.2% due primarily to gas supplier refunds being returned to the ratepayers through the CGAC, and to a lesser extent, increased borrowing rate. Results of Operations - Twelve Months Ended March 31, 1995 versus Twelve Months Ended March 31, 1994 Operating Margin decreased $1,558,000 or 6.3% over the twelve months ended March 31, 1995. The decrease from 1994 is primarily due to lower volumes of firm gas sold due to 13.5% warmer weather than 1994, partially offset by increased volumes and margins on transportation revenues to industrial customers.
1995 1994 Firm MCF Sold & Transported 5,975,641 6,203,653 Operating Margin $23,221,000 $24,779,000 Average Operating Margin Per Firm MCF $3.89 $3.99
Other Operating Expenses increased $299,000 or 2.5% over the twelve months ended March 31,1994. The increase is primarily due to higher legal expenses of $197,000, increase costs associated with maintaining customer records and collections of $151,000, higher expenses for maintenance of mains and services of $145,000 and higher regulatory costs of $59,000 partially offset by lower provision for bad debts of $201,000 and lower production costs of $199,000 due to less costs associated with restructuring supply contracts brought about by the Federal Energy Regulatory Commission ("FERC") Order 636. Depreciation Expense increased $175,000 due to an increase in the level of depreciable assets. Other Income increased $284,000 or 15.1% over the twelve months ended March 31, 1994. 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); this was partially offset by lower Propane revenue of $315,000 caused by significantly warmer weather. Interest Expense increased $109,000; Other Taxes increased $107,000; Dividends Declared on Common Stock increased $236,000, and Income Taxes decreased $530,000 all for the same reasons as noted in the three month explanation. Liquidity and Capital Resources - March 31, 1995 The Company added approximately $6,031,000 to Plant assets during the nine months ended March 31, 1995. 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 this strategy, 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 March 31, 1995 was 41.7% Common Equity, 12.5% Preferred Stock and 45.8% Long-Term Debt. PART II - OTHER INFORMATION Item 1. Legal Proceedings None 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 Not Applicable Item 5. Other Information None 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/ CHERYL M. CLARK Cheryl M. Clark Corporate Clerk /s/ MICHAEL J. MARRONE Michael J. Marrone Vice President, Treasurer & Chief Financial Officer Dated: May 12, 1995 EX-27 2 FDS FOR 3RD QUARTER 10-Q
UT 9-MOS JUN-30-1995 MAR-31-1995 PER-BOOK 68,491 5,989 13,818 3,181 2,894 94,373 5,228 15,565 7,387 28,180 0 8,448 30,983 0 0 0 900 0 0 0 25,862 94,373 38,533 1,512 8,932 11,834 6,724 1,399 8,123 2,806 2,446 521 1,925 1,636 0 10 .97 0
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