-----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, FhddqJ6j148qM4Gi1v9PQG62CBlbjh0c1nrxrUN670UH2T5/yjbE3ryWjUrt8jWS pulGd5B/Dj9AcCkx7wlRZA== 0000046189-98-000012.txt : 19980415 0000046189-98-000012.hdr.sgml : 19980415 ACCESSION NUMBER: 0000046189-98-000012 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19980228 FILED AS OF DATE: 19980414 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: ESSEX COUNTY GAS COMPANY CENTRAL INDEX KEY: 0000046189 STANDARD INDUSTRIAL CLASSIFICATION: NATURAL GAS DISTRIBUTION [4924] IRS NUMBER: 041427020 STATE OF INCORPORATION: MA FISCAL YEAR END: 0831 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 000-01166 FILM NUMBER: 98592760 BUSINESS ADDRESS: STREET 1: 7 N HUNT RD CITY: AMESBURY STATE: MA ZIP: 01913 BUSINESS PHONE: 5083884000 MAIL ADDRESS: STREET 1: 7 NORTH HUNT ROAD CITY: AMESBURY STATE: MA ZIP: 01913 FORMER COMPANY: FORMER CONFORMED NAME: HAVERHILL GAS CO DATE OF NAME CHANGE: 19830420 10-Q 1 1 SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q (Mark One) X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended February 28, 1998 OR TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from ________ to __________ Commission File Number 0-1166 ESSEX COUNTY GAS COMPANY (Exact name of registrant as specified in its charter) Massachusetts 04-1427020 (State or other jurisdiction (I.R.S.Identification #) Employer incorporation or organization) 7 North Hunt Road, Amesbury,Massachusetts 01913 (Address of principal executive offices)(Zip Code) (978) 388-4000 (Registrant's telephone number, including area code) (Former name, former address and former fiscal year, if changed since last report) Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Sections 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 APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS DURING THE PRECEDING FIVE YEARS: Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Section 12, 13 and 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by court. Yes No APPLICABLE ONLY TO CORPORATE ISSUERS: Number of shares of Common Stock outstanding as of February 28, 1998: 1,720,919 2 PART I - FINANCIAL INFORMATION Item 1 FINANCIAL STATEMENTS The accompanying unaudited consolidated financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions to Form 10-Q and Rule 10-01 of Regulation S-X. They do not include information and footnotes required by generally accepted accounting principles for complete financial statements. For further information, refer to the notes to consolidated financial statements included in the registrant's Annual Report on Form 10-K for the year ended August 31, 1997 (1997 10-K). In the opinion of Management, all adjustments, consisting of normally recurring adjustments considered necessary for a fair presentation, have been included. Because of the seasonal nature of the registrant's business, operating results for the six months ended February 28, 1998, are not necessarily indicative of the results that may be expected for the year ending August 31, 1998. 3 ESSEX COUNTY GAS COMPANY CONSOLIDATED BALANCE SHEETS February 28, 1998 August (Unaudited) 31, 1997 ----------- -------- ASSETS Utility plant $107,496,583 $104,540,111 Less: accumulated depreciation 27,061,350 25,021,795 ------------ ------------ Net utility plant 80,435,233 79,518,316 ------------ ------------ Other property and investments 775,592 718,838 ------------ ------------ Capitalized lease 578,443 604,822 ------------ ------------ Current assets: Cash and cash equivalents 1,946,279 434,930 Accounts receivable, net Customers 6,847,586 2,275,005 Other 221,502 389,526 Recoverable gas costs - 320,909 Supplemental fuel inventory 2,749,337 4,131,520 Material and supplies 555,076 560,493 Prepaid deferred income taxes 252,625 100,105 Prepayments and other 113,768 622,024 ------------ ------------ Total current assets 12,686,173 8,834,512 ------------ ------------ Deferred charges: Regulatory assets 1,437,717 1,790,966 Unamortized debt expense and other 2,098,831 1,278,367 ------------ ------------ Total deferred charges 3,536,548 3,069,333 ------------ ------------ $ 98,011,989 $ 92,745,821 ============= ============ See Notes to Consolidated Financial Statements 4 ESSEX COUNTY GAS COMPANY CONSOLIDATED BALANCE SHEETS (Continued) February 28, 1998 August (Unaudited) 31, 1997 ----------- -------- CAPITALIZATION AND LIABILITIES Common stock equity: Common stock, no par (5,000,000 authorized shares, issued