-----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, KcC3wLoqQRHBRYJsYdKgJInLqX8pUhhHddH03qCY2HE7t4p+oxNvp0Cw3/nIWgIa xxxWpfch8TIVphcGDgpuiQ== 0000910647-95-000066.txt : 19951109 0000910647-95-000066.hdr.sgml : 19951109 ACCESSION NUMBER: 0000910647-95-000066 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19950930 FILED AS OF DATE: 19951108 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-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-01857 FILM NUMBER: 95588073 BUSINESS ADDRESS: STREET 1: 115 CHESHIRE RD CITY: PITTSFIELD STATE: MA ZIP: 01201-1388 BUSINESS PHONE: 4134421511 10-Q 1 FORM 10-Q SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q Quarterly Report Under Section 13 or 15(d) of the Securities Exchange Act of 1934 For the Quarter Ended September 30, 1995 Commission File No. 0-1857-3 THE BERKSHIRE GAS COMPANY Massachusetts 04-1731220 115 Cheshire Road, Pittsfield, Massachusetts 01201-1388 Registrant's telephone number, including Area Code 413:442-1511 Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filling requirements for the past 90 days. Yes X No At September 30, 1995, the Registrant had issued and outstanding 2,115,235 shares of Common Stock, par value $2.50. THE BERKSHIRE GAS COMPANY STATEMENTS OF INCOME AND RETAINED EARNINGS - Unaudited (In Thousands Except Share Amounts)
Three Months Three Months Ended 9/30/95 Ended 9/30/94 Operating Revenues $4,153 $4,832 Cost of Gas Sold 1,719 2,382 ------ ------ Operating Margin 2,434 2,450 ------ ------ Other Operating Expenses 2,282 2,612 Depreciation 335 310 ------ ------ Total 2,617 2,922 ------ ------ Utility Operating Loss (183) (472) Other Income - Net 316 348 ------ ------ Operating Loss and Other Income 133 (124) Interest Expense 867 922 Other Taxes 191 212 ------ ------ Pre-Tax Loss (925) (1,258) Income Tax Benefit (351) (492) ------ ------ NET LOSS (574) (766) Retained Earnings at Beginning of Period 6,718 7,098 ------ ------ Total 6,144 6,332 ------ ------ Dividends Declared: Preferred Stock 173 174 Common Stock 582 488 ------ ------ Total Dividends 755 662 ------ ------ Retained Earnings at End of Period $5,389 $5,670 ====== ====== Loss Attributable to Common Stock ($ 747) ($ 940) ====== ====== Average Shares of Common Stock Outstanding 2,113,714 1,774,944 --------- --------- Loss Per Share of Common Stock ($0.35) ($0.53) ====== ======
See Independent Accountants' Review Report and Notes to Financial Statements. THE BERKSHIRE GAS COMPANY STATEMENTS OF INCOME AND RETAINED EARNINGS - Unaudited (In Thousands Except Share Amounts)
Twelve Months Twelve Months Ended 9/30/95 Ended 9/30/94 Operating Revenues $47,256 $53,320 Cost of Gas Sold 24,158 28,048 ------- ------- Operating Margin 23,098 25,272 ------- ------- Other Operating Expenses 11,259 13,006 Depreciation 3,649 3,404 ------- ------- Total 14,908 16,410 ------- ------- Utility Operating Income 8,190 8,862 Other Income - Net 1,484 2,454 ------- ------- Operating and Other Income 9,674 11,316 Interest Expense 3,613 3,598 Other Taxes 1,676 1,641 ------- ------- Pre-Tax Income 4,385 6,077 Income Taxes 1,665 2,418 ------- ------- NET INCOME 2,720 3,659 Retained Earnings at Beginning of Period 5,670 4,250 Adjustment to Retained Earnings 0 390 ------- ------- Total 8,390 8,299 ------- ------- Dividends Declared: Preferred Stock 693 708 Common Stock 2,308 1,921 ------- ------- Total Dividends 3,001 2,629 ------- ------- Retained Earnings at End of Period $ 5,389 $ 5,670 ======= ======= Earnings Available for Common Stock $ 2,027 $ 2,951 ------- ------- Average Shares of Common Stock Outstanding 2,069,398 1,760,354 --------- --------- Earnings Per Share of Common Stock $0.98 $1.68 ===== =====
See Independent Accountants' Review Report and Notes to Financial Statements. THE BERKSHIRE GAS COMPANY BALANCE SHEETS (In Thousands)
September 30, June 30, 1995 1995 (Unaudited) (Audited) ASSETS: Utility Plant: Utility Plant - at original cost $92,983 $91,863 Less: Accumulated Depreciation 22,685 22,537 ------- ------- Utility Plant - Net 70,298 69,326 ------- ------- Other Property: Other Property - at original cost 10,891 10,766 Less: Accumulated Depreciation 4,938 4,804 ------- ------- Other Property - Net 5,953 5,962 ------- ------- Current Assets: Cash and Cash Equivalents 109 492 Accounts Receivable Utility Service (less allowance: 4,149 6,103 Sept. 1995-$901; June 1995-$832) Merchandise & Other (less allowance: 421 509 Sept. 1995-$133; June 1995-$119) Other Receivables 204 234 Inventories (at the lower of average cost or market): Natural Gas 2,624 1,702 Liquefied Petroleum 226 250 Materials and Supplies 1,373 1,284 Prepayments 410 178 ------- ------- Total Current Assets 9,516 10,752 ------- ------- Deferred Debits: Unamortized Debt Expense 567 578 Capital Stock Expense 600 638 Environmental Cleanup Costs 1,088 1,046 Other 1,006 787 ------- ------- Total Deferred Debits 3,261 3,049 ------- ------- Recoverable Environmental Cleanup 2,894 2,894 ------- ------- Costs TOTAL ASSETS $91,922 $91,983 ======= =======
