-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, F/Gv7w1RVCov/WARUiRmrq2i8TjSAMFW+acisOZFQxxwht6VFrMgLbROeEkDPfs/ QG3HUEp6Aq2vRu8oonvU8A== 0000910647-95-000053.txt : 19951002 0000910647-95-000053.hdr.sgml : 19951002 ACCESSION NUMBER: 0000910647-95-000053 CONFORMED SUBMISSION TYPE: 10-K PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19950630 FILED AS OF DATE: 19950927 SROS: NASD 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-K SEC ACT: 1934 Act SEC FILE NUMBER: 000-01857 FILM NUMBER: 95576494 BUSINESS ADDRESS: STREET 1: 115 CHESHIRE RD CITY: PITTSFIELD STATE: MA ZIP: 01201-1388 BUSINESS PHONE: 4134421511 10-K 1 BODY OF FORM 10-K SECURITIES AND EXCHANGE COMMISSION Washington, DC 20549 FORM 10-K (Mark One) [X] Annual report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 (Fee required) For the fiscal year ended June 30, 1995 or [ ] Transition report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 (No fee required) For the transition period from to . Commission File Number 0-1857-3 The Berkshire Gas Company (Exact Name of Registrant as Specified in Its Charter) Massachusetts 04-1731220 (State or Other Jurisdiction of (I.R.S. Employer Identification No.) Incorporation or Organization) 115 Cheshire Road, Pittsfield, MA 01201-1879 (Address of Principal Executive Offices) (Zip Code) (413) 442-1511 (Registrant's Telephone Number, Including Area Code) Securities registered pursuant to Section 12(b) of the Act: Name of Each Exchange Title of Each Class on Which Registered Securities registered pursuant to Section 12(g) of the Act: Common Stock, Par Value $2.50 Per Share (Title of Class) 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 by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. [ ] Aggregate market value of shares of Common Stock, $2.50 par value of the Registrant held by non-affiliates as of July 31, 1995 was $33,020,921. Total shares of common stock of the Registrant outstanding as of July 31, 1995 were 2,112,233. Documents Incorporated by Reference: 1. The Berkshire Gas Company's Annual Report to Shareholders for the fiscal year ended June 30, 1995 (Items 5, 6, 7, and 8 of Part II). 2. The Berkshire Gas Company's definitive Proxy Statement, dated October 10, 1995, filed pursuant to Regulation 14A under the Securities and Exchange Act of 1934 (Items 10, 11, 12 and 13 of Part III). THE BERKSHIRE GAS COMPANY Table of Contents PART I ------ Item Page Number Number ------ ------ Business 1 3 Properties 2 13 Legal Proceedings 3 13 Submission of Matters to a Vote of Security Holders 4 14 Additional Items - 14 (Executive Officers of the Registrant PART II ------- Market For Registrant's Common Equity and Related Stockholder Matters 5 15 Selected Financial Data 6 15 Management's Discussion and Analysis of Financial Condition and Results of Operations 7 15 Financial Statements and Supplementary Data 8 15 Changes in and Disagreements with Accountants on Accounting and Financial Disclosure 9 15 PART III -------- Directors and Executive Officers of the Registrant 10 16 Executive Compensation 11 16 Security Ownership of Certain Beneficial Owners and Management 12 16 Certain Relationships and Related Transactions 13 16 PART IV ------- Exhibits, Financial Statement Schedules, and Reports on Form 8-K 14 16 THE BERKSHIRE GAS COMPANY PART 1 ------ Item 1. Business - ---------------- General The Berkshire Gas Company ("the Company") was incorporated in the Commonwealth of Massachusetts in 1853 and is a publicly-held utility engaged in the distribution and sale of natural gas for residential, commercial and industrial use. The Company also has an appliance rental division that sells and leases gas burning equipment. Through its Berkshire Propane division, the Company markets liquefied petroleum gas. Territory Served The Company's utility service territory includes 19 communities in the western portion of the Commonwealth of Massachusetts, including the cities of Pittsfield and North Adams, the towns of Adams, Amherst, Great Barrington, Greenfield and Williamstown, and twelve smaller municipalities. The population of the area served is estimated at 190,000 and is primarily residential in character, but the territory also includes industrial, agricultural, educational, cultural and resort facilities. The Company also markets propane throughout the western portion of Massachusetts and eastern New York state. The Company serves approximately 32,000 natural gas and 5,000 propane customers. Customers The largest group of natural gas customers is the residential class. During the fiscal years ended June 30, 1995, 1994 and 1993, residential consumers accounted for approximately 53%, 54% and 54%; commercial and industrial consumers accounted for 44%, 44% and 46%; and transportation consumers accounted for approximately 3%, 2% and 0% of operating revenues respectively. This business is not dependent upon one or even a few customers, so the loss of any one customer or limited number of customers would have no material adverse effect on the business. The number of natural gas customers increased 1.5% in 1995 over 1994, from 31,445 to 31,925 primarily in the residential heating class as a result of increased marketing efforts. Total Mcf sold and transported increased from 7,362,210 Mcf in 1994 to 7,392,382 in 1995, primarily attributable to increased transportation and interruptible volumes, and increased customer meters, offset by lower residential and commercial and industrial volumes due to warmer weather during the heating season. In 1995, Mcf sales increased 10.1% over 1993 due to the same factors as noted above. Total natural gas customers by classification at June 30 in each of the previous five years were:
1995 1994 1993 1992 1991 ---- ---- ---- ---- ---- Residential 27,894 27,524 27,199 26,734 26,812 Commercial & Industrial 4,031 3,921 3,854 3,773 3,829
Competition Implementation of the Federal Energy Regulatory Commission's ("FERC") Order 636 has increased the potential for competition in gas procurement, supply and sale. FERC's actions have sought to encourage competition and natural gas market efficiency through deregulation and "unbundling of services" at the interstate pipeline level. This unbundling has changed the historical relationships, whereby producers sold to pipelines, pipelines sold to local distribution companies ("LDCs") such as Berkshire Gas and LDCs sold to end-users. Now LDCs or end-users may utilize pipeline services not only for purchases but also for the transportation of gas purchased from third parties. While historically the Company has been subject to competition from electricity, oil, propane, coal and other fuels for heating, water heating, cooking, air conditioning and industrial applications, the regulatory changes have created the potential for competition among existing and new suppliers or brokers of natural gas. As a result, opportunities may arise for others to sell natural gas or provide brokerage service to end-users to whom the Company might otherwise make sales or provide brokerage service. Large volume end-users are most likely to be the primary target for third parties seeking to make such sales. If third parties do, in fact, provide a substantial volume of sales or brokerage service to end-users located within the Company's service territory, and the Company does not increase its sales to other end-users, then the Company would have a smaller sales base across which it can allocate fixed costs. That in turn could necessitate further requests for rate relief, thereby affecting the Company's competitive posture. At the current time, however, no such third party sales are occurring in the Company's service territory. Similar opportunities may exist for the Company to broker gas to new or existing customers, whether or not they are located within the Company's service territory. Rates and Regulations The Company is subject to the regulatory authority of the Massachusetts Department of Public Utilities ("MDPU") with respect to various matters, including rates, financing, certain gas supply contracts, demand-side management programs and planning and safety matters. The principal rate classifications are residential, and commercial and industrial. The Company also offers five Quasi-Firm transportation rates for large end-users as well as interruptible sales and transportation service. The Company's rate structure is based on the cost of providing service to each customer class. In March 1993, the MDPU authorized the Company to increase rates for sales of gas effective April 1993. The amount of the increase on an annualized basis was $1,252,000. In December 1993, the MDPU authorized the Company to increase rates for sales of gas effective January 1, 1994. The amount of the increase on an annualized basis was $124,000. This increase was due to recalculations of the original rate increase granted in March 1993. The Company's residential rates are designed separately for heating and non-heating purposes. Additionally, for the Company, like most other utility companies in Massachusetts, subsidized rates are available to residential customers who receive Supplemental Security Income from the Social Security Administration, Aid for Dependent Children, Emergency Assistance for the Elderly, Disabled, and Children (formerly General Relief), Fuel Assistance, Refugee Resettlement, Medicaid, and/or Veteran's Benefits. These customers receive a 20% discount from the standard residential rates. The commercial and industrial rates are based on load factor; that is, the cost is based on how much gas is consumed and when it is consumed. Those customers who use more than 30% of their annual usage in the summer are considered high load factor; those using less than 30% of their annual usage during the summer season are considered low load factor. There are seven classifications of load factor rates as follows: small, medium, large, and extra-large high load factor; and small, medium, and large low load factor. The current firm rate structure is based on seasonal rates, whereby base rates are higher in the winter (November through April) and lower in the summer (May through October). In addition to the base rates, the Company has a seasonal Cost of Gas Adjustment Clause ("CGAC") rate schedule, pursuant to which the Company recovers (primarily variable) gas costs. Charges under the CGAC rate schedule are added to the base rates and are designed to recover higher gas costs in the winter and refund lower gas costs in the summer. The Company also provides several non-firm and special rates to meet the varying needs of large customers. Interruptible Sales Service is available for large interruptible end-users for the sale and delivery of interruptible gas supplies while Interruptible Transportation Service is available for large interruptible end-users for only the delivery of gas supplies through the Company's distribution system. Five Quasi-Firm Transportation Rates are available for large end-users and provide firm transportation and optional standby service for less than twelve months. Additionally, a Load Management Rate is available for nonresidential customers who agree to reduce demand to a predetermined minimum level on peak days. Finally, the Company makes sales to primarily larger customers under special contracts that reflect charges, levels, and terms of service different from those under generally available tariffs. Often arrangements of this nature are made to meet competitive challenges. Such contracts must be approved by the MDPU on an individual case basis. The Company is also subject to standards prescribed by the Secretary of Transportation under the Natural Gas Pipeline Safety Act of 1968 with respect to the design, installation, testing, construction and maintenance of pipeline facilities. The enforcement of these standards has been delegated to the MDPU, which has taken an active role in such enforcement, including the application of civil penalties and the requirement of remedial programs. The regulation of prices, terms and conditions of interstate pipeline sales of natural gas is subject to the jurisdiction of FERC. The Company is not under direct jurisdiction of FERC, but monitors, and periodically participates in, proceedings before FERC which involve the Company's pipeline gas suppliers/transporters, the Company's operations, and other matters pertinent to the Company's business. (See also "Competition".) Environmental Matters 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 Company cannot predict the future impact of such standards and requirements, which are subject to change and can have retroactive effect. During fiscal 1990, the MDPU issued a generic ruling on cost recovery for environmental cleanup costs with respect to former gas manufacturing sites. Under the ruling, the Company will recover, excluding carrying costs, the prudently incurred annual cleanup costs over a seven-year period through the 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 during any one year. During the fiscal year ended June 30, 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 by 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 proceeding. It is difficult to predict the potential financial impact of a site 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 2010, the level of expenditure for the sites will range from $2,894,000 to $8,777,000. The anticipated level of expenditures has remained the same in 1995 from 1994 and been reduced from 1993 estimates resulting from the Company's analysis and review of the sites and the commencement of clean-up activities at the first site. The Company has recorded the most likely amount of $2,894,000 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 MDEP. The Company's unamortized costs at June 30, 1995 were $1,046,000 and should be recovered using the formula discussed above. Seasonality The Company's business has a distinct seasonal quality because a large percentage of its sendout serves residential and commercial heating loads. Gas operating revenues reflect the seasonal nature of the business. Such revenues are affected by temperature variations between the heating and non- heating seasons and by seasonal pricing differentials embodied in the Company's effective schedule of rates and charges for gas services. (See also "RATES AND REGULATIONS"). Employee Relations The Company has 160 employees, approximately 58% of whom are represented by the United Steelworkers of America, AFL, CIO, CLC, under a contract which remains in effect until March 31, 1996. Relations with employees are generally satisfactory. Gas Supply In 1992, the FERC issued a series of Orders: Order 636, Order 636-A, and Order 636-B (together "Order 636"), which restructured interstate natural gas pipeline services. Order 636 was intended to complete the restructuring of the natural gas pipeline industry that FERC and Congress began in prior years with respect to natural gas pricing and open access to transportation on interstate pipelines. The long-term objective of Order 636 was to promote fair competition among suppliers of gas, thus giving customers an adequate and reliable supply of clean and abundant natural gas at the lowest reasonable price. Order 636 required that interstate pipeline companies unbundle (i.e., separate) their sales, transportation and storage services and provide all transportation services on a basis that was equal in quality for gas supplies whether purchased from the pipeline or from any gas supplier. Consequently, LDCs, such as the Company, that previously had purchased the majority of their firm gas supplies through the interstate pipelines' bundled contract demand service had to arrange their own portfolio of supply, transportation and storage contracts (i.e., they had to "convert" their prior purchases from interstate pipelines to direct purchases