and outstanding 1,720,919 shares at February 28, 1998 and 1,685,318 shares at August 31, 1997) $21,423,671 $20,320,890 Unrecognized gain (loss) on investments available for sale, net 6,759 (6,253) Retained earnings 17,113,249 15,094,008 ----------- ------------ 38,543,679 35,408,645 ----------- ------------ Long-term debt less current portion 28,199,000 28,799,000 ----------- ------------ Non-current obligations under capital lease 522,264 550,939 ----------- ------------ Current liabilities: Current portion of long-term debt 821,779 960,535 Current obligation under capital lease 56,179 53,883 Obligations under supplemental fuel inventory 3,661,135 3,807,788 Notes payable, banks 5,415,000 3,313,000 Accounts payable 2,965,746 3,092,859 Accrued interest 809,598 803,237 Taxes payable 2,066,582 157,098 Refundable gas costs 543,352 - Transition obligations 152,496 401,465 Supplier refund due customers 722,855 1,567,364 Other 166,589 320,308 ----------- ------------ Total current liabilities 17,381,311 14,477,537 ----------- ------------ Deferred credits: Accumulated deferred income taxes 8,742,195 8,941,079 Unamortized investment tax credit 1,106,248 1,141,132 Deferred directors' fees 887,679 1,106,358 Other 2,629,613 2,321,131 ----------- ------------ Total deferred credits 13,365,735 13,509,700 ----------- ------------ $98,011,989 $92,745,821 =========== ============ See Notes to Consolidated Financial Statements 5 ESSEX COUNTY GAS COMPANY CONSOLIDATED STATEMENTS OF OPERATIONS THREE MONTHS ENDED ---------------------------- February February 28, 1998 28, 1997 (Unaudited) (Unaudited) ------------ ------------ Operating revenues $23,027,508 $23,220,840 Less: Cost of gas 11,332,610 11,671,220 ------------ ------------ Operating margin 11,694,898 11,549,620 ------------ ------------ Operating expenses: Operations and maintenance expenses 3,329,602 3,551,161 Depreciation 1,814,684 1,648,682 Taxes, other than federal income 1,033,363 979,992 Federal income taxes 1,615,679 1,555,558 ------------ ------------ Total operating expenses 7,793,328 7,735,393 ------------ ------------ Operating income 3,901,570 3,814,227 Other income - net 136,728 144,826 ------------ ------------ Income before interest charges 4,038,298 3,959,053 ------------ ------------ Interest charges: Interest on long-term debt 625,597 574,361 Amortization of debt expense 8,147 6,901 Other interest expense 164,681 252,812 Allowance for funds used during construction (6,583) (6,459) ------------ ------------ Total interest charges 791,842 827,615 ------------ ------------ Income available for common stock $ 3,246,456 $3,131,438 ============ ============ Common shares outstanding (weighted average) 1,703,532 1,659,033 ------------ ------------ Basic earnings per common share $ 1.91 $ 1.89 ------- ------- Diluted earnings per common share $ 1.85 $ 1.84 ------- ------- Dividends per common share $ .42 $ .41 ------- ------- See Notes to Consolidated Financial Statements 6 ESSEX COUNTY GAS COMPANY CONSOLIDATED STATEMENTS OF OPERATIONS SIX MONTHS ENDED ---------------------------- February February 28, 1998 28, 1997 (Unaudited) (Unaudited) ------------ ------------ Operating revenues $32,062,323 $31,363,341 Less: Cost of gas 15,525,141 15,801,323 ------------ ------------ Operating margin 16,537,182 15,562,018 ------------ ------------ Operating expenses: Operations and maintenance expenses 6,363,846 6,555,537 Depreciation 2,361,369 2,146,442 Taxes, other than federal income 1,307,126 1,208,539 Federal income taxes 1,662,359 1,366,116 ------------ ------------ Total operating expenses 11,694,700 11,276,634 ------------ ------------ Operating income 4,842,482 4,285,384 Other expense- net 149,856 123,753 ------------ ------------ Income before interest charges 4,992,338 4,409,137 ------------ ------------ Interest charges: Interest on long-term debt 1,263,977 1,051,528 Amortization of debt expense 16,207 13,831 Other interest expense 301,009 484,195 Allowance for funds used during construction (11,842) (11,186) ------------ ------------ Total interest charges 1,569,351 1,538,368 ------------ ------------ Income available for common stock $ 3,422,987 $ 2,870,769 ============ ============ Common shares outstanding (weighted average) 1,696,863 1,653,293 ------------ ------------ Basic earnings per common share $ 2.02 $ 1.74 ------- ------- Diluted earnings per common share $ 1.96 $ 1.70 ------- ------- Dividends per common share $ .83 $ 0.81 ------- ------- See