See Independent Accountants' Review Report and Notes to Financial Statements. THE BERKSHIRE GAS COMPANY BALANCE SHEETS (In Thousands)
September 30, June 30, 1995 1995 (Unaudited) (Audited) LIABILITIES AND OTHER CREDITS Common Shareholders' Equity: Common Stock $ 5,288 $ 5,259 Premium on Common Stock 15,851 15,711 Retained Earnings 5,389 6,718 ------- ------- Total Common Shareholders' Equity 26,528 27,688 ------- ------- Redeemable Cumulative Preferred Stock 8,406 8,448 ------- ------- Long-Term Debt (less current maturities) 30,983 30,983 ------- ------- Current Liabilities: Notes Payable to Banks 3,920 0 Current Maturities of Long-Term Debt 900 900 Accounts Payable 2,684 3,091 Taxes Accrued (862) 125 Other Current Liabilities 5,317 5,518 Refundable Gas Costs 2,445 4,117 ------- ------- Total Current Liabilities 14,404 13,751 ------- ------- Unamortized Investment Tax Credit 1,336 1,355 ------- ------- Deferred Income Taxes 7,371 6,864 ------- ------- Reserve for Recoverable Environmental Cleanup Costs 2,894 2,894 ------- ------- TOTAL LIABILITIES AND OTHER CREDITS $91,922 $91,983 ======= =======
See Independent Accountants' Review Report and Notes to Financial Statements. THE BERKSHIRE GAS COMPANY STATEMENT OF CASH FLOWS - Unaudited (In Thousands)
Three Months Three Months Ended 9/30/95 Ended 9/30/94 Cash flows from Operating Activities: Net Loss ($ 574) ($ 766) Adjustments to Reconcile Net Loss to Net Cash Used in Operating Activities: Depreciation and Amortization 568 515 Provision for Losses on Accounts Receivable 80 65 Refundable Gas Costs (1,672) (1,812) Deferred Income Taxes 507 656 Changes in Assets and Liabilities Which Provided (Used) Cash: Accounts Receivable 1,962 2,949 Other Receivables 30 96 Inventories (987) (952) Accounts Payable (407) (425) Taxes Accrued (987) (1,470) Other (695) (813) ------ ------ Total Adjustments (1,601) (1,191) ------ ------ Net Cash Used in Operating Activities (2,175) (1,957) ------ ------ Cash Flows from Investing Activities: Construction Expenditures (1,500) (1,384) ------ ------ Net Cash Used in Investing Activities (1,500) (1,384) ------ ------ Cash Flows from Financing Activities: Dividends Paid (755) (662) Proceeds from Note Payable Borrowings 3,920 3,890 Proceeds from Other Stock Transactions - Net 127 106 ------ ------ Net Cash Provided by Financing Activities 3,292 3,334 ------ ------ Net Decrease in Cash (383) (7) Cash and Cash Equivalents at Beginning of Period 492 65 ------ ------ Cash and Cash Equivalents at End of Period $ 109 $ 58 ====== ======
See Independent Accountants' Review Report and Notes to Financial Statements. The Berkshire Gas Company Notes to Financial Statements September 30, 1995 (Dollars in Thousands Except Share Amounts) NOTES: OTHER FINANCIAL INFORMATION: The accompanying unaudited financial statements have been prepared in accordance with the instructions to Form 10-Q and do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. All adjustments, which in the opinion of management are necessary to a fair presentation of the operations for the interim periods presented, have been made. These adjustments are of a normal recurring nature. The results of operations for such interim periods are not necessarily indicative of results of operations for a full year. These financial statements should be read in conjunction with the summary of accounting policies and notes to financial statements included in the Company's Annual Report on Form 10-K for the year ended June 30, 1995. CONTINGENCIES: ENVIRONMENTAL: Federal, State and local laws and regulations establishing standards and requirements for protection of the environment have increased in number and scope in recent years. The Berkshire Gas Company (the "Company") cannot predict the future impact of such standards and requirements, which are subject to change and can have retroactive effect. During fiscal 1990, the Massachusetts Department of Public Utilities ("MDPU") issued a generic ruling on cost recovery for environmental cleanup with respect to former gas manufacturing sites. Under the ruling, the