from producers or marketers). This constituted a major change to the manner in which the Company obtained gas supplies and the sources from which it obtained those supplies. During fiscal 1994, the Company completed its conversion of firm supply contracts from its former interstate pipeline supplier, Tennessee Gas Pipeline Company ("Tennessee"), to third party suppliers as mandated by Order 636. This followed the initial conversion of 30% of the Company's former pipeline supplies to third party suppliers during fiscal 1993 under Tennessee's transitional restructuring settlement (called "Cosmic Settlement"). Order 636's restructuring mandate issued April 8, 1992, was implemented by Tennessee Gas Pipeline Company on September 1, 1993. Subsequently, the Company completed the conversion of the remaining 70% of its firm gas supplies from Tennessee Gas Pipeline to two third-party suppliers. The two suppliers were Natural Gas Clearing House ("NGC") and Tenngasco Corporation ("TC"). The daily volumes contracted were 4,920 Mcf with NGC for a term of 9 years and 7,599 Mcf with TC for a term of six years. On March 14, 1994, the Company received approval from the MDPU for its final two conversion contracts. With this final approval, the Company's portfolio of firm natural gas contracts consisted of Aquila Energy Marketing (2,683 Mcf); Boundary Gas (1,050 Mcf); NGC "Cosmic" (2,682 Mcf); NGC "636" (4,920 Mcf); TC (7,599 Mcf). The Company's purchases of natural gas under contracts lasting more than one year are subject to the approval of the MDPU. This is a change from the procedures applicable prior to FERC Order 636, where supplies were previously approved by FERC as part of the "bundled" sales service provided by Tennessee. Ultimately, the Company's customers should benefit over the long-term from the restructuring undertaken the past two years under the "Cosmic Settlement" and Order 636. However, during the near term, the Company is subject to the pass-through of additional transition costs associated with the industry restructuring that Tennessee is and will be incurring. Under the terms of a fuel purchase agreement executed with Altresco, Inc. on December 11, 1992, the Company is entitled to receive gas peaking service of up to 7,310 Mcf per day during the Winter Period of November 1 through March 31 of each year (not to exceed 307,018 Mcf for each Winter Period) and back-up gas supplies of up to 30,702 Mcf per day in the event of proration or curtailment of firm gas supplies (including propane). In addition, on December 21, 1994, the Company executed two contracts with Distrigas of Massachusetts Corporation ("DOMAC") which entitled the Company to receive up to 5,263 Mcf per day of peaking gas. The Company estimates that its supply of natural gas and supplemental sources under contract are adequate to meet the anticipated needs of the Company's customers for the foreseeable future. The annual sources of supply are as follows: firm long-haul pipeline natural gas, including storage gas, 9,913,803 Mcf; natural gas peaking (Altresco), 307,000 Mcf; ("DOMAC") 1,067,251 MCF; and Liquefied Petroleum Gas, 13,800 (daily capability) Mcf. Several factors may affect the acquisition of additional supplies by the Company. Additional pipeline supplies designated as "best efforts" or "interruptible" are available from time to time, but are subject to daily curtailment at the suppliers'/transporters' discretion. Although availability to the Company of Liquefied Petroluem Gas ("LPG") and Liquid Natural Gas ("LNG") supplies is subject to various contingencies including transportation problems, suppliers' operational difficulties and extraordinary weather conditions, the Company has not faced any supply acquisition and/or delivery problems since December, 1989. At that date, despite extreme weather, the Company was able to maintain service to all firm customers. The acquisition of additional gas supplies and the ability to deliver to customers under design conditions experienced during the 93-94 winter attests to the reliability and integrity of the Company's supply portfolio and distribution system. The Company has five LPG gas plants and one temporary portable LNG vaporizing unit which are utilized on peak days to supplement the pipeline natural gas supply. By supplementing its natural gas supply with LPG, the Company is able to meet its customers' requirements during peak periods. The Company's pipeline deliveries combined with LPG facilities' storage capacity yield a maximum daily sendout of approximately 54,900 Mcf. Actual maximum daily sendout during the 94-95 heating season was 45,760 Mcf, which occurred on February 6, 1995 with an average temperature of -3 degrees Fahrenheit. On August 1, 1991, Tennessee filed, in FERC Docket No. RP 91-203, a request for a general increase of its rates by approximately $343 million. The rate tariff sheets with some modifications were placed in effect subject to refund on February 1, 1992. Several rate conferences between Tennessee, its customers and the FERC staff were held in an attempt to settle various cost of service and rate design issues. A Stipulation and Agreement (the "Agreement") was subsequently filed by Tennessee on June 2, 1993 and was approved by the FERC on April 5, 1994. Pursuant to the terms of the Agreement, Berkshire received refunds (including interest) from Tennessee of $2,076,000 on June 3, 1994 and $1,838,700 on February 16, 1995. All such refunds were returned to the Company's customers through the Company's CGAC and effectively reduced the cost of gas to the customers. On December 29, 1994, Tennessee filed with the FERC a general rate increase (Docket RP 95-112) seeking $181 million in jurisdictional revenues. On January 25, 1995, the FERC issued an order which accepted Tennessee's rate filing, suspended it for five months, and established hearing and technical conference procedures to address various rate and operational tariff issues. Subsequently, numerous rate settlements conferences were held by Tennessee with its customers and the FERC staff. On June 2, 1995, Tennessee presented an offer of settlement which was not supported by the majority of its customers. On June 30, 1995, Tennessee filed a motion to place its proposed tariff rates with some modifications into effect. Unless a settlement between Tennessee and its customers is reached, formal rate hearings will begin at FERC in March, 1996. During the fiscal year ended June 30, 1995, the Company purchased an aggregate of 5,949,176 Mcf of interstate pipeline natural gas at an average cost of $3.2820 per Mcf. The average cost in each of the four preceding years ended June 30 was: 1994 - $3.9725; 1993 - $3.9881; 1992 - $3.6421; and 1991 - $3.5887. The composition of gas supply for customer requirements during the fiscal year ended June 30, 1995 was: 99.9% natural gas and .1% LNG and LPG. Item 2. Properties - ------------------ The Company has approximately 654 miles of distribution mains, the major portion of which are constructed of coated steel, plastic or cast iron. Berkshire owns and operates five auxiliary liquefied petroleum gas plants for supplementing its supply of natural gas. (See "Business - Gas Supply"). The Company has five terminal stations receiving gas from Tennessee. All the principal properties of the Company are owned in fee, subject to the lien of the mortgage securing the Company's First Mortgage Bonds, and are also subject to covenants, restrictions, easements, leases, rights-of- way and other similar minor encumbrances or defects common to properties of comparable size and character; none of which in the opinion of the Company's management materially interferes with the Company's use of its properties in order to conduct its business. The Company's gas mains are primarily located under public highways and streets. Where they are under private property, the Company has obtained easements or rights-of-way from the record holders of title. These easements and rights are deemed by the Company to be adequate for the purposes for which they are being used. Item 3. Legal Proceedings - ------------------------- With reference to the matters discussed above in Item I "Environmental Matters", the Company notified its present and former insurance carriers that it has incurred and will incur further costs associated with the previously-referenced coal tar deposits, for which it will seek coverage under applicable insurance policies. No litigation has yet commenced and it is not possible to determine the extent to which recovery of costs will ultimately be obtained from such insurance carriers. Claims against the Company have been asserted by a general contractor involved in the construction of a transportation pipeline for which the Company served as developer. 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 position of the Company. Item 4. Submission of Matters To A Vote Of Security Holders - ----------------------------------------------------------- None. Item 4. Additional Items - ------------------------ Additional Items - ---------------- Executive Officers of the Registrant The table set forth below shows the names, titles and ages of all executive officers of the Registrant as of June 30, 1995. There is no family relationship among officers of the Registrant. There is no arrangement between any of the officers and any other person(s) pursuant to which such officer was or is to be elected as an officer.
Served in This Name Title Capacity Since Age - ---- ----- -------------- --- S.S. Robinson President and Chief 10-28-87 55 Executive Officer M.J. Marrone Vice President, Treasurer 10-28-87 53 and Chief Financial Officer L.H. Hotman Vice President of Supply, 10-16-91 52 Rates and Planning
The executive officers are elected annually. Listed below is a brief account of the business of each of the above executive officers during the past five years.
Name Capacity in Which Served During Past Five Years - ---- ----------------------------------------------- S.S. Robinson President and Chief Executive Officer M.J. Marrone Vice President, Treasurer and Chief Financial Officer L.H. Hotman Vice President of Supply, Rates & Planning; Vice President of Supply, Rates & Marketing; Director of Planning.
PART II ------- Item 5. Market For Registrant's Common Equity and Related Stockholder Matters - ----------------------------------------------------------------------------- The number of registered common shareholders of record of the Registrant's Common stock as of the close of business on July 31, 1995 was 1,874. The other information required is contained in The Berkshire Gas Company's Annual Report to Shareholders for the fiscal year ended June 30, 1995 ("Registrant's Annual Report") on page 27, under the heading "Quarterly Financial Information". This information is hereby incorporated by reference in this report. Item 6. Selected Financial Data - ------------------------------- The information required is contained in Registrant's Annual Report on pages 10 - 11, under the heading "10-Year Comparative Summary of Operations and Statistics". This information is hereby incorporated by reference in this report. Item 7. Management's Discussion and Analysis of Financial Condition and - ----------------------------------------------------------------------- Results of Operations --------------------- The information required is contained in Registrant's Annual Report on pages 12 - 14, under the heading "Management's Discussion and Analysis of Financial Condition and Results of Operations". This information is hereby incorporated by reference in this report. Item 8. Financial Statements and Supplementary Data - --------------------------------------------------- The information required is contained in Registrant's Annual Report on pages 15 - 27, in the financial statements of The Berkshire Gas Company for the years ended June 30, 1995, 1994 and 1993 together with the related notes, under the heading "Independent Auditors' Report", and under the heading "Quarterly Financial Information". This information is hereby incorporated by reference in this report. Item 9. Changes in and Disagreements with Accountants on Accounting and - ------------------------------------------------------------------------ Financial Disclosure -------------------- None. PART III -------- Items 10, 11, 12 and 13 - ----------------------- The information required regarding the Executive Officers of the Registrant is included in Part I under "Additional Items". Certain other information called for by Items 10, 11, 12 and 13 has been omitted from this report pursuant to General Instruction G(3), and is incorporated herein by reference to the definitive proxy statement to be filed with the Securities and Exchange Commission pursuant to Regulation 14A not later than 120 days after the close of the Company's last fiscal year. PART IV ------- Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K - ------------------------------------------------------------------------ (a) 1. Financial Statements -------------------- The following financial statements and related notes are contained in the Registrant's Annual Report for the fiscal year ended June 30, 1995 and are incorporated herein by reference. Report of Independent Auditors. Statements of Income and Retained Earnings for the years ended June 30, 1995, 1994 and 1993. Balance Sheets, June 30, 1995, 1994 and 1993. Statements of Common Shareholders' Equity and Redeemable Cumulative Preferred Stock, June 30, 1995, 1994 and 1993. Statements of Cash Flows for the years ended June 30, 1995, 1994 and 1993. Notes to Financial Statements. Selected Quarterly Financial Data (unaudited) for the years ended June 30, 1995, 1994 and 1993. Financial Statement Schedules - ----------------------------- The information called for by this item appears under the caption "Financial Statement Schedules and Exhibits Filed with Annual Report on Form 10-K" (page 1 hereof). Such information is incorporated by reference herein. 3. Exhibits ----------- The information called for by this item appears under the caption "Financial Statement Schedules and Exhibits Filed with Annual Report on Form 10-K" (page 1 hereof). Such information is incorporated by reference herein. (b) Reports on Form 8-K ------------------- None. SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, as amended, the Registrant has caused this report to be signed on its behalf by the undersigned thereunto duly authorized. Date: August 29, 1995 By: /s/ SCOTT S. ROBINSON Scott S. Robinson, President & CEO Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, this report has been signed below by the following persons in the capacities on the dates indicated.
Signatures Capacity Date - ---------- -------- ---- /s/ J.T. KELLEY Director August 29, 1995 J.T. Kelley Chairman of the Board /s/ SCOTT S. ROBINSON Principal Executive August 29, 1995 Scott S. Robinson Officer; Director President and Chief Executive Officer /s/ MICHAEL J. MARRONE Principal Financial August 29, 1995 Michael J. Marrone & Accounting Officer Vice President, Treasurer and Chief Financial Officer /s/ GEORGE R. BALDWIN Director August 29, 1995 George R. Baldwin /s/ JOHN W. BOND Director August 29, 1995 John W. Bond /s/ PAUL L. GIOIA Director August 29, 1995 Paul L. Gioia /s/ WILLIAM S. GOEDECKE Director August 29, 1995 William S. Goedecke /s/ FRANKLIN M. HUNDLEY Director August 29, 1995 Franklin M. Hundley /s/ ROBERT B. TRASK Director August 29, 1995 Robert B. Trask
THE BERKSHIRE GAS COMPANY FINANCIAL STATEMENT SCHEDULES and EXHIBITS Filed With ANNUAL REPORT ON FORM 10-K EXHIBIT INDEX Certain of the following exhibits are filed herewith or will be filed herewith by amendment. Certain other of the following exhibits have heretofore been filed with the Commission and pursuant to Rule 411 are incorporated herein by reference.