Notes to Consolidated Financial Statements 7 ESSEX COUNTY GAS COMPANY CONSOLIDATED STATEMENTS OF CASH FLOWS SIX MONTHS ENDED --------------------------- February February 28, 1998 28, 1997 (Unaudited) (Unaudited) ------------ ------------ Operating activities: Net income $3,422,987 $2,870,769 ------------ ------------ Adjustments to reconcile net income to net cash: Depreciation and amortization 2,621,150 2,247,481 Provision for uncollectible accounts 565,797 794,582 Deferred income taxes (357,682) 1,099,395 Non-cash compensation related to ESOP - 75,000 Changes in current assets and liabilities: Accounts receivable (4,970,354) (7,537,953) Inventories including fuel 1,387,600 1,220,215 Prepaid expenses and other current assets 508,256 594,477 Refundable gas costs 864,261 (1,456,897) Accounts payable (127,113) (696,593) Taxes payable 1,909,484 983,219 Supplier refund due customers (844,509) (275,644) Other, net (827,410) 326,687 ------------ ------------ Total 729,480 (2,626,031) ------------ ------------ Net cash provided by operating activities 4,152,467 244,738 ------------ ------------ Investing activities: Capital expenditures (3,478,595) (3,778,338) Cost of property retirements, net of salvage (59,513) 31,542 ------------ ------------ Net cash used in investing activities (3,538,108) (3,746,796) ------------ ------------ Financing activities: Dividends paid (1,403,746) (1,335,174) Net proceeds from issuance of common stock 1,084,145 596,370 Proceeds from issuance of long-term debt - 10,000,000 Principal retired on long-term debt (738,756) (727,799) Decrease in fuel obligation (146,653) (48,967) Principal payment on ESOP obligation - (75,000) Net borrowings (repayment) of short-term debt 2,102,000 (4,428,000) ----------- ------------ Net cash provided by financing activities 896,990 3,981,430 ----------- ------------ Net increase in cash 1,511,349 479,372 Cash at beginning of period 434,930 303,526 ----------- ------------ Cash at end of period $1,946,279 $ 782,898 =========== ============ Supplemental disclosures: Cash paid for interest (net of amount capitalized) $ 785,481 $1,615,223 Cash paid for income taxes $ 340,000 - See Notes to Consolidated Financial Statements 8 Notes to Consolidated Financial Statements A. Interim Accounting Policies The amount of natural gas sold for purposes of central and space heating, and to a lesser extent, water heating, is directly related to the ambient air temperature. Consequently, less gas is sold during the summer months than is sold during the winter months. In order to match its costs more properly with gas sales revenue each month, the Company charges to certain expenses, primarily depreciation, an amount equal to the percentage of the annual volume of firm gas sales forecasted for the month, applied to the estimated annual expenses. B. Accounts Receivable Accounts Receivable - Customers are shown net of allowance for uncollectible accounts of $1,351,758 and $772,000 as of February 28, 1998 and August 31, 1997, respectively. C. Restriction on Retained Earnings Under the terms of the Indenture of First Mortgage Bonds dated October 1, 1955, as updated by Supplemental Indentures numbered One through Fifteen, retained earnings in the amount of $7,279,482 as of February 28, 1998, were unrestricted as to the payment of cash dividends on Common Stock and the purchase, redemption, or retirement of shares of capital stock. D. Commitments and Contingencies For information regarding commitments and contingencies, see Notes to Consolidated Financial Statements in the Company's 1997 Annual Report on Form 10-K. E. Merger Agreement The Company has agreed, subject to the terms and conditions of the Agreement and Plan of Merger dated as of December 19, 1997 (the "Merger Agreement") with Eastern Enterprises ("Eastern"), to merge with a wholly-owned subsidiary of Eastern. Upon consummation of the proposed merger, the Company would become a wholly-owned subsidiary of Eastern, and each share of the Company's common stock would be converted into the right to receive a number of shares of Eastern common stock equal to the exchange ratio provided for in the Merger Agreement. The proposed merger is subject to a vote of the Company's stockholders, regulatory approvals, required consents and other conditions. 