Company may recover annual cleanup costs, excluding carrying costs, over a seven year period through the Cost of Gas Adjustment Clause ("CGAC"). This ruling also provides for the sharing of any proceeds received from insurance carriers equally between the Company and its ratepayers, and establishes maximum amounts that can be recovered from customers in any one year. During the period ended September 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 substances associated with by-products of the gas manufacturing process. The review and assessment process began in 1985 with respect to the first site which is owned by the Company, and in 1989 with respect to the second site, which was formerly owned by the Company. With the review and approval of the Massachusetts Department of Environmental Protection ("MDEP"), at the first site, the investigative work is near completion and remedial alternatives are being examined. At the second site, investigative activities are continuing. 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 site will range from $2,894 to $8,777. The anticipated level of expenditures has remained the same from prior year 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 September 30, 1995 were $1,088 and should be recovered using the formula discussed above. TRANSPORTATION PIPELINE: Claims against the Company have been asserted by a general contractor and certain subcontractors involved in the construction of a transportation pipeline for which the Company served as developer. Although the Company cannot predict the ultimate outcome of the claims, which the Company believes are without merit, it intends to contest the claims vigorously and believes that the outcome will not have a material adverse impact on the overall financial condition or results of operations of the Company. Management's Discussion and Analysis of Financial Condition and Results of Operations Results of Operations - First Quarter Ended September 30, 1995 versus First Quarter Ended September 30, 1994 Since income is not significantly affected by changes in revenue due to changes in gas costs, the discussion below pertains to Operating Margin(Operating Margin or Gross Profit = Operating Revenues Net of Cost of Gas Sold). Berkshire Gas Company considers Operating Margin to be a more pertinent measure of operating results than Operating Revenues. Operating Margin decreased $16,000 or .6% from the three months ended September 30, 1994. Operating Margin is primarily affected by the change in the level of firm gas sold and transported. Interruptible gas sold and transported has no affect on Operating Margin since those margins are flowed back to the firm customer. The decrease from 1994 is primarily due to slightly lower firm transportation volumes sold to industrial customers.
1995 1994 3 Month Firm MCF Sold & Transported 700,769 751,868 3 Month Operating Margin 2,434,000 2,450,000 3 Month Average Operating Margin Per Firm MCF $3.47 $3.26
Other Operating Expenses decreased $330,000 or 12.6% from the three months ended September 30, 1994. The decrease is due primarily to a reduction in Administrative and General costs of $79,000 due to cost containment measures, lower Transmission and Distribution costs of $165,000 or 18.9% due to decreased payroll and increased operating efficiencies, and lower ECS ("Energy Conservation Service") expenses. The Income Tax benefit was reduced by $141,000 due to reduction in Net Loss in 1995. Dividends Declared on Common Stock increased $94,000 due to additional shares outstanding from the sale of 295,000 shares during the second quarter of fiscal 1995, and to a lesser extent, additional shares from the Dividend Reinvestment Plan ("DRIP"). Results of Operations - Twelve Months Ended September 30, 1995 versus Twelve Months Ended September 30, 1994 Earnings available for Common Stock were $2,027,000 for the twelve months ended September 30, 1995 as compared to $2,951,000 for 1994. The decrease is due primarily to significantly warmer weather during the heating season, furthermore, 1994 results included proceeds from an insurance settlement which increased earnings $403,000. Operating Margin decreased $2,174,000 or 8.6% from the twelve months ended September 30, 1994. Operating Margin is primarily affected by the change in the level of firm gas sold and transported. 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 8.4% warmer than normal temperatures for the winter period, partially offset by higher volumes of firm transportation to industrial customers.