Exhibit Number** Description - -------- ----------- 4(a) First Mortgage Indenture and Deed of Trust, dated as of July 1, 1954, between Pittsfield Coal Gas Company (now The Berkshire Gas Company) and Chemical Corn Exchange Bank (now Chemical Bank), Trustee. Filed as Exhibit 4(c) to the Company's Registration Statement on Form S-1, Registration Statement No. 2-19808, and incorporated herein by reference. 4(b) First Supplemental Indenture, dated as of June 1, 1956, between the Company and Chemical Corn Exchange Bank (now Chemical Bank), Trustee. Filed as Exhibit 4(d) to the Company's Registration Statement on Form S-1, Registration Statement No. 2-19808, and incorporated herein by reference. 4(c) Second Supplemental Indenture, dated as of October 1, 1957, between the Company and Chemical Corn Exchange Bank (now Chemical Bank), Trustee. Filed as Exhibit 4(e) to the Company's Registration Statement on Form S-2, Registration Statement No. 2-19808, and incorporated herein by reference. 4(d) Third Supplemental Indenture, dated as of October 1, 1958, between the Company and Chemical Corn Exchange Bank (now Chemical Bank), Trustee. Filed as Exhibit 4(f) to the Company's Registration Statement on Form S-1, Registration Statement No. 2-19808, and incorporated herein by reference. 4(e) Fourth Supplemental Indenture, dated as of August 1, 1960, between the Company and Chemical Bank New York Trust Company (now Chemical Bank), Trustee. Filed as Exhibit 4(e) to the Company's Registration Statement on Form S-2, File No. 33-1492, and incorporated herein by reference. 4(f) Fifth Supplemental Indenture, dated as of June 1, 1962, between the Company and Chemical Bank New York Trust Company (now Chemical Bank), Trustee. Filed as Exhibit 4(f) to the Company's Registration Statement on Form S-2, File No. 33-1492, and incorporated herein by reference. 4(g) Sixth Supplemental Indenture, dated as of February 1, 1965, between the Company and Chemical Bank New York Trust Company (now Chemical Bank), Trustee. Filed as Exhibit 4(g) to the Company's Registration Statement on Form S-2, File No. 33-1492, and incorporated herein by reference. 4(h) Seventh Supplemental Indenture, dated as of October 1, 1965, between the Company and Chemical Bank New York Trust Company (now Chemical Bank), Trustee. Filed as Exhibit 4(h) to the Company's Registration Statement on Form S-2, File No. 33-1492, and incorporated herein by reference. 4(i) Eighth Supplemental Indenture, dated as of September 1, 1967, between the Company and Chemical Bank New York Trust Company (now Chemical Bank), Trustee. Filed as Exhibit 4(i) to the Company's Registration Statement on Form S-2, File No. 33-1492, and incorporated herein by reference. 4(j) Ninth Supplemental Indenture, dated as of April 1, 1969, between the Company and Chemical Bank, Trustee. Filed as Exhibit 4(j) to the Company's Registration Statement on Form S-2, File No. 33-1492, and incorporated herein by reference. 4(k) Tenth Supplemental Indenture, dated as of March 1, 1972, between the Company and Chemical Bank, Trustee. Filed as Exhibit 4(k) to the Company's Registration Statement on Form S-2, File No. 33-1492, and incorporated herein by reference. 4(l) Eleventh Supplemental Indenture, dated as of April 15, 1975, between the Company and Chemical Bank, Trustee. Filed as Exhibit 4(l) the Company's Registration Statement on Form S-2, File No. 33-1492, and incorporated herein by reference. 4(m) Twelfth Supplemental Indenture, dated as of November 27, 1978, between the Company and Chemical Bank, Trustee. Filed as Exhibit 4(m) to the Company's Registration Statement on Form S-2, File No. 33-1492, and incorporated herein by reference. 4(n) Thirteenth Supplemental Indenture, dated as of October 15, 1981, between the Company and Chemical Bank, Trustee. Filed as Exhibit 4(n) to the Company's Registration Statement on Form S-2, File No. 33-1492, and incorporated herein by reference. 4(o) Fourteenth Supplemental Indenture, dated as of August 19, 1983, between the Company and Chemical Bank, Trustee. Filed as Exhibit 4(o) to the Company's Registration Statement on Form S-2, File No. 33-1492, and incorporated herein by reference. 4(p) Fifteenth Supplemental Indenture, dated as of August 19, 1985, between the Company and Chemical Bank, Trustee. Filed as Exhibit 4(p) to the Company's Registration Statement on Form S-2, Registration No. 33-1492, and incorporated herein by reference. 4(q) Sixteenth Supplemental Indenture, dated as of January 1, 1988, between the Company and Chemical Bank, Trustee. Filed as Exhibit 4(q) to the Company's Registration Statement on Form S-3, Registration No. 33-27785, and incorporated herein by reference. 4(r) Seventeenth Supplemental Indenture, dated as of February 1, 1989, between the Company and Chemical Bank, Trustee. Filed as Exhibit 4(r) to the Company's Registration Statement on Form S-3, Registration Statement No. 33-27785, and incorporated herein by reference. 4(s) Eighteenth Supplemental Indenture, dated as of September 1, 1991, between the Company and Chemical Bank, Trustee. Filed as Exhibit 4(x) to the Company's Registration Statement on Form S-3, Registration Statement No. 33-64302, and incorporated herein by reference. 4(t) Nineteenth Supplemental Indenture, dated as of September 1, 1992, between the Company and Chemical Bank, Trustee. Filed as Exhibit 4(z) to the Company's Registration Statement on Form S-3, Registration Statement No. 33-64302, and incorporated herein by reference. 4(u) Debenture Indenture, dated as of November 1, 1986, between the Company and Centerre Trust Company of St. Louis (now Boatmen's Trust Company), as Trustee. Filed as Exhibit 4(q) to the Company's Registration Statement on Form S-2, Registration Statement No. 33-9509, and incorporated herein by reference. 4(v) Senior Note Agreement, dated as of July 1, 1990, between the Company and Allstate Life Insurance Company. Filed as Exhibit 4(w) to the Company's Registration Statement on Form S-3, Registration Statement No. 33-64302, and incorporated herein by reference. 4(w) Charter of the Company. Filed as Exhibit 3(a) to the Company's Form 8, amending the Company's Form 10-Q for the fiscal quarter ended September 30, 1984, File No. 0-1857-3, and incorporated herein by reference. 4(x) Amendment to the Company's Charter, dated October 30, 1985. Filed as Exhibit 3(b) to the Company's Registration Statement on Form S-2, Registration Statement No. 33-1492, and incorporated herein by reference. 4(y) Amendment to the Company's Charter, dated July 14, 1986. Filed as Exhibit 3(a) to the Company's Form 10-K for the fiscal year ended June 30, 1986, File No. 0-1857-3, and incorporated herein by reference. 4(z) Amendment to the Company's Charter, dated October 28, 1986. Filed as Exhibit 4(v) to the Company's Registration Statement on Form S-3, Registration Statement No. 33-27785, and incorporated herein by reference. 4(aa) Amendment to the Company's Charter, dated June 15, 1992. Filed as Exhibit 4(y) to the Company's Registration Statement on Form S-3, Registration Statement No. 33-64302, and incorporated herein by reference. 4(bb) Amendment to the Company's Charter, dated July 29, 1994. Filed as Exhibit 4(bb) on the Company Registration Statement on Form S-2, Registration Statement No. 33-838 28, and is incorporated herein by reference thereto. 10(a) Employment Contract between the Company and Scott S. Robinson. Filed as Exhibit 10(f) to the Company's Form 10-K for the fiscal year ended June 30, 1985, File No. 01857-3, and incorporated herein by reference. 10(b) Contract for the operation and maintenance of a cogeneration pipeline between the Company and Altresco Financial, Inc., dated December 11, 1992. Filed as Exhibit 10(n) to the Company's Form 10-K for the fiscal year ended June 30, 1993, File No. 0-18573, and incorporated herein by reference. 10(c) Year-to-year contract for the purchase of propane gas between the Company and Enron Gas Liquids, dated June 1, 1993. Filed as Exhibit 10(c) on the Company Registration Statement on Form S-2, Registration Statement No. 33-83828, and is incorporated herein by reference thereto. 10(d) Contract for the transportation of natural gas under IT rate schedule between the Company and Tennessee Gas Pipeline Company, contract number 103250-8, dated September 1, 1993. Filed as Exhibit 10(d) on the Company Registration Statement on Form S-2, Registration Statement No. 33-83828, and is incorporated herein by reference thereto. 10(e) Contract for the transportation of natural gas under FT-A rate schedule between the Company and Tennessee Gas Pipeline Company, contract number 2030, dated September 1, 1993. Filed as Exhibit 10(e) on the Company Registration Statement on Form S-2, Registration Statement No. 33-83828, and is incorporated herein by reference thereto. 10(f) Contract for the transportation of natural gas under FT-A rate schedule between the Company and Tennessee Gas Pipeline Company, contract number 2064, dated September 1, 1993. Filed as Exhibit 10(f) on the CompanyRegistration Statement on Form S-2, Registration Statement No. 33-83828, and is incorporated herein by reference thereto. 10(g) Contract for the transportation of natural gas under FT-A rate schedule between the Company and Tennessee Gas Pipeline Company, contract number 779, dated September 1, 1993. Filed as Exhibit 10(g) on the Company Registration Statement on Form S-2, Registration Statement No. 33-83828, and is incorporated herein by reference thereto. 10(h) Contract for the transportation of natural gas under CGT-NE rate schedule between the Company and Tennessee Gas Pipeline Company, contract number 2063, dated September 1, 1993. Filed as Exhibit 10(h) on the Company Registration Statement on Form S-2, Registration Statement No. 33-83828, and is incorporated herein by reference thereto. 10(i) Contract for the purchase of natural gas between the Company and Tenngasco Corporation, dated September 14, 1993. Filed as Exhibit 10(i) on the Company Registration Statement on Form S-2, Registration Statement No. 33-83828, and is incorporated herein by reference thereto. 10(j) Contract for the purchase of natural gas between the Company and Natural Gas Clearinghouse, dated as of November 1, 1993. Filed as Exhibit 10(j) on the Company Registration Statement on Form S-2, Registration Statement No. 33-83828, and is incorporated herein by reference thereto. 10(k) Gas Storage Agreement between the Company and Tennessee Gas Pipeline Company, dated as of September 1, 1993. Filed as Exhibit 10(k) on the Company Registration Statement on Form S-2, Registration Statement No. 33-838 28, and is incorporated herein by reference thereto. 10(l) Company Corporate Incentive Compensation Plan ("ICP"). Filed as Exhibit 10(l) on the Company Registration Statement on Form S-2, Registration Statement No. 33-838 28, and is incorporated herein by reference thereto. 10(m) Severance Agreement, dated September 28, 1993, by and between the Company and Donald Atwater. Filed as Exhibit 10(m) on the Company Registration Statement on Form S-2, Registration Statement No. 33-83828, and is incorporated herein by reference thereto. 10(n) Severance Agreement, dated September 28, 1993, by and between the Company and Robert M. Allessio. Filed as Exhibit 10(n) on the Company Registration Statement on Form S-2, Registration Statement No. 33-83828, and is incorporated herein by reference thereto. 10(o) Severance Agreement, dated October 15, 1993, by and between the Company and Michael J. Marrone. Filed as Exhibit 10(o) on the Company Registration Statement on Form S-2, Registration Statement No. 33-83828, and is incorporated herein by reference thereto. 10(p) Severance Agreement, dated October 15, 1993, by and between the Company and Leslie H. Hotman. Filed as Exhibit 10(p) on the Company Registration Statement on Form S-2, Registration Statement No. 33-83828, and is incorporated herein by reference thereto. 10(q) Severance Agreement, dated October 15, 1993, by and between the Company and Cheryl M. Clark. Filed as Exhibit 10(q) on the Company Registration Statement on Form S-2, Registration Statement No. 33-83828, and is incorporated herein by reference thereto. 13(a) Annual Report to Shareholders Filed Herewith: A copy of the Company's Annual Report to Shareholders for fiscal year ended June 30, 1995. 27(a) Financial Data Schedule Filed Herewith: Financial Data Schedule for the fiscal year ended June 30, 1995.
THE BERKSHIRE GAS COMPANY OTHER ALLOWANCES FOR THE YEAR ENDED JUNE 30, 1995 ($000'S)
COLUMN A COLUMN B COLUMN C COLUMN D COLUMN E - -------- -------- -------- -------- -------- ADDITIONS DEDUCTIONS ------------------------------------------ ------------------------ BALANCE AT CHARGED TO CHARGED TO OTHER ACCTS. BALANCE BEGINNING OPERATING PROFIT ----------------------- AT CLOSE DESCRIPTION OF PERIOD & LOSS OR INCOME ACCOUNT AMOUNT DESCRIPTION AMOUNT OF PERIOD - ----------- ---------- ---------------- ------- ------ ----------- ------ --------- ALLOWANCES DEDUCTED FROM ASSETS TO WHICH THEY APPLY Reserved for bad debts: Gas Accounts $727 $628 App. Rental $ 18 Accts. charged $541 $832 off - less recoveries Merchandise & 21 Merchandise & 50 Accts. charged 27 44 Jobbing Accts. Jobbing off - less Operations recoveries Liq. Petroleum 68 Liq. Petroleum 45 Accts. charged 39 74 Gas Accounts Operations off - less recoveries ---- ---- ---- ---- ---- TOTAL $816 $628 $113 $607 $950 ==== ==== ==== ==== ====
THE BERKSHIRE GAS COMPANY OTHER ALLOWANCES FOR THE YEAR ENDED JUNE 30, 1994 ($000'S)
COLUMN A COLUMN B COLUMN C COLUMN D COLUMN E - -------- -------- -------- -------- -------- ADDITIONS DEDUCTIONS ------------------------------------------ ------------------------ BALANCE AT CHARGED TO CHARGED TO OTHER ACCTS. BALANCE BEGINNING OPERATING PROFIT ----------------------- AT CLOSE DESCRIPTION OF PERIOD & LOSS OR INCOME ACCOUNT AMOUNT DESCRIPTION AMOUNT OF PERIOD - ----------- ---------- ---------------- ------- ------ ----------- ------ --------- ALLOWANCES DEDUCTED FROM ASSETS TO WHICH THEY APPLY Reserved for bad debts: Gas Accounts $600 $1,176 App. Rental $13 Accts. charged $1,062 $727 off - less recoveries Merchandise & 20 Merchandise & 7 Accts. charged 6 21 Jobbing Accts. Jobbing off - less Operations recoveries Liq. Petroleum 54 Liq. Petroleum 42 Accts. charged 28 68 Gas Accounts Operations off - less recoveries ---- ------ --- ------ ---- TOTAL $674 $1,176 $62 $1,096 $816 ==== ====== === ====== ====
THE BERKSHIRE GAS COMPANY OTHER ALLOWANCES FOR THE YEAR ENDED JUNE 30, 1993 ($000'S)
COLUMN A COLUMN B COLUMN C COLUMN D COLUMN E - -------- -------- -------- -------- -------- ADDITIONS DEDUCTIONS ------------------------------------------ ------------------------- BALANCE AT CHARGED TO CHARGED TO OTHER ACCTS. BALANCE BEGINNING OPERATING PROFIT ----------------------- AT CLOSE DESCRIPTION OF PERIOD & LOSS OR INCOME ACCOUNT AMOUNT DESCRIPTION AMOUNT OF PERIOD - ----------- ---------- ---------------- ------- ------ ----------- ------ ---------- ALLOWANCES DEDUCTED FROM ASSETS TO WHICH THEY APPLY Reserved for bad debts: Gas Accounts $467 $737 App. Rental $14 Accts. charged $618 $600 off - less recoveries Merchandise & 16 Merchandise & 19 Accts. charged 15 20 Jobbing Accts. Jobbing off - less Operations recoveries Liq. Petroleum 59 Liq. Petroleum 38 Accts. charged 43 54 Gas Accounts Operations off - less recoveries ---- ---- --- ---- ---- TOTAL $542 $737 $71 $676 $674 ==== ==== === ==== ====
EX-13 2 EXHIBIT 13(A)--ANNUAL REPORT Berkshire Gas Company ------------------------------------------------------------ 1 9 9 5 A N N U A L R E P O R T A Strong Tomorrow Built on Today's Achievements A Strong Tomorrow Built on Today's Achievements A strong future is built on a track record of solid achievements and successes. The theme of this year's Annual Report centers on many advances that have been and are being made throughout the Company with a focus on improving both short and long-term performance. While specific actions are as diverse as a record sales send out, lower purchased gas costs, automated meter reading and sophisticated new computer systems, they all present a positive and compelling profile of Berkshire Gas and its comprehensive efforts to ensure continued growth and a strong profitable future. FINANCIAL HIGHLIGHTS - -------------------------------------------------------------------------------
For the Fiscal Year Ended June 30 1995/1994 1994/1993 OPERATIONS ($000) 1995 1994 % Change 1993 % Change - ------------------------------------------------------------------------------------------------------------ Operating Revenues $47,934 $53,029 -9.6% $47,132 12.5% Operating Margin 23,114 25,144 -8.1 22,301 12.7 Operating and Other Income 9,418 11,201 -15.9 9,399 19.2 Net Income 2,529 3,673 -31.1 2,810 30.7 Earnings Available for Common Stock 1,835 2,953 -37.9 2,066 42.9 COMMON SHARE DATA - ------------------------------------------------------------------------------------------------------------ Earnings Per Share $0.92 $1.69 -45.6% $1.20 40.8% Dividends Per Share 1.10 1.085 1.4 1.080 0.5 Book Value Per Share 13.16 12.99 1.3 12.30 5.6 Market Price (Year-End) 15.00 16.25 -7.7 18.00 -9.7 Average Shares of Common Stock Outstanding 1,990,517 1,751,830 13.6 1,718,522 1.9 Number of Registered Common Shareholders 1,878 1,835 2.3 1,879 -2.3 OTHER DATA - ------------------------------------------------------------------------------------------------------------ Gross Utility Plant ($000) $91,863 $86,098 6.7% $83,016 3.7% Net Utility Plant ($000) 69,326 66,191 4.7 65,846 0.5 Capital Expenditures ($000) 7,746 5,112 51.5 5,458 -6.3 Total Gas Sold and Transported (MCF-000's) 7,392 7,362 0.4 6,712 9.7 Total Natural Gas Customers 31,925 31,445 1.5 31,053 1.3 Propane Gallons Sold (000's) 3,738 3,904 -4.3 3,522 10.8