9 Item 2 Management's Discussion and Analysis of Financial Condition and Results of Operations Results of Operations For the Three Months Ended February 28, 1998 and February 28, 1997 The Company's gas sales are divided into two categories: firm, whereby the Company must supply gas to the customers on demand; and interruptible, whereby the Company may, generally during colder months, discontinue service to high volume industrial customers. Sales of gas to interruptible customers do not materially affect the Company's operating income because, unless interruptible volumes exceed a certain threshold specified by the Massachusetts Departpment of Telecommunications and Energy ("MDTE"), the Company must return all gross profit on such sales directly to the Company's firm customers. Once the threshold is attained, the Company may retain 25% of gross profits. The threshold was not attained in the period ended February 28, 1998. The Company's sales are responsive to colder weather as the majority of its firm customers use natural gas for space heating purposes. The Company measures weather through the use of effective degree days ("EDD"). An effective degree day is calculated by subtracting the average temperature for the day, adjusted for wind and cloud cover, from 65 degrees Fahrenheit. The Company's service territory experienced 3,140 EDD during the three months ended February 28, 1998 as compared to 3,215 EDD for the three months ended February 28, 1997. The Company's twenty year average for the three months ended February 28, 1998 is 3,437 EDD. Despite the warmer weather, the volume of firm sales increased 1.0% to 2,502,158 dekatherms ("Dth") for the three months ended February 28, 1998 from 2,491,596 for the three months ended February 28, 1997. However, the Company's total operating revenues decreased 1.0% to $23,027,508 for the three months ended February 28, 1998 from $23,220,840 for the three months ended February 28, 1997. This decrease was primarily due to lower gas costs. The average unit price per Dth of firm gas sold was $9.13 for the three months ended February 28, 1998 compared to $9.24 for the three months ended February 28, 1997. The cost of gas decreased 2.9% to $11,332,610 for the three months ended February 28, 1998 from $11,671,220 for the three months ended February 28, 1997. The decrease in gas costs is attributable to a 3.6% decrease in the Company's average cost of gas to $4.51 per firm Dth for the three months ended February 28, 1998 from $4.68 per firm Dth for the three months ended February 28, 1997. The decrease in unit cost is due to lower prices charged by suppliers. Operations and maintenance expenses totaled $3,329,602 for the three months ended February 28, 1998 compared to $3,551,161 for the three months ended February 28, 1997. The change was due primarily to a decrease in allowance for uncollectible accounts. Depreciation expense increased $166,002 (10.1%) for the three months ended February 28, 1998 compared to the three months ended February 28, 1997. This increase was primarily due to an increase in the depreciation rate approved by the MDTE from 3.03% to 3.70%. Interest charges for the three months ended February 28, 1998 decreased by $35,773 (4.3%) compared to the three months ended February 28, 1997. The decrease was primarily attributable to lower outstanding balances on long and short-term debt. Income available for common stock increased $115,018 to $3,246,456 for the three months ended February 28, 1998 from $3,131,438 for the three months ended February 28, 1997. Income per common share increased $.02 to $1.91 for the three months ended February 28, 1998 from $1.89 per share for the three months ended February 28, 1997. Dividends per common share were $.42 per share for the three months ended February 28, 1998 compared to $.41 per share for the three months ended February 28, 1997. In March 1998, the Company declared a dividend of $.42 per share which was paid to shareholders on April 1, 1998. 