1995 1994 12 Month Firm MCF Sold & Transported 5,896,992 6,405,724 12 Month Operating Margin $23,098,000 $25,272,000 12 Month Average Operating Margin Per Firm MCF $3.92 $3.95
Other Operating Expenses decreased $1,747,000 or 13.4% from the twelve months ended September 30, 1994. The decrease reflects lower Customer Accounts expense of $485,000 due to lower levels of uncollectible accounts; decreased Administrative and General costs of $756,000 due to lower insurance, regulatory costs, and employee welfare expense; lower Transmission and Distribution due to reduced payroll and lower system maintenance costs; and lower professional fees associated with restructuring supply contracts brought about by the Federal Energy Regulatory Commission ("FERC") Order 636. Depreciation expense increased $245,000 due to an increase in the amount of depreciable assets. Other Income decreased $970,000 from 1994. The decrease was primarily due to an insurance settlement that was included in 1994 income in the amount of $403,000 (net of taxes and amounts previously recorded). Propane revenue was $113,000 less due to significantly warmer weather during the heating season. Interest income was $172,000 less resulting from the overcollection of prior period gas costs through the CGAC. Income Taxes decreased $753,000 from 1994 due to lower earnings. Dividends Declared on Common Stock increased $387,000 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. Liquidity and Capital Resources - September 30, 1995 The Company added approximately $1,500,000 to Plant assets during the three months ended September 30, 1995. These construction expenditures primarily represent investments in new and replacement mains and services. The capital structure of the Company at September 30,1995 was 40.2% Common Equity, 12.8% Preferred Stock and 47.0% Long-Term Debt. 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. Funds for environmental clean-up costs are initially financed through short-term borrowings and all such costs will be recovered over a seven year period under a ruling issued by the MDPU. PART II - OTHER INFORMATION Item 1. Legal Proceedings No developments during the quarter. Item 2. Changes in Securities Not Applicable Item 3. Defaults Upon Senior Securities Not Applicable Item 4. Submission of Matters to a Vote of Security Holders Not Applicable Item 5. Other Information Not Applicable Item 6. Exhibits and Reports on Form 8 - K (a) List of Exhibits 27 - Financial Data Schedule The balance sheet as of September 30, 1995, the related statements of income and retained earnings for the three month periods ended September 30, 1995 and 1994, and the statements of cash flows for the three month period ended September 30, 1995 and 1994 have been reviewed, prior to filing, by the Registrants independent public accountants, Deloitte & Touche LLP, whose report covering their review of the financial statements is presented below. Deloitte & Touche LLP City Place Telephone:(203) 280-3000 185 Asylum Street Facsimile:(203) 280-3051 Hartford, Connecticut 06103-3402 INDEPENDENT ACCOUNTANTS' REPORT The Berkshire Gas Company: We have reviewed the accompanying balance sheet of The Berkshire Gas Company as of September 30, 1995, the related statements of income and retained earnings for the three month periods ended September 30, 1995 and 1994, and the statements of cash flows for the three month periods ended September 30, 1995 and 1994. These financial statements are the responsibility of the Company's management. We conducted our review in accordance with standards established by the American Institute of Certified Public Accountants. A review of interim financial information consists principally of applying analytical procedures to financial data and making inquiries of persons responsible for financial and accounting matters. It is substantially less in scope than an audit conducted in accordance with generally accepted auditing standards, the objective of which is the expression of an opinion regarding the financial statements as a whole. Accordingly, we do not express such an opinion. Based on our review, we are not aware of any material modifications that should be made to such financial statements for them to be in conformity with generally accepted accounting principles. We have previously audited, in accordance with generally accepted auditing standards, the balance sheet of The Berkshire Gas Company as of June 30, 1995, and the related statements of income and retained earnings and of cash flows for the year then ended (not presented herein); and in our report dated August 25, 1995, we expressed an unqualified opinion on those financial statements. In our opinion, the information set forth in the accompanying balance sheet as of June 30, 1995 is fairly stated, in all material respects, in relation to the balance sheet from which it has been derived. /s/ Deloitte & Touche LLP November 8, 1995 SIGNATURES Pursuant to the requirements of the Securities and Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. THE BERKSHIRE GAS COMPANY Registrant /s/ Michael J. Marrone Vice President, Treasurer & Chief Financial Officer Dated: November 8, 1995 EX-27 2 FINANCIAL DATA SCHEDULE FOR 3 MONTHS
UT 3-MOS JUN-30-1995 SEP-30-1995 PER-BOOK 70,298 5,953 9,516 3,261 2,894 91,922 5,288 15,851 5,389 26,528 0 8,406 30,983 3,920 0 0 900 0 0 0 21,185 91,922 4,153 (351) 2,282 2,617 (183) 316 133 867 (574) 173 (747) 582 0 (383) (.35) 0
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