Berkshire Gas Company To Our Shareholders: This year's report provides an overview of many of the positive developments and advances made by the Company over the course of the past year as well as a preview of future initiatives that are currently being planned. All of these efforts are geared toward improving short and long-term profitability. Despite a stagnant economy and yet another heating season beset by substantially warmer than normal weather, Berkshire Gas continues to focus on efficiency, productivity and profitability as its highest priorities. Earnings The combination of a lackluster economy and warm weather exerted downward pressure on financial performance. Earnings for the year were $.92 as compared to 1994 earnings of $1.69 which reflected colder than normal weather and included a one time insurance settlement of $.23 per share. Normal weather during the winter period would have increased earnings by approximately $.45 per share. Current year earnings also reflect a dilution of approximately $.11 per share as a result of the issuance of 295,000 additional shares of Common Stock in October 1994. Weather As has been the case in four out of the last five years, weather was substantially warmer than normal during the 1994-95 heating season. Temperatures for the winter period were 8.4% warmer than normal and 13% warmer than the preceding year. Weather during the month of January, which is traditionally the coldest winter month, was 20% warmer than normal. Lost heating load in January significantly handicaps our best efforts to achieve a normal winter send out over the remaining months, even in the event of a return to normal temperatures. Given the cyclical nature of weather patterns, we anticipate a return to more normal winter conditions in the near future. Sales Firm sales declined by 12% from the prior year largely due to lower heating demand as a result of warmer winter weather. Firm transportation for the year, however, increased by 29% from 1994 partially offsetting the loss of margins from lower firm sales. Capitalizing on the recent restructuring of the natural gas industry, the Company has been successful in tailoring its services and rates to the specific needs of larger customers. In some cases, this has included conversion of firm sales to firm transportation. Our ability to be flexible and responsive to the needs of individual customers greatly enhances our competitive position in what has become a truly open marketplace. Despite warmer temperatures, the Company did establish a new record for gas sold during a single twenty-four hour period on February 6, 1995. Sales for that day totaled 45,760 MCF, largely as a result of the Company's ability to offer additional transportation volumes to commercial and industrial customers. The previous sales record was established in January of 1994 when volumes totaling 43,934 MCF were sold in one day. Rates During the year, the Company was successful in reducing its retail rates on three occasions. These reductions were made possible as a result of refunds to the Company from its primary pipeline supplier, as mandated by the Federal Energy Regulatory Commission, and lower gas costs. The full amount of these recoveries is passed on to customers through the Cost of Gas Adjustment Clause on their monthly bills in concert with requirements of the Massachusetts Department of Public Utilities. As a result of these reductions and the Company's commitment to contain rates, customers are paying less today for natural gas service in 1995 dollars than they did ten years ago. Stable rates play a key role in retaining customers and in the Company's ability to attract new business. Cost Reduction The Company continues to reduce costs across the board. Operating expenses for 1995 were 10% lower than in the previous year. This was accomplished in part by reductions in insurance cost, uncollectible accounts, legal expense, regulatory expense, salary and benefit costs and professional fees. In addition, the Company anticipates further savings as a result of attrition, retirements and the realignment of staff to meet changing needs. Company-wide employment is now below 160, down from an all-time high of 194 in 1989. Regulatory Environment As the nature of our industry has changed in recent years, so has the tenor of the regulatory environment. In many sectors, new demands have been placed on regulators forcing them to rethink the role of government in the regulation of utilities. Resulting changes have been, and will continue to be, positive for our industry. We are working cooperatively with federal and state regulatory authorities to fully explore many of the new approaches to regulation currently being discussed. Berkshire Propane The Berkshire Propane Division attained new milestones in customer growth during the year. The Division has consistently achieved annual double digit growth in the number of customer served. At the same time, Berkshire Propane has added to its service territory and is lowering costs by increasing efficiency, as outlined elsewhere in this report. As with the utility, Berkshire Propane also saw a reduction in volumes sold during the year due to warmer winter weather. New Initiatives To further heighten efficiency and increase productivity, while at the same time remaining mindful of our customers' needs, several key-automation based initiatives have been undertaken this year which hold great short and long-range promise. Plans currently call for the investment of up to $2 million dollars in systems and equipment which will significantly reduce costs. The flow of accurate and timely information is important in any organization. Whether it is information needed to provide new service, to repair customer equipment or to assure adequate supplies of natural gas, reliable up-to-date information technology can make all the difference in the world. In recognition of this, the Company has conducted an exhaustive review of both hardware and software, with the aid of expert information systems consultants, toward the goal of implementing an integrated information network Company-wide. The adoption of this advanced technology will provide both management and employees with an extremely powerful tool that can be used to save time, improve customer service and make critical information available at a moment's notice. Our investment in this project represents a commitment to further improvements at all levels of our organization. Our Distribution Department has also inaugurated a program which will have far reaching benefits both for customers and the Company. Automated meter reading is being widely adopted by the natural gas industry. Its use saves time, yields greater accuracy and makes it possible to read meters in difficult locations, or during periods of inclement weather when meters may not be readily accessible. Additionally, it will eliminate the need to estimate bills, which focus group research has found to be chief among our customers' concerns. Cost savings will be realized by a reduction in manpower needs as the program becomes fully implemented, as well as by a reduction in billing inquiries handled by customer service representatives. To date, more than 25% of the Company's 32,000 customer meters have been adapted to this new technology. Our employees are to be commended for openly embracing automated technology. Many have been actively involved with the Company's consultants in the review, selection and implementation of the various systems discussed above, and their participation has been invaluable. These initiatives represent just a portion of the work that has been undertaken toward improving operations and performance. Other initiatives currently under way, or under consideration, are highlighted throughout this year's report. Together they represent real advancements in technology and efficiency that will serve both the customer and the shareholder. Summary In spite of challenges presented by nature, this has been a year of progress toward our goal of improved profitability. Berkshire Gas is an innovative and progressive company whose management is committed to providing the best possible service at the lowest possible cost while at the same time fulfilling the expectations of its shareholders. Recent weather and economic trends have made it difficult to balance these interests, but you may be sure that we will continue our pursuit of these goals. We are continuing along avenues intended to enhance performance and improve profitability during periods of adverse weather or economic conditions. Most importantly, we are confident that today's achievements are providing a solid foundation for a bright future filled with opportunities for growth and expansion. Your investment represents an endorsement of our initiatives for the future, and we thank you for your confidence and support. ----------------------------- | | | | | Photo of | | Joseph T. Kelley | | Chairman of the Board | | | | | ----------------------------- /s/ Joseph T. Kelley Chairman of the Board --------------------------------------- | | | | | Photo of | | Scott S. Robinson | | President & Chief Executive Officer | | | | | --------------------------------------- /s/ Scott S. Robinson President & Chief Executive Officer Berkshire Gas Company Operations Today's Accomplishments * Initiated automated meter-reading. * Automated productivity reporting and reduced supervisory staff. * Expanded and upgraded the Supervisory Control and Data Acquisition System. * Implemented a computerized distribution-modeling system. * Expanded distribution network. * Streamlined Engineering record keeping. * Accelerated cash flow. * Improved response to customer inquiries. Tomorrow's Advances * Evaluate computer-aided dispatch systems. * Expand distribution system capacity. * Install paperless engineering systems. The following pages present a tour of each of the functional areas of the Berkshire Gas Company. This state-of-the-Company overview has a dual focus: to highlight today's achievements and profile improvements, with an eye toward additional advances planned for the future. ---------------------------------------------------------- | | | Photo of | | | | Meter Shop Technicians, Steve Fellmann and | | Tom Stefanik, complete installation of an automated | | rotary natural gas meter at Williams College to | | accommodate increased demand. | | | ---------------------------------------------------------- ---------------------------------------------------------- | | | Photo of | | | | Production Technician, Chris Benham, fine tunes a | | portion of the Company's Supervisory Control and Data | | Acquisition System used to monitor real time performance | | of the pipeline distribution network. | | | ---------------------------------------------------------- ---------------------------------------------------------- | | | Photo of | | | | A van equipped with automated meter reading equipment | | travels through a residential neighborhood collecting | | readings from customer meters for use in billing. | | | ---------------------------------------------------------- The nerve center of a dynamic utility company is Operations. At Berkshire Gas, this key component includes Customer Operations, Distribution and Engineering. Together these departments are responsible for design, construction, operation and maintenance of the pipeline network and associated technology. The Customer Information Center also falls under the aegis of Operations. As the Company's front-line interface with customers, the importance of this function cannot be over stressed. Customer Operations reached a milestone this year with the installation of 8,000 automated meters. When all of the Company's 32,000 meters have been converted, this technology will eliminate estimated billing, simplify the billing process, reduce inquiries and increase customer satisfaction. Customer Operation continually monitors its performance to ensure peak efficiency and cost-effectiveness. An automated productivity-reporting system is being developed to computerize analyses now performed manually by supervisors. As a result of effective use of new technology, the Company has been able to reduce supervisory staff requirements in this area. In another technological advance, Distribution has expanded and upgraded its Supervisory Control and Data Acquisition system. Sensors and electronic controllers at critical locations throughout the distribution network allow dispatchers to view system performance in real time and make appropriate adjustments. In addition, new computer models of the distribution system allow the Company to evaluate alternatives for future growth. To meet increasing demand for natural gas, Engineering is planning new facilities to serve the Amherst/Greenfield area, the fastest-growing segment of the Company's service area. Engineering is also converting manual records to an Automated Mapping and Facilities Management system in order to streamline its operations. The spotlight is also on efficiency in the Customer Information Center where monthly reports will soon be produced in two working days rather than the six-to-eight now required. Cash flow also has been substantially improved by engaging an outside service firm to accelerate collection of overdue bills. In addition, cross-training programs and advanced communications systems continue to improve the speed and quality of responses to information and service requests. For the future, Customer Operations personnel are actively evaluating computer-aided dispatch systems that will provide information to field personnel more quickly and efficiently. Further expansion of the Company's pipeline network and implementation of paperless engineering systems are two areas currently being reviewed by the Company's Engineering Department. These advancements will help to increase efficiency and reduce costs in the future. These successes, coupled with future plans to implement new technology and optimize staff resources, will improve the service the Company provides to its customers, while also making it possible to control costs and focus on profitability. --------------------------------------------------------- | | | Photo of | | | | Senior Engineer, Dave Grande, evaluates avenues for | | future load growth using a computer model of the | | Company's distribution system. | | | --------------------------------------------------------- --------------------------------------------------------- | | | Photo of | | | | Customer Representative, Nicolette McGovern, accesses | | customer information using innovative technology | | designed to speed response time. | | | --------------------------------------------------------- Berkshire Gas Company Gas Supply Acquisition and Management Today's Accomplishments * Reduced the cost of purchased gas. * Met record demand. * Realized conservation and load management benefits. Tomorrow's Advances * Secure fixed-price futures contracts. * Accrue conservation performance incentives. Deregulation and market-driven forces make it imperative for the Company to ensure reliable supplies of natural gas at competitive rates. As a member of the Mansfield Consortium, which includes five other natural gas distribution companies, Berkshire Gas has the same purchasing power as the state's largest utilities. By skillfully negotiating contracts with multiple suppliers and capturing low wellhead prices, the Company purchases natural gas today for less than it did two years ago. In addition to earning high ratings from the Massachusetts Department of Public Utilities, the ability to negotiate favorable contracts on the open market permits competitive pricing that is helping Berkshire Gas retain existing customers and obtain new ones. The availability of low-cost gas supplies has aided the Company in meeting growing consumer demand. This was particularly evident this winter when the Company realized an all-time 24 hour sales record, despite unusually mild weather. Energy conservation programs also continue to contribute to a healthy financial picture. Conservation and load-management program services provided to 2,600 customers this year generated gas cost savings of approximately $1 million. Looking toward the future, the Company's supply professionals are exploring new ways to meet customer pricing demands, including the utilization of natural gas futures contracts on the New