10 For the Six Months Ended February 28, 1998 and February 28, 1997 Total operating revenues for the six months ended February 28, 1998 increased 2.2% to $32,062,323 from $31,363,341 for the six months ended February 28, 1997. Firm gas volumes were 3,508,521 Dth for the six month period ended February 28, 1998 compared to 3,412,739 Dth for the six month period ended February 28, 1997. The increase in operating revenues is primarily due to the increased volumes and a 1% increase in unit prices. There were 4,080 EDD for the six month period ended February 28, 1998 compared to 4,193 EDD for the six months ended February 28, 1997, representing a 2.7% decrease. Average EDD in the Company's service area for the six month period is equivalent to 4,390 EDD. The average selling price of firm gas was $8.96 per Dth for the six months ended February 28, 1998 compared to $8.87 per Dth for the same period last year. The increase is due to higher gas costs and, for the six months ended February 28, 1997, the Company, for only three of the six months, benefited from higher MTDE approved rates effective December 1, 1996. Interruptible revenues for the six months ended February 28, 1998 and February 28, 1997 were $155,794 and $683,943, respectively. Operations and maintenance expenses for the six months ended February 28, 1998 decreased to $6,363,846 from $6,555,537 for the comparable period a year ago. The decrease is due to the factors mentioned above for the three month period ended February 28, 1998. Interest expense increased $30,983 (2.0%) for the six months ended February 28, 1998 compared to the six months ended February 28, 1997. The increase was due to higher outstanding balances on long-term debt. Income available for common stock increased by $552,218 to $3,422,987 for the six months ended February 28, 1998 as compared to $2,870,769 for the same period last year while earnings per share increased to $2.02 from $1.74. Dividends were $.83 and $.81 per share, respectively. Liquidity and Capital Resources Net cash provided by operating activities for the six months ended February 28, 1998 was $4,152,467. Cash flows were generated primarily from net income of $3,422,987; depreciation and amortization of $2,621,150; a decrease in inventory of $1,387,600; and an increase in taxes payable of $1,909,484. These sources of cash were offset primarily by an increase in accounts receivable of $4,910,354. The increase in accounts receivable is due to the seasonal nature of the Company's business. The decrease in inventories also resulted from the seasonal nature of the Company's business whereby gas inventories increase in the warmer months and decrease when sold in the colder months. Occasionally the Company receives refunds from its pipeline supplier as a result of regulatory action by the Federal Energy Regulatory Commission. The supplier refunds are returned by the Company to customers over a twelve month period. The Company did not receive any supplier refunds during the three months ended February 28, 1998. 11 The Company finances its gas inventory with a bank through a special purpose credit agreement which has a maximum financing commitment of $10,000,000 with a floating interest rate. This credit agreement extends from December 12, 1995 through December 31, 2000. As of February 1998, the Company's obligation under this credit agreement was $3,661,135. The Company continues to invest a significant amount of capital in its distribution system to satisfy current and expected future customer demand. Funding has traditionally been generated from operations, short-term bank borrowings, issuance if long-term debt and the issuance of additional equity, including the issuance of additional shares of common stock through the Company's Dividend Reinvestment and Common Stock Purchase Plan. During the quarter ended February 28, 1998, the Company raised $549,160 of common stock through its Dividend Reinvestment and Common Stock Purchase Plan (including $32,069 from the cash infusion portion of the Plan) and $373,969 of common stock issued to the Company's qualified employee plans. Management anticipates that these and other sources will remain available and will continue to adequately serve the Company's needs. For the six months ended February 28, 1998, the Company's construction expenditures totaled $3,578,211. Historically, the second quarter of the Company's fiscal year has been characterized by significant construction expenditures, high gas sendout and operating revenues. Cash requirements during this period have historically been satisfied through short-term bank borrowings. Planned construction expenditures for the remainder of fiscal 1998 are currently estimated at $3,100,000 and planned construction expenditures for fiscal 1999 are currently estimated at $8,000,000. The Company's planned construction expenditures and long-term debt repayments have been and will continue to be funded through cash generated by operations and short-term bank borrowings which the Company anticipates will be replaced from time to time with equity and long-term debt