York Mercantile Exchange ("NYMEX") exchange. At the same time, the Company's Conservation Department is completing a filing which, when approved by the Massachusetts Department of Public Utilities, will enable the Company to earn incentives and additional revenues from the successful implementation of its programs. --------------------------------------------------------- | | | Photo of | | | | Specialty Minerals Purchasing Manager, James Mirante | | and Quarry Superintendent, Lynn Burton, discuss the | | future growth of their operations and associated energy | | needs with Les Hotman, Berkshire Gas Vice-President of | | Rates, Supply and Planning and Karen Zink, Manager of | | Rates and Planning. | | | --------------------------------------------------------- Berkshire Gas Company Administration Today's Accomplishments * Obtained favorable financing rates. * Reduced employee benefit costs. * Offered early-retirement options. * Committed to company-wide, utility-specific software. Tomorrow's Advances * Install integrated information systems. * Realign staff assets. --------------------------------------------------------- | | | Photo of | | | | Frank Swigut, Senior Manager and Business Systems | | Consulting for Deloitte & Touche, discusses various | | options for integrating technology and information | | with Berkshire Gas personnel as part of the Company's | | evaluation of new information processing hardware | | and software. | | | --------------------------------------------------------- Administration provides services essential to Company growth: financial strength, information management and manpower planning. In the financial area, innovative financing negotiated at very favorable rates and the sale of additional equity in October of 1994, represent major steps toward a more balanced capital structure. Banking costs are also being significantly reduced by aggressively negotiating lower fees. Additionally, competitive bidding has yielded broader and more flexible employee benefit plans at reduced cost to the Company. As a result of regulatory reform and aggressive case management, workmen's compensation costs have been cut by one-third. As automation continues to reduce the physical workload, the Company has been able to offer early-retirement options designed to maintain appropriate staffing levels. Implementation of a networked computer system and company-wide, utility-specific software represents probably the most sweeping procedural change in Company history. By promoting fast, easy and complete exchange of information between all departments, the new system will significantly improve internal productivity and responsiveness to customers. In planning for the future, the Company is evaluating staffing needs and requirements in light of early retirements and the changing nature of the workplace as a result of automation. Consequently, employees displaced by technology are being retrained and reeducated to assume new duties and meet needs that are emerging throughout the organization. The realignment of staffing assets plays a critical role in cost control as well as providing employees new opportunities for growth and experience. Finance, information services and manpower planning play critical roles in every aspect of the Company's operation. Advances in these areas yield direct results to the bottom line. The Company's finance and information services professionals are engaged daily in the pursuit of additional technology and innovative financial vehicles for the benefit of the Company's customers and its shareholders. The strength of these departments provides support for the Company's effort to seize opportunities and lay the foundation for a bright future. Berkshire Gas Company Marketing Today's Accomplishments * Adopted team marketing. * Realized load growth. * Implemented target marketing program. * Instituted customer retention program. * Customized rates for large customers. Tomorrow's Advances * Future load expansion. * Expansion of custom services. * Underground storage tank program. --------------------------------------------------------- | | | Photo of | | | | Yankee Candle founder and President, Mike Kittredge, | | discusses the firm's recent conversion to natural gas | | with Walter Martin, a Senior Commercial and Industrial | | Marketing Representative at Berkshire Gas. Yankee | | Candle manufacturers and sells an exciting line of top | | quality candles around the globe. | | | --------------------------------------------------------- --------------------------------------------------------- | | | Photo of | | | | Senior Commercial and Industrial Marketing | | Representative, Rick Ryer, reviews details of the | | recent conversion of Pittsfield High School to natural | | gas with Principal, Mark Matthews, and Sally Douglas, | | Budget Officer for the Pittsfield School Department. | | | --------------------------------------------------------- "Working together we can accomplish more than we can individually." With this in mind, the Company's marketing effort has focused on coordinating resources company-wide in a teamwork approach to promote and sell natural gas. Combining the resources and talents of people throughout the organization has proven to be an effective approach. As a result of this coordinated effort, the Company realized significant load additions over the past year. Natural gas has been selected as the fuel of choice by new customers such as Wal Mart, the Old Country Buffet and the Willowood Nursing Home, all in Pittsfield, as well as the Clark Art Museum and Williams College in Williamstown, and the Yankee Candle Company in Deerfield. Effective marketing requires both a knowledge of the marketplace as well as a thorough understanding of a potential customer's needs. In identifying those needs, the Company's marketing professionals target key segments of specific markets. Working with decision makers such as architects and engineers, the marketing team is able to secure additional load by providing information and access to the latest and most efficient natural gas technology, as well as detailed information about the Company and its services. This program has been expanded to include traditional trade allies such as heating contractors and plumbers. Building strong relationships with these target groups has paid solid dividends and contributed significantly to the Company's growth. The quality of customer relationships is more important than ever in today's competitive marketplace. In recognition of this, Berkshire Gas has initiated a pro-active marketing strategy. A team of representatives from several Company departments is going out in the field, calling on key commercial and industrial customers. These personal visits demonstrate a strong service commitment while eliminating potential problems and keeping the Company in touch with the latest business developments and customer requirements. The advent of customized rates also has played a key role in meeting customers' changing needs. Deregulation of the natural gas industry has introduced new competitive dimensions in the marketplace. The Company now competes daily with marketers and outside suppliers. Our ability to tailor services and rates to meet specific customer requirements is a key factor in the success of our marketing efforts. The Company continues to focus on providing competitive services that are flexible and superior to those offered by all other suppliers. Looking forward, the Company is committed to continued load growth. The Amherst and Greenfield areas of the Company's service territory continue to offer the greatest near-term growth potential. To penetrate these markets, sales representatives are pursing new avenues, such as tailoring customer service packages to meet the particular needs of residential and commercial customers. Environmental concerns are providing an opportunity for marketing to promote and expand the Company's underground storage tank program. Owners of homes and businesses with leaking underground oil storage tanks are becoming increasingly concerned with the cost of environmental remediation of their property. By packaging and offering attractive alternatives, new customers are converting daily to natural gas to satisfy their energy needs. An emphasis on doing more with less, on teamwork and on change has helped the Company adjust to meet the evolving needs of the business and at the same time, capitalize on growth opportunities in the marketplace. Least-cost growth will continue to be an important goal as the Company markets its products and services in the future. Berkshire Gas Company Berkshire Propane Today's Accomplishments * Increased customer base. * Reduced truck loading time. * Avoided a planned expansion of clerical staff. * Reduced supervisory staff. * Reduced capital costs. Tomorrow's Advances * Explore information-processing improvements. * Expand service area. --------------------------------------------------------- | | | Photo of | | | | Berkshire Propane reached a milestone in its history | | this year with the addition of its 5000th customer, the | | Open Hearts Camp in Great Barrington, Massachusetts. | | The 400 acre camp is a summer retreat for youngsters | | who have undergone open heart surgery. It was | | established and endowed by the late Edward J. Madden, | | one of the first open heart patients. | | | --------------------------------------------------------- Aggressive marketing initiatives have continued to expand Berkshire Propane's customer base. Solid customer growth has led to the addition of the Division's 5,000th customer this year. Management envisions further expanding the existing service area in New York and Massachusetts to continue to build on the Division's growth record. Significant productivity improvements have resulted from modifications to Berkshire Propane's truck-filing facilities in Pittsfield, cutting loading time by 60 percent. Steps such as this reduce overhead costs and heighten overall efficiency. In addition, enhancements to the Company's computer system eliminated the need for a scheduled expansion of clerical staff. Supervisory staff also has been reduced as the result of Company-wide improvements. Other information-processing advances planned for the near future include computerized on-board ticketing and customer information storage. The purchase of cylinders and tanks represents a significant capital expense which can be partially offset by refurbishing tanks recovered from customers. Berkshire Propane has been able to more than triple the number of tanks refurbished this year, substantially cutting capital expenditures. These reductions in both operating and capital costs, coupled with planned improvements in information processing and expansion of the service territory, will enhance the Division's ability to maintain consistent contributions to the profitability of the Company. Berkshire Gas Company Service Area A strong future is built on a sound past. For more than 140 years, Berkshire Gas has been serving the energy needs of western Massachusetts. Located in one of the most desirable areas of the Northeast, the Company's neighbors include prestigious educational institutions, R&D centers and high-tech businesses attracted by the region's natural beauty and superb quality of life. A tradition of excellence has been built on the Company's long record of service. Today we provide natural gas service to 19 cities and towns in Massachusetts with a combined population of 190,000. The Berkshire Propane Division serves 107 communities in a 5,000 square mile area in western Massachusetts and eastern New York. Our past success has been built on countless singular achievements and advancements. The prospects for our future will likely be similarly determined. With that in mind, we endeavor daily to change and adapt in the continued pursuit of excellence as we build on a long and proud history. --------------------------------------------------------- | | | Photo of | | | | Map of Western Massachusetts and Eastern New York | | State depicting service area by town and county. | | | --------------------------------------------------------- The examples contained in this report all share a common goal: to demonstrate accomplishments achieved or planned across all Company departments and functions. Together they present the image of a Company that is optimizing its resources, controlling costs, and improving customer service. With this strong foundation, coupled with clearly defined plans for the future, the Berkshire Gas Company is positioned for continued growth and profitability. Berkshire Gas Company Financial Review - ---------------------------------------------------------------------- Contents - ---------------------------------------------------------------------- 10-Year Comparative Summary of Operations and Statistics 14 Management's Discussion and Analysis of Financial Condition and Results of Operations 16 Financial Statements: Statements of Income and Retained Earnings 19 Balance Sheets 20 Statements of Common Shareholders' Equity and Redeemable Cumulative Preferred Stock 21 Statements of Cash Flows 22 Notes to Financial Statements 23 Independent Auditors' Report 29 Quarterly Financial Information 31 Officers and Directors 32 10-YEAR COMPARATIVE SUMMARY OF OPERATIONS AND STATISTICS
For the Years Ended June 30 OPERATIONS ($000) 1995 1994 1993 1992 1991 - ----------------------------------------------------------------------------------------------- Operating Revenues $ 47,934 $ 53,029 $ 47,132 $ 47,969 $ 41,408 Cost of Gas Sold 24,820 27,885 24,831 26,741 22,341 Operating Margin 23,114 25,144 22,301 21,228 19,067 Net Income 2,529 3,673 2,810 1,952 1,462 Earnings Available for Common Stock 1,835 2,953 2,066 1,849 1,377 COMMON SHARE DATA* - ----------------------------------------------------------------------------------------------- Earnings Per Share $ 0.92 $ 1.69 $ 1.20 $ 1.10 $ 0.83 Annualized Dividends Per Share 1.10 1.10 1.08 1.08 1.08 Dividends Declared Per Share 1.10 1.085 1.08 1.08 1.23 Book Value Per Share 13.16 12.99 12.30 12.13 12.07 Market Price (Year-End) 15.00 16.25 18.00 14.75 13.00 Average Shares of Common Stock Outstanding 1,990,517 1,751,830 1,718,522 1,687,734 1,655,550 CAPITALIZATION ($000) - ----------------------------------------------------------------------------------------------- Common Equity $ 27,688 $ 22,946 $ 21,326 $ 20,626 $ 20,155 Preferred Stock 8,448 8,491 9,026 9,111 1,196 Long-Term Debt 30,983 31,083 25,413 26,564 28,156 - ----------------------------------------------------------------------------------------------- Total Capitalization $ 67,119 $ 62,520 $ 55,765 $ 56,301 $ 49,507 % OF TOTAL - ----------------------------------------------------------------------------------------------- Common Equity 41.2% 36.7% 38.2% 36.6% 40.7% Preferred Stock 12.6 13.6 16.2 16.2 2.4 Long-Term Debt 46.2 49.7 45.6 47.2 56.9 RATIOS (%) - ----------------------------------------------------------------------------------------------- Payout Ratio 120% 65% 90% 98% 130% Market-to-Book Ratio 114 125 146 122 108 Return on Average Common Equity 7.2 13.3 9.8 9.1 6.8 PROPERTY ($000) - ----------------------------------------------------------------------------------------------- Capital Expenditures $ 7,746 $ 5,112 $ 5,458 $ 5,165 $ 4,245 Pipeline Construction 0 0 5,659 1,539 4,526 Gross Utility Plant 91,863 86,098 83,016 79,942 76,404 Net Utility Plant 69,326 66,191 65,846 64,840 63,277 Net Non-Utility Plant 5,962 5,715 5,004 8,965 10,627 Total Assets 91,983 90,991 91,891 92,124 95,971 GAS SALES (MCF-000'S) - ----------------------------------------------------------------------------------------------- Residential 2,513 2,839 2,730 2,639 2,347 Commercial & Industrial 2,305 2,625 2,681 2,703 2,480 Interruptible 1,104 807 1,012 1,468 1,092 - ----------------------------------------------------------------------------------------------- Total Natural Gas Sales 5,922 6,271 6,423 6,810 5,919 - ----------------------------------------------------------------------------------------------- GAS TRANSPORTED (MCF-000'S) - ----------------------------------------------------------------------------------------------- Firm Transportation 1,130 874 289 0 0 Interruptible Transportation 340 217 0 0 0 - ----------------------------------------------------------------------------------------------- Total Gas Sold and Transported 7,392 7,362 6,712 6,810 5,919 - ----------------------------------------------------------------------------------------------- Propane Gallons Sold 3,738 3,904 3,522 3,158 2,927 OTHER STATISTICS - ----------------------------------------------------------------------------------------------- Customer Meters 31,925 31,445 31,053 30,507 30,641 Maximum Daily MCF Sendout 45,760 43,934 39,446 38,237 37,095 Minimum Daily MCF Sendout 8,216 8,114 7,371 8,060 6,855 Degree Days 6,748 7,651 7,396 7,210 6,261 20-Year Average Degree Days 7,354 7,356 7,341 7,348 7,432 Number of Employees 160 173 181 180 185 * Reflects the 2-for-1 Common Stock split in August 1986.
10-YEAR COMPARATIVE SUMMARY OF OPERATIONS AND STATISTICS
For the Years Ended June 30 OPERATIONS ($000) 1990 1989 1988 1987 1986 - ----------------------------------------------------------------------------------------------- Operating Revenues $ 39,476 $ 37,274 $ 34,992 $ 37,321 $ 36,958 Cost of Gas Sold 20,280 20,953 19,619 21,033 23,938 Operating Margin 19,196 16,321 15,373 16,288 13,020 Net Income 2,047 1,769 1,757 2,364 1,395 Earnings Available for Common Stock 1,955 1,671 1,653 2,253 1,278 COMMON SHARE DATA* - ----------------------------------------------------------------------------------------------- Earnings Per Share $ 1.21 $ 1.05 $ 1.14 $ 1.83 $ 1.15 Annualized Dividends Per Share 1.28 1.28 1.28 1.22 1.10 Dividends Declared Per Share 1.28 1.28 1.235 1.15 1.07 Book Value Per Share 12.40 12.40 12.57 11.96 11.17 Market Price (Year-End) 14.50 17.25 16.75 18.50 16.00 Average Shares of Common Stock Outstanding 1,622,563 1,595,075 1,444,738 1,232,884 1,115,500 CAPITALIZATION ($000) - ----------------------------------------------------------------------------------------------- Common Equity $ 20,299 $ 19,904 $ 19,848 $ 14,866 $ 13,634 Preferred Stock 1,290 1,378 1,465 1,559 1,647 Long-Term Debt 29,147 23,066 14,952 16,906 10,792 - ----------------------------------------------------------------------------------------------- Total Capitalization $ 50,736 $ 44,348 $ 36,265 $ 33,331 $ 26,073 % OF TOTAL - ----------------------------------------------------------------------------------------------- Common Equity 40.1% 44.9% 54.7% 44.6% 52.3% Preferred Stock 2.5 3.1 4.1 4.7 6.3 Long-Term Debt 57.4 52.0 41.2 50.7 41.4 RATIOS (%) - ----------------------------------------------------------------------------------------------- Payout Ratio 106% 122% 112% 67% 96% Market-to-Book Ratio 117 139 133 155 143 Return on Average Common Equity 9.7 8.4 9.5 15.8 10.4 PROPERTY ($000) - ----------------------------------------------------------------------------------------------- Capital Expenditures $ 6,438 $ 12,308 $ 9,778 $ 6,983 $ 5,320 Pipeline Construction 6,475 0 0 0 0 Gross Utility Plant 71,805 65,657 55,310 47,105 41,196 Net Utility Plant 60,558 55,991 46,576 39,163 34,137 Net Non-Utility Plant 8,119 2,882 2,616 2,531 2,384 Total Assets 83,680 65,240 56,886 49,979 43,072 GAS SALES (MCF-000'S) - ----------------------------------------------------------------------------------------------- Residential 2,545 2,547 2,428 2,333 2,254 Commercial & Industrial 2,778 2,702 2,564 2,209 1,902 Interruptible 1,163 1,026 893 763 1,243 - ----------------------------------------------------------------------------------------------- Total Natural Gas Sales 6,486 6,275 5,885 5,305 5,399 - ----------------------------------------------------------------------------------------------- GAS TRANSPORTED (MCF-000'S) - ----------------------------------------------------------------------------------------------- Firm Transportation 0 0 0 0 0 Interruptible Transportation 169 118 31 0 0 - ----------------------------------------------------------------------------------------------- Total Gas Sold and Transported 6,655 6,393 5,916 5,305 5,399 - ----------------------------------------------------------------------------------------------- Propane Gallons Sold 2,789 2,588 2,293 2,075 1,905 OTHER STATISTICS - ----------------------------------------------------------------------------------------------- Customer Meters 30,395 29,733 28,684 27,894 27,250 Maximum Daily MCF Sendout 38,012 37,480 38,917 35,469 32,659 Minimum Daily MCF Sendout 7,294 7,228 6,603 5,821 6,279 Degree Days 7,045 7,581 7,471 7,276 7,182 20-Year Average Degree Days 7,474 7,474 7,479 7,504 7,502 Number of Employees 191 194 182 155 149 * Reflects the 2-for-1 Common Stock split in August 1986.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS - ----------------------------------------------------------------------------- (Dollars in Thousands Except Share and per Share Amounts) An Overview of 1995 - ----------------------------------------------------------------------------- Operating Margin for 1995 decreased 8.1% to $23,114 from 1994 levels of $25,144, resulting in decreased Net Income and Earnings Per Share of Common Stock of 31.1% to $2,529 and 45.6% to $.92, respectively, over the prior year's results. The decreases in Operating Margins and Net Income for 1995 are primarily due to significantly warmer weather during the heating season relative to 1994, furthermore, 1994 results included proceeds from an insurance settlement which contributed $.23 to earnings per share, and to a lesser extent, the issuance of 295,000 shares of Common Stock diluted 1995 earnings by $.11 per share. Continued efforts in cost containment resulted in increased operating efficiencies reducing operating expenses by $1,320. The number of degree days in 1995 was 6,748, a decrease of 11.8% from the 1994 level, and 8.2% below the 20-year average. Net Utility Plant increased to approximately $69,326, a 4.7% increase above 1994, reflecting capital expenditures of $7,746, which were 52% above 1994 levels. During 1995, the Company sold 295,000 shares of Common Stock netting proceeds of $4,213 to repay short-term bank borrowings. In 1995 the book value per share rose to $13.16 from $12.99 in 1994. Results of Operations - ----------------------------------------------------------------------------- 1995 vs. 1994 Earnings available for Common Stock were $1,835 for 1995 as compared to $2,953 for 1994; Earnings Per Share of Common Stock based on the average number of shares outstanding for the same periods were $.92 and $1.69, respectively. The $.77 or 45.6% decrease in per share earnings from 1994 is due primarily to significantly warmer weather during the heating season, furthermore 1994 results included proceeds from an insurance settlement which increased 1994 earnings by $.23 per share, and to a lesser extent, the issuance of 295,000 shares of Common Stock diluted 1995 earnings by $.11 per share. 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 required to recover from or return to the customers through the Company's Cost of Gas Adjustment Clause ("CGAC") any changes in the cost of natural gas. Operating Margin decreased $2,030 or 8.1% as compared with 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 effect 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 11.8% 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 and Transported 5,948 6,338 Operating Margin $23,114 $25,144 Average Operating Margin Per Firm MCF $ 3.89 $ 3.97
Other Operating Expenses consisted of the following:
1995 1994 ------- ------- Transmission and Distribution $ 3,400 $ 3,407 Customer Accounts 2,740 3,162 Administrative and General 4,173 4,909 Other 1,276 1,431 ------- ------- Total $11,589 $12,909 ======= =======
Other Operating Expenses decreased $1,320 or 10.2% from 1994 levels. The decrease in Other Operating Expenses primarily reflects lower Customer Accounts expense of $422 due to lower levels of uncollectible accounts; decreased Administrative and General costs due to lower insurance costs of $254, lower employee welfare of $196 due to fewer medical claims, reduced legal expense of $64, lower shareholders expense of $45, lower regulatory expense of $49 and lower salaries and benefits of $138. Other costs were $155 less than 1994, primarily due to lower professional fees associated with restructuring supply contracts brought about by the Federal Energy Regulatory Commission ("FERC") Order 636. Depreciation Expense increased by $203 in 1995 over 1994 due to an increase in the amount of depreciable assets. Other Income decreased $871 from 1994. The decrease was primarily due to an insurance settlement that was included in 1994 income in the amount of $403 (net of taxes and amounts previously recorded). Propane revenue was $170 less than 1994 due to the significantly warmer weather during the heating season. Interest income was $60 less resulting from the overcollection of prior period gas costs through the CGAC. Interest Expense increased $178 due to higher long-term interest expense due to semi-annual pricing of the Medium-Term note, partially offset by lower short-term interest due to lower levels of borrowing. Other Taxes increased $70 due to higher personal property valuations and rates. Income Taxes decreased $887 from 1994 due to lower earnings in 1995. Dividends Declared on Common Stock increased $312 due to additional shares outstanding, and to a lesser extent, dividends increased $.015 per share in 1995. The Company sold 295,000 shares of Common Stock during the second quarter of fiscal 1995. 1994 vs. 1993 Earnings available for Common Stock were $2,953 for 1994 as compared to $2,066 for 1993; Earnings Per Share of Common Stock based on the average number of shares outstanding for the same periods were $1.69 and $1.20, respectively. The $.49 or 40.8% increase in per share earnings over 1993 is primarily due to colder weather during the heating season, increased operating efficiencies and the settlement of an insurance claim relating to a line of business that was discontinued in the 1970's ($403 net of taxes and amounts previously recorded which equates to $.23 on a per share basis). Operating Margins increased $2,843 as compared with 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 effect on Operating Margin since the margins are flowed back to the firm customer. The Company's sales are affected by the weather as the majority of its firm customers use natural gas for heating. The increase in Operating Margin in 1994 is primarily due to colder weather during the heating season which increased the volumes of firm gas sold by 638 MCF or 11.2%. To a lesser extent, a 2.54% base rate increase effective April 1, 1993 contributed to the increased Margin.
1994 1993 ------- ------- Firm MCF Sold and Transported 6,338 5,700 Operating Margin $25,144 $22,301 Average Operating Margin Per Firm MCF $ 3.97 $ 3.91
Operating Expenses consisted of the following:
1994 1993 ------- ------- Transmission and Distribution $ 3,407 $ 3,382 Customer Accounts 3,162 2,599 Administrative and General 4,909 4,087 Other 1,431 1,164 ------- ------- Total $12,909 $11,232 ======= =======
Other Operating Expenses increased $1,677 or 14.9% over 1993 levels. The increase in Other Operating Expenses primarily reflects higher Customer Accounts expense of $439 due to higher levels of uncollectible accounts; increased Administrative and General costs resulting from higher salaries, associated benefits and fees of $537, additional legal expense of $153, additional regulatory costs of $62, increased shareholder expenses primarily associated with the Company's Share Owner Dividend Reinvestment and Stock Purchase Plan ("DRIP") of $43; Other costs for the residential conservation program of $121 and professional fees of $123 associated with restructuring supply contracts brought about by the Federal Energy Regulatory Commission ("FERC") Order 636. Depreciation increased by $230 in 1994 over 1993 due to an increase in the level of depreciable assets, and, to a lesser extent, an increase in the composite depreciation rate from 3.64% to 4.04% effective April 1, 1993. Other Income increased $866 in 1994 over 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 (net of taxes and amounts previously recorded) and higher jobbing margins of $147. Increased interest income resulted from an undercollection of prior period gas costs through the CGAC approximating $137. The increase in other income is partially offset by lower rental income of $184 due to higher depreciation expense reflecting an adjustment for the change in the lives of rental assets during 1993. Income Taxes for 1994 as compared with 1993 increased by $857 due to changes in net earnings as discussed above. Liquidity and Capital Resources - ----------------------------------------------------------------------------- Cash flows from operations, net of dividend payments, have generally provided the principal liquidity to meet operating requirements. Capital requirements have been generally funded by both internal and external sources. The issuance of long-term financing is dependent on management's evaluation of need, financial market conditions and other factors. Short-term financing is used to meet seasonal cash requirements. 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 $4,213 to repay short-term bank borrowings. The Company's capital expenditures were $7,746 in 1995, $5,112 in 1994, and $5,458 in 1993. In addition, during 1993, approximately $5,659 was spent for the construction, planning and permitting of a pipeline for a 160 megawatt cogeneration project, for which the Company acted as the developer. In 1993, the Company conveyed its interest in the pipeline, at which time approximately $8,472 was transferred out of construction work in progress as these costs were completely reimbursed to the Company. The Company expects fiscal 1996 capital expenditures to total approximately $8,000. Construction expenditures will be financed initially through short-term borrowings and refinanced by issuing long-term debt and/or equity, to the extent that internally generated funds are not available. Beginning June 15, 1993, the Company's Share Owner Dividend Reinvestment and Stock Purchase Plan ("DRIP") allowed for the sale of Common Stock shares at a 3.0% discount to plan participants to increase cash flow to support current construction expenditures. As of June 30, 1995, the Company had lines of credit aggregating $25,500, all of which remained unused. The Company's continued evaluation of its environmental protection requirements has indicated that present estimates of investigative and cleanup costs range from $2,894 to $8,777 and are expected to be incurred through 2010. The anticipated level of expenditures has remained the same in 1995 from 1994 and been reduced from 1993 estimates resulting from the Company's analysis and review of the sites and the commencement of clean-up activities at the first site. The Company has recorded the most likely costs of $2,894 in accordance with SFAS No. 5. All costs, excluding carrying charges, are expected to be subject to recovery over a seven-year period under a ruling issued by the MDPU. Capitalization at June 30, 1995, excluding current redemption requirements of long-term debt, consisted of 46.2% long-term debt, 41.2% common equity, and 12.6% preferred stock. It is management's view that the Company has adequate access to capital markets and will have sufficient capital resources, both internal and external, to meet anticipated capital requirements. Inflation - ----------------------------------------------------------------------------- The accompanying financial statements reflect the historical cost of events and transactions, regardless of the purchasing power of the dollar at the time. Due to the capital intensive nature of the Company's business, the most significant impact of inflation is on the Company's depreciation of utility plant. Rate regulation, to which the Company is subject, allows recovery through its rates of only the historical cost of utility plant as depreciation. The Company expects that any higher costs experienced upon replacement of existing facilities will be recovered through the normal regulatory process. STATEMENTS OF INCOME AND RETAINED EARNINGS - ----------------------------------------------------------------------------- (In Thousands Except Share Amounts)
Years Ended June 30 1995 1994 1993 - ------------------------------------------------------------------------------------------ Operating Revenues $ 47,934 $ 53,029 $ 47,132 Cost of Gas Sold 24,820 27,885 24,831 - ------------------------------------------------------------------------------------------ Operating Margin 23,114 25,144 22,301 - ------------------------------------------------------------------------------------------ Other Operating Expenses 11,589 12,909 11,232 Depreciation 3,624 3,421 3,191 - ------------------------------------------------------------------------------------------ Total 15,213 16,330 14,423 - ------------------------------------------------------------------------------------------ Utility Operating Income 7,902 8,814 7,878 Other Income - Net 1,516 2,387 1,521 - ------------------------------------------------------------------------------------------ Operating and Other Income 9,418 11,201 9,399 Interest Expense 3,667 3,489 3,490 Other Taxes 1,697 1,627 1,544 - ------------------------------------------------------------------------------------------ Pre-tax Income 4,054 6,085 4,365 Income Taxes 1,525 2,412 1,555 - ------------------------------------------------------------------------------------------ NET INCOME $ 2,529 $ 3,673 $ 2,810 Retained Earnings At Beginning of Period 7,098 5,658 5,450 Adjustment to Retained Earnings 0 390 0 - ------------------------------------------------------------------------------------------ Total 9,627 9,721 8,260 - ------------------------------------------------------------------------------------------ Dividends Declared: Preferred Stock 694 720 744 Common Stock 2,215 1,903 1,858 - ------------------------------------------------------------------------------------------ Total Dividends 2,909 2,623 2,602 - ------------------------------------------------------------------------------------------ Retained Earnings at End of Period $ 6,718 $ 7,098 $ 5,658 ========================================================================================== Earnings Available for Common Stock $ 1,835 $ 2,953 $ 2,066 ========================================================================================== Average Shares of Common Stock Outstanding 1,990,517 1,751,830 1,718,522 - ------------------------------------------------------------------------------------------ Earnings Per Share of Common Stock $ 0.92 $ 1.69 $ 1.20 ==========================================================================================
Reference should be made to Notes to Financial Statements. BALANCE SHEETS - -------------------------------------------------------------------------------
(In Thousands) June 30 1995 1994 1993 - -------------------------------------------------------------------------------------------- ASSETS Utility Plant: Utility Plant-at original cost $91,863 $86,098 $83,016 Less: Accumulated Depreciation 22,537 19,907 17,170 - -------------------------------------------------------------------------------------------- Utility Plant-Net 69,326 66,191 65,846 - -------------------------------------------------------------------------------------------- Other Property: Other Property-at original cost 10,766 9,957 8,750 Less: Accumulated Depreciation 4,804 4,242 3,746 - -------------------------------------------------------------------------------------------- Other Property-Net 5,962 5,715 5,004 - -------------------------------------------------------------------------------------------- Current Assets: Cash and Cash Equivalents 492 65 59 Accounts Receivable 6,612 8,687 6,891 Other Receivables 234 133 176 Inventories 3,236 3,629 3,089 Prepayments 178 146 145 - -------------------------------------------------------------------------------------------- Total Current Assets 10,752 12,660 10,360 - -------------------------------------------------------------------------------------------- Deferred Debits: Unamortized Debt Expense 578 624 647 Capital Stock Expense 638 340 420 Environmental Cleanup Costs 1,046 1,030 872 Other 787 1,537 1,740 - -------------------------------------------------------------------------------------------- Total Deferred Debits 3,049 3,531 3,679 - -------------------------------------------------------------------------------------------- Recoverable Environmental Cleanup Costs. 2,894 2,894 7,002 - -------------------------------------------------------------------------------------------- TOTAL ASSETS $91,983 $90,991 $91,891 ============================================================================================ LIABILITIES AND OTHER CREDITS Common Shareholders' Equity: Common Stock $ 5,259 $4,417 $4,333 Premium on Common Stock 15,711 11,431 10,945 Surplus Invested in Plant 0 0 390 Retained Earnings 6,718 7,098 5,658 - -------------------------------------------------------------------------------------------- Total Common Shareholders' Equity 27,688 22,946 21,326 - -------------------------------------------------------------------------------------------- Redeemable Cumulative Preferred Stock 8,448 8,491 9,026 - -------------------------------------------------------------------------------------------- Long-Term Debt (less current maturities) 30,983 31,083 25,413 - -------------------------------------------------------------------------------------------- Current Liabilities: Notes Payable to Banks 0 6,580 11,840 Current Maturities of Long-Term Debt 900 900 1,670 Accounts Payable 3,091 2,776 3,047 Taxes Accrued 125 (155) (85) Refundable (Recoverable) Gas Costs 4,117 502 (1,019) Other Current Liabilities 5,518 5,261 2,931 - -------------------------------------------------------------------------------------------- Total Current Liabilities 13,751 15,864 18,384 - -------------------------------------------------------------------------------------------- Unamortized Investment Tax Credit 1,355 1,430 1,506 - -------------------------------------------------------------------------------------------- Deferred Income Taxes 6,864 8,283 9,234 - -------------------------------------------------------------------------------------------- Reserve for Recoverable Environmental Cleanup Costs 2,894 2,894 7,002 - -------------------------------------------------------------------------------------------- TOTAL LIABILITIES AND OTHER CREDITS $91,983 $90,991 $91,891 ============================================================================================
Reference should be made to Notes to Financial Statements. STATEMENTS OF COMMON SHAREHOLDERS' EQUITY AND REDEEMABLE CUMULATIVE PREFERRED STOCK - -----------------------------------------------------------------------------
(In Thousands Except Share Amounts) June 30 1995 1994 1993 - --------------------------------------------------------------------------------------- Common Shareholders' Equity: Common Stock, $2.50 par value;shares authorized: 1995, 1994 and 1993 - 2,600,000; 2,600,000 and 2,100,000, respectively. Shares issued and outstanding: 1995-2,103,432; 1994-1,766,909; 1993-1,733,068 $ 5,259 $ 4,417 $ 4,333 Premium on Common Stock 15,711 11,431 10,945 Surplus Invested in Plant 0 0 390 Retained Earnings 6,718 7,098 5,658 - --------------------------------------------------------------------------------------- Total Common Shareholders' Equity $27,688 $22,946 $21,326 ======================================================================================= Redeemable Cumulative Preferred Stock: 4.80%, $100 par value; 15,000 shares authorized;issued and outstanding: 1995-4,478;1994-4,906;1993-5,257 $ 448 $ 491 $ 526 9.00%, $100 par value;10,000 shares authorized;issued and outstanding: 1995-0;1994-0;1993-5,000 0 0 500 8.40%, $100 par value; 80,000 shares authorized;issued and outstanding: 1995, 1994, and 1993-80,000 8,000 8,000 8,000 - --------------------------------------------------------------------------------------- Total Redeemable Cumulative Preferred Stock $ 8,448 $ 8,491 $ 9,026 =======================================================================================
Reference should be made to Notes to Financial Statements. STATEMENTS OF CASH FLOWS - -------------------------------------------------------------------------------
(In Thousands) Years Ended June 30 1995 1994 1993 - --------------------------------------------------------------------------------------------- Cash Flows from Operating Activities: Net Income $ 2,529 $ 3,673 $ 2,810 Adjustments to Reconcile Net Income to Net Cash Provided by Operating Activities: Depreciation and Amortization 4,477 4,107 3,588 Provision for Losses on Accounts Receivable 741 1,274 808 Refundable (Recoverable) Gas Costs 3,615 1,521 (1,771) Deferred Income Taxes (1,419) (1,553) 841 Changes in Assets and Liabilities Which Provided (Used) Cash: Accounts and Other Receivables 1,233 (3,027) (1,355) Inventories 393 (540) (1,090) Unamortized Debt Expense 0 (24) 0 Unamortized Investment Tax Credit 0 0 (30) Unamortized Capital Stock Expense (155) 0 (183) Accounts Payable 315 (271) 1,010 Taxes Accrued 280 (70) (129) Consumer Rebates and Other 960 2,977 172 - --------------------------------------------------------------------------------------------- Net Cash Provided by Operating Activities 12,969 8,067 4,671 - --------------------------------------------------------------------------------------------- Cash Flows from Investing Activities: Capital Expenditures and Disposal Costs (7,746) (5,112) (5,458) Capital Expenditures - Transportation Pipeline 0 0 (5,659) - --------------------------------------------------------------------------------------------- Net Cash Used in Investing Activities (7,746) (5,112) (11,117) - --------------------------------------------------------------------------------------------- Cash Flows from Financing Activities: Dividends Paid (2,909) (2,623) (2,452) Current Maturities of Long-Term Debt 0 (770) (120) Proceeds from (Principal Payments on) Issuance of Long-Term Debt (100) 5,670 (1,151) Proceeds from (Principal Payments on) Notes Payable Borrowings-Net (6,580) (5,260) 3,500 Principal Payments on Construction Loan Borrowings-Net 0 0 (4,284) Proceeds from Issuance of Common Stock-Net 4,213 0 0 Proceeds from Other Stock Transactions-Net 580 34 408 Proceeds from Reimbursement of Transportation Pipeline Expenditures 0 0 2,091 Proceeds from the Sale of Transportation Pipeline 0 0 8,472 - --------------------------------------------------------------------------------------------- Net Cash (Used in) Provided by Financing Activities (4,796) (2,949) 6,464 - --------------------------------------------------------------------------------------------- Net Increase in Cash and Cash Equivalents 427 6 18 Cash and Cash Equivalents at Beginning of Year 65 59 41 - --------------------------------------------------------------------------------------------- Cash and Cash Equivalents at End of Year $ 492 $ 65 $ 59 ============================================================================================= Supplemental Disclosures of Cash Flow Information: Cash Paid During the Year for: Interest (net of amount capitalized) $ 3,452 $ 3,380 $ 3,327 Income Taxes (net of refund) 3,027 2,552 974 =============================================================================================
Reference should be made to Notes to Financial Statements. NOTES TO FINANCIAL STATEMENTS - ----------------------------------------------------------------------------- (Dollars in Thousands Except Share and Per Share Amounts) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - ----------------------------------------------------------------------------- The Berkshire Gas Company ("the Company") is a publicly owned utility engaged in the distribution and sale of natural gas for residential, commercial and industrial use, as well as the transportation of natural gas for larger industrial users. The Company also sells and leases gas burning equipment, and markets liquefied petroleum gas through its Berkshire Propane operations. The Company is subject to regulation by the Massachusetts Department of Public Utilities ("MDPU"). The Company's accounting policies conform to Generally Accepted Accounting Principles ("GAAP") as applied to public utilities giving effect to the accounting practices and policies of the MDPU. Income Taxes - ----------------------------------------------------------------------------- Effective July 1, 1993, the Company adopted the provisions of Statement of Financial Accounting Standards No. 109, "Accounting for Income Taxes." ("SFAS No. 109"), which requires that the liability method be used in calculating deferred income taxes. Upon adoption, the Company recorded deferred income tax liabilities for temporary differences for which deferred income taxes had not been provided and to adjust deferred tax balances to reflect changes in tax rates expected to be in effect during the periods the temporary differences reverse. With the adoption of SFAS No. 109, the Company has determined that it has excess deferred taxes which has resulted in the recording of a regulatory liability. The regulatory liability reflects amounts due to the ratepayers which will be refunded through the regulatory process. Depreciation - ----------------------------------------------------------------------------- The Company depreciates its utility plant at straight line rates approved by the MDPU. The current depreciable composite rate is 4.04% and has been in effect since April 1, 1993. Depreciable non-utility property consists of rental equipment, propane tanks and related equipment used in the Company's liquefied petroleum gas operations, and is depreciated at annual rates ranging from 2.5% to 20.0%. Revenues - ----------------------------------------------------------------------------- Customer meters are read or estimated on a monthly basis. After the reading or estimation is prepared, customers are billed for their gas usage and any applicable monthly rental fee. At the time of billing, revenues are recorded. Pursuant to the MDPU, the Company is allowed to recover increases in gas costs and to refund any decreases in gas costs by way of the Cost of Gas Adjustment Clause ("CGAC"). A gas adjustment charge or refund for estimated gas costs as compared with actual gas costs and any profit on the sale or transportation of interruptible volumes is included in the monthly customer billings via the CGAC. Any difference between actual and estimated gas costs plus interest is accrued or deferred and is recorded in the month the related revenue is billed. Unamortized Debt Expense - ----------------------------------------------------------------------------- The issuance costs associated with long-term debt are deferred and amortized over the life of the issue. Investment Tax Credit - ----------------------------------------------------------------------------- The unamortized balance of the investment tax credit ("ITC") relating to machinery and equipment acquisitions up through 1986 is deducted from federal income taxes and is deferred on the balance sheet, as prescribed by the MDPU, and is being amortized over the expected lives of the applicable assets. The unamortized balance of the ITC for the years ended June 30, 1995, 1994 and 1993 was $1,355, $1,430 and $1,506, respectively. The amortized portion for the years ended June 30, 1995, 1994 and 1993 was $75, $75 and $47, respectively. Utility Plant - ----------------------------------------------------------------------------- The cost of maintenance, repairs and the renewal of items determined to be less than full units of plant property are charged to maintenance expense accounts. The cost of betterments and the renewal of full units of plant property are charged to plant property accounts. Costs include materials, labor and indirect charges for engineering, general and administrative and supervisory services. The book value of plant property replaced, retired or sold is concurrently removed from such plant property accounts and charged to accumulated depreciation along with its associated removal costs, less any salvage value. A functional classification for the cost of utility plant at June 30 is as follows:
1995 1994 1993 - ----------------------------------------------------------------------------- Transmission and Distribution Plant........... $77,128 $72,000 $69,199 General Plant................. 9,549 8,995 8,664 Manufactured Gas Production Plant............. 4,455 4,464 4,458 Construction in Progress...... 731 639 695 - ----------------------------------------------------------------------------- Total.................... $91,863 $86,098 $83,016 =============================================================================
Transmission and distribution plant consists of mains; services and meters, the cost for their installation; land and rights of way; and measuring and regulating station equipment which is used to deliver and to monitor gas used by the customer. General plant consists of structures and their improvements, office furniture and equipment, including computers, and transportation equipment. The manufactured gas production plant consists of land, gas mixing equipment and liquefied petroleum gas equipment used to supplement natural gas volumes during the peak season in order to meet customer demand. ACCOUNTS RECEIVABLE - ----------------------------------------------------------------------------- Details of accounts receivable, net of allowance for doubtful accounts, as of June 30 are as follows:
1995 1994 1993 - --------------------------------------------------------------------- Utility Service.................. $6,103 $8,133 $6,406 Merchandise and Jobbing.......... 118 140 124 Liquefied Petroleum.............. 391 414 361 - --------------------------------------------------------------------- Total - Net ................ $6,612 $8,687 $6,891 =====================================================================
The allowance for doubtful accounts as of June 30, 1995, 1994 and 1993, respectively, is: Utility - $832, $727 and $600; Merchandise - $44, $21 and $20; Liquefied Petroleum - $75, $68 and $54. INVENTORIES - ----------------------------------------------------------------------------- Materials, supplies and liquefied petroleum used in the non-utility operations are valued at the lower of average cost or market value; liquefied petroleum used in the utility operations is valued at cost; natural gas is recorded at cost. The details of these inventories as of June 30 are as follows:
1995 1994 1993 - ----------------------------------------------------------------------------- Materials and Supplies.......... $1,284 $1,357 $1,413 Natural Gas..................... 1,702 2,088 1,526 Liquefied Petroleum............. 250 184 150 - ----------------------------------------------------------------------------- TOTAL - Net............... $3,236 $3,629 $3,089 =============================================================================
RECLASSIFICATION - ----------------------------------------------------------------------------- The Company has reclassified certain amounts for prior years to conform with the 1995 presentation. RETAINED EARNINGS - ----------------------------------------------------------------------------- On April 29, 1994, the Company received authorization from the MDPU to transfer $390 from Surplus Invested in Plant to Retained Earnings representing the surpluses resulting from the 1954 acquisition of Berkshire Gas Company and the 1958 acquisition of Greenfield Gas Light Company at less than net book value. This transfer had no effect on the Company's earnings. COMMON STOCK - ----------------------------------------------------------------------------- Earnings per share of Common Stock are calculated after the recognition of the dividend requirements for the Redeemable Cumulative Preferred Stock of $694 $720 and $744 for the fiscal years ended June 30, 1995, 1994 and 1993, respectively. Earnings per share of Common Stock are based on the average number of Common shares outstanding. The average number of Common Stock shares outstanding for the fiscal years ended June 30, 1995, 1994 and 1993 were 1,990,517, 1,751,830 and 1,718,522, respectively. The Company issued shares pursuant to the Share Owner Dividend Reinvestment and Stock Purchase Plan ("DRIP") of 41,586, 33,841 and 32,147 for a total of $628, $569, and $492 during 1995, 1994 and 1993, respectively. Beginning June 15, 1993, the Company initiated a plan for the purchase of Common Stock whereby all holders of 10 shares or more are eligible to purchase shares of Common Stock at a 3% discount of the average of the bid and asked prices for the five days preceding the purchase date. Participants can purchase shares by either reinvesting dividends on Common Stock already held or through optional cash payments. During fiscal 1995, the Company sold 295,000 shares of Common Stock in a public offering. During fiscal 1994, 100,000 additional shares were authorized and approved by the MDPU pursuant to the DRIP. See "Redeemable Cumulative Preferred Stock" below concerning the restrictions on the payment of cash dividends on, or purchases of, Common Stock. REDEEMABLE CUMULATIVE PREFERRED STOCK - ----------------------------------------------------------------------------- The Company has authorized two series of Cumulative Preferred Stock: the 4.8% and the 8.4%. The redemption price per share for the 4.8% Cumulative Preferred Stock (as well as the amount due on voluntary liquidation) is $100.00. The provisions of the 4.8% Cumulative Preferred Stock require the Company to offer to purchase up to 450 shares at par annually on September 15. Pursuant thereto, the Company purchased 428 shares during 1995, 351 shares during the 1994 fiscal year, and 357 shares during 1993. The Company called and retired the 4,500 remaining shares of the 9.0% Cumulative Preferred Stock in January 1994. The provisions of the 8.4% Cumulative Preferred Stock provide for an annual mandatory sinking fund of 5,334 shares at par commencing in the year 2003. The redemption price per share of the 8.4% Cumulative Preferred Stock (as well as the amount due on a voluntary liquidation basis) is $105.10 beginning May 30, 2002 and thereafter gradually reduces to $100. The Charter provisions applicable to the Cumulative Preferred Stock and the First Mortgage Indenture contain restrictions on the use of retained earnings for the payment of cash dividends on, or purchases of, Common Stock. At June 30, 1995, the Company's retained earnings were $6,718. At such date, under the most restrictive of these provisions, $2,945 of the retained earnings were unrestricted. LONG-TERM DEBT - ----------------------------------------------------------------------------- Details regarding the Company's First Mortgage Bonds, Debentures, Senior and Medium-Term Notes Payable, and sinking funds (due after one year) as of June 30 are as follows:
Portions Description Maturing Interest Annually First Mortgage Bonds: Rate Through 1995 1994 1993 - ---------------------------------------------------------------------------------- Series K 7.7850 1997 $ 520 $ 540 $ 560 M 9.3750 1998 720 800 880 O 12.7500 1995 0 0 210 P 10.0600 2019 10,000 10,000 10,000 Debenture: 9.1250 2006 5,743 5,743 5,763 Senior Note: 9.6000 2020 8,000 8,000 8,000 Medium-Term Note: 7.0625 1999 6,000 6,000 0 - ---------------------------------------------------------------------------------- TOTAL..................................... $30,983 $31,083 $25,413 ==================================================================================
All interest rates are fixed except in the case of the Medium-Term Note, which is variable based upon the LIBOR six month rate and which is convertible at the option of the Company to a fixed rate based upon the lender's cost of funds rate. The aggregate amount of sinking fund and other maturities due in each of the next five years are: 1996 - $500; 1997 - $1,000; 1998 - $480; 1999 - $6,960; and 2000 - $400. Series P, the Senior Note and the Medium-Term Note do not have sinking fund requirements. The redemption of the Debenture is voluntary by the holder, is non-cumulative and cannot exceed $400 per year. The First Mortgage Bonds are collateralized by substantially all of the utility plant. OTHER CURRENT LIABILITIES - ----------------------------------------------------------------------------- Details of other current liabilities as of June 30 are as follows:
1995 1994 1993 - ------------------------------------------------------------------ Accrued Interest.................. $ 839 $ 841 $ 881 Insured Retirement Plan........... 377 414 314 Dividends Declared................ 752 660 654 Accrued Consumer Rebates.......... 2,044 2,091 6 Other............................. 1,506 1,255 1,076 - ------------------------------------------------------------------ TOTAL....................... $5,518 $5,261 $2,931 ==================================================================
Accrued consumer rebates represent refunds received from a major supplier of natural gas to the Company. The refunds are associated with the supplier rate case before FERC, and are to be refunded to the ratepayer during the next fiscal year. SHORT-TERM LOANS AND COMPENSATING BALANCES - ----------------------------------------------------------------------------- The Company has lines of credit aggregating $25,500 with various banks, all of which remained unused as of June 30, 1995. The lines of credit are reviewed periodically with various banks and may be renewed or canceled. In connection with these lines of credit, the Company borrows primarily at less than the prime rate. In lieu of compensating balance requirements, the Company pays commitment fees on a portion of its credit lines equating to 3/8 of 1% on $11,000 with the various banks. Information as to short-term borrowings is as follows:
1995 1994 1993 - -------------------------------------------------------------------------- Balance Outstanding at June 30.......... $ 0 $ 6,580 $11,840 Maximum Amount of Borrowings at Any Month-End....................... 10,470 20,570 18,260 Average Borrowings During the Year...... 5,604 15,407 14,393 Average Interest Rate at End of Year.... 7.31% 5.04% 4.41% Weighted Average Interest Rate During the Year............................... 6.60% 4.65% 5.05%
INCOME TAXES - ----------------------------------------------------------------------------- The difference in the effective tax rate compared with the statutory tax rate is shown in the following table:
1995 1994 1993 - ------------------------------------------------------------------- Tax at Statutory Rate........... 34% 34% 34% State Taxes (Net of Federal Benefit)....................... 4.5 4.6 4.4 Investment Tax Credit........... (1.9) (1.2) (1.7) Permanent Differences........... 1.0 2.2 (1.1) - ------------------------------------------------------------------ Effective Tax Rate.............. 37.6% 39.6% 35.6% ==================================================================
A summary of the tax provision is as follows:
1995 1994 1993 - ------------------------------------------------------------------ Federal Income - Current.......... $2,169 $2,740 $ 585 Federal Income - Deferred......... (923) (751) 681 State - Current................... 512 571 130 State - Deferred.................. (233) (148) 159 - ------------------------------------------------------------------ TOTAL....................... $1,525 $2,412 $1,555 ==================================================================
The components of the net deferred income tax liability at June 30 are as follows:
1995 1994 - -------------------------------------------------------------------- Deferred Liabilities: Investment Tax Credit....................... $ 558 $ 602 Excess Tax over Book Depreciation........... 8,731 8,545 Environmental Response Costs................ 207 216 - -------------------------------------------------------------------- Total Deferred Liabilities.............. 9,496 9,363 - -------------------------------------------------------------------- Deferred Assets: Recoverable Gas Cost........................ (1,789) (354) Other....................................... (843) (726) - -------------------------------------------------------------------- Total Deferred Assets................... (2,632) (1,080) - -------------------------------------------------------------------- Total Net Deferred Income Taxes......... $6,864 $8,283 ====================================================================
CONTINGENCIES - ----------------------------------------------------------------------------- Federal, state and local laws and regulations establishing standards and requirements for the protection of the environment have increased in number and scope in recent years. The Company cannot predict the future impact of such standards and requirements, which are subject to change and can have retroactive effectiveness. During fiscal 1990, the MDPU issued a generic ruling on cost recovery for environmental cleanup with respect to former gas manufacturing sites. Under the ruling, the Company will recover annual cleanup costs, excluding carrying costs, over a seven-year period through the 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 fiscal year ended June 30, 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 one site, the investigative activities are proceeding, while at the second site, the investigative work is near completion and remedial alternatives are being examined. 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 2010 the level of expenditures for the sites will range from $2,894 to $8,777. The anticipated level of expenditures has remained the same in 1995 from 1994 and been reduced from 1993 estimates resulting from the Company's analysis and review of the sites and the commencement of clean-up activities at the first site. The Company has recorded the most likely cost of $2,894 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 June 30, 1995 were $1,046 and should be recovered using the formula discussed above. 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. 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 position or results of operations of the Company. FERC Order 636 provides for 100% recovery by pipelines of any "Transition Costs" prudently incurred as a result of industry restructuring. As these costs have been and may be approved in the future, they have been and will be passed through to the Company as demand charges associated with the transportation of gas through the pipeline. Under current rate structures, these costs are recovered through the CGAC. OTHER INCOME - ----------------------------------------------------------------------------- A condensed summary of the Company's non-utility operations before income tax (included in the "Statements of Income and Retained Earnings" under "Other Income - Net") as of June 30 is as follows:
1995 1994 1993 - ------------------------------------------------------------------------- Merchandise and Jobbing: Sales................................ $1,068 $1,438 $1,057 Cost of Sales and Expenses........... 862 1,117 910 - ------------------------------------------------------------------------- Net.............................. 206 321 147 - ------------------------------------------------------------------------- Appliance Rentals: Revenues............................. 1,380 1,314 1,218 Expenses............................. 671 580 309 - ------------------------------------------------------------------------- Net.............................. 709 734 909 - ------------------------------------------------------------------------- Liquefied Petroleum Gas: Sales................................ 4,022 3,890 3,628 Cost of Sales and Expenses........... 3,703 3,463 3,235 - ------------------------------------------------------------------------- Net.............................. 319 427 393 - ------------------------------------------------------------------------- Miscellaneous Net...................... 282 905 72 - ------------------------------------------------------------------------- TOTAL............................ $1,516 $2,387 $1,521 =========================================================================
POST-RETIREMENT BENEFITS - ----------------------------------------------------------------------------- The Company has non-contributory funded retirement income plans covering substantially all employees. The cost of the plans is actuarially determined, and it is the Company's policy to fund accrued pension costs. The net pension cost in 1995, 1994 and 1993 is summarized as follows:
1995 1994 1993 - -------------------------------------------------------------------- Service Cost...................... $ 634 $ 588 $ 600 Interest Cost..................... 1,135 1,100 1,040 Return on Plan Assets: Actual.......................... (1,009) (347) (1,907) Deferred........................ (397) (978) 789 - -------------------------------------------------------------------- Net Recognized Return....... (1,406) (1,325) (1,118) Other............................. 259 249 242 - -------------------------------------------------------------------- Net Pension Cost............ $ 622 $ 612 $ 764 ====================================================================
The funded status and accrued pension cost for the defined benefit plans at June 30 are as follows:
1995 1994 1993 - -------------------------------------------------------------------------- Fair Value of Plan Assets............ $17,267 $16,150 $15,737 Projected Benefit Obligation......... 16,647 16,545 15,715 - -------------------------------------------------------------------------- Excess (Deficiency) of Fair Value of Plan Assets Over Projected Benefit Obligation........ 620 (395) 22 Unrecognized Net Gain................ (3,315) (2,564) (3,208) Unrecognized Prior Service Cost...... 930 1,001 1,048 Unrecognized Net Obligation (at transition)..................... 1,469 1,649 1,829 - -------------------------------------------------------------------------- Accrued Pension Cost................. (296) (309) (309) Accumulated Benefit Obligation....... 13,314 13,558 12,659 Vested Benefit Obligation............ 13,293 13,182 12,282 - -------------------------------------------------------------------------- Assumed Discount Rate................ 7.00% 7.00% 7.00% Assumed Rate of Compensation Increase............................ 5.625% 5.875% 5.875% Expected Rate of Return on Plan Assets.............................. 9.25% 9.25% 8.75% - --------------------------------------------------------------------------
Approximately 98.7% of plan assets are invested in equity securities, debt securities and cash equivalents, and the balance is in other investments, principally real estate. The benefit formula is based either on the number of years of service or the employee's average base salary for the five years yielding the highest average. The Company maintains a 401(k) Post-Retirement Plan for all Company employees. The Company matches up to 3 1/2% of a participating employee's annual salary. The expense for the years ended June 30, 1995, 1994 and 1993 related to the 401(k) Plan was $223, $213 and $204, respectively. INDEPENDENT AUDITORS' REPORT - ----------------------------------------------------------------------------- DELOITTE & City Place Touche LLP 185 Asylum Street Hartford, Connecticut 06103-3402 To the Shareholders of The Berkshire Gas Company: We have audited the accompanying balance sheets of The Berkshire Gas Company as of June 30, 1995, 1994 and 1993 and the related statements of income and retained earnings, common shareholders' equity and redeemable cumulative preferred stock and of cash flows for the years then ended. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, such financial statements present fairly, in all material respects, the financial position of the Company at June 30, 1995, 1994 and 1993, and the results of its operations and its cash flows for the years then ended in conformity with generally accepted accounting principles. /s/ DELOITTE & TOUCHE LLP August 25, 1995 QUARTERLY FINANCIAL INFORMATION - ------------------------------- A comparison of unaudited quarterly financial information is presented on page 31. ANNUAL MEETING - -------------- The annual meeting of shareholders will be held at the Berkshire Hilton Inn, Pittsfield, Massachusetts, on November 14, 1995, at 10:00 A.M. SHARE OWNER DIVIDEND REINVESTMENT AND STOCK PURCHASE PLAN - ------------------- The Company has a program which allows for the reinvestment of dividends and optional cash payments to purchase additional shares of the Company's Common Stock at a 3% discount. The Plan is available to holders of 10 shares or more and provides a convenient method to acquire additional shares without fees or other charges. Shareholders who wish to take advantage of the Plan or want additional information may do so by contacting: The Berkshire Gas Company Attn: Secretary of the Share Owner Dividend Reinvestment and Stock Purchase Plan Committee 115 Cheshire Road Pittsfield, Massachusetts 01201-1388 (413) 442-1511 TRANSFER AGENT - -------------- State Street Bank and Trust Company P.O. Box 8200 Boston, Massachusetts 02266-8200 STOCK LISTING - ------------- The Common Stock of The Berkshire Gas Company is traded on the National Over-the-Counter Market and is quoted through the NASDAQ System under the symbol BGAS. FORM 10-K INFORMATION - --------------------- Upon written request to the Company at 115 Cheshire Road, Pittsfield, Massachusetts 01201-1388, a copy of the Company's current Form 10-K Annual Report, as filed with the Securities and Exchange Commission, will be provided to any shareholder without charge. This report has been prepared for the purposes of information and record only and not in connection with the sale or offer for sale of securities, or any solicitation of an offer to buy securities. QUARTERLY FINANCIAL INFORMATION - -------------------------------
For the Fiscal Year Ended June 30 (In Thousands Except Per Share Amounts) (Unaudited) 1995 First Second Third Fourth - ------------------------------------------------------------------------------------------ Operating Revenues $ 4,832 $12,086 $21,615 $9,401 Operating and Other Income (Loss) (124) 2,378 5,869 1,295 Income (Loss) Before Income Taxes (1,258) 1,036 4,180 96 Net Income (Loss) (766) 656 2,556 83 Earnings (Loss) Per Share (0.53) 0.23 1.14 (0.04) Dividends Declared Per Share 0.275 0.275 0.275 0.275 Prices of Common Shares: High 17 3/4 16 3/4 16 15 3/4 Low 16 14 1/4 14 3/4 14 1994 - ------------------------------------------------------------------------------------------ Operating Revenues $ 4,542 $12,951 $25,948 $9,588 Operating and Other Income (Loss) (239) 2,881 7,290 1,269 Income (Loss) Before Income Taxes (1,249) 1,611 5,652 72 Net Income (Loss) (752) 1,013 3,507 (95) Earnings (Loss) Per Share (0.54) 0.47 1.89 (0.15) Dividends Declared Per Share 0.27 0.27 0.27 0.275 Prices of Common Shares: High 19 19 18 1/4 17 1/4 Low 17 1/4 17 16 1/2 15 1/2 1993 - ----------------------------------------------------------------------------------------- Operating Revenues $ 5,092 $12,192 $21,037 $8,811 Operating and Other Income (Loss) (431) 2,440 6,184 1,206 Income (Loss) Before Income Taxes (1,471) 1,265 4,593 (22) Net Income (Loss) (879) 810 2,863 16 Earnings (Loss) Per Share (0.62) 0.36 1.55 (0.10) Dividends Declared Per Share 0.27 0.27 0.27 0.27 Prices of Common Shares: High 15 1/4 15 3/4 17 1/2 18 1/4 Low 14 14 1/4 14 16 1/2
The Common Stock of The Berkshire Gas Company is traded on the National Over-the-Counter Market and is quoted through the NASDAQ System (BGAS). Primarily because of the relatively small number of shareholders and the infrequency of trading, the average bid and asked prices noted above do not necessarily reflect actual transactions. Earnings per Common Share have been computed based on average Common Shares outstanding in each period after recognition of Preferred Stock dividends. It is currently the policy of the Board of Directors to declare cash dividends payable in July, October, January and April. The dividend rate is reassessed regularly in light of existing conditions, the needs of the Company and the interests of shareholders. The sum of the quarterly earnings (loss) per share amounts many not equal the annual income per share due to the issuance of Common Stock. The Berkshire Gas Company - ----------------------------------------------------------------------------- Officers - ----------------------------------------------------------------------------- Scott S. Robinson Michael J. Marrone President and Chief Executive Officer Vice President, Treasurer and Chief Financial Officer Les H. Hotman Cheryl M. Clark Vice President, Supply, Rates and Planning Clerk of the Corporation Directors - ----------------------------------------------------------------------------- George R. Baldwin** Franklin M. Hundley Area Chairman Managing Director, Arthur J. Gallagher & Co., Rich, May, Bilodeau & a national insurance brokerage firm Flaherty, P.C., a law firm John W. Bond* ** Joseph T. Kelley* President, Chairman of the Board Kimbell Securities Corp., a securities The Berkshire Gas Company broker/dealer; Real estate management Paul L. Gioia** Scott S. Robinson* Partner, President and Chief Executive LeBoeuf, Lamb, Greene & MacRae, Officer a law firm The Berkshire Gas Company William S. Goedecke** Robert B. Trask** First Vice President, Retired President and Chief Operating Smith Barney Harris Upham & Co., Inc., Officer, An investment banking and stock brokerage Country Curtains, Inc., firm a mail-order/retail firm * Executive Committee ** Audit Committee EX-27 3 EXHIBIT 27(A)--FDS ARTICLE UT
UT 12-MOS JUN-30-1995 JUN-30-1995 PER-BOOK 69,326 5,962 10,752 3,049 2,894 91,983 5,259 15,711 6,718 27,688 0 8,448 30,983 0 0 0 900 0 0 0 23,964 91,983 47,934 1,525 11,589 15,213 7,902 1,516 9,418 3,667 2,529 694 1,835 2,215 0 427 .92 0
-----END PRIVACY-ENHANCED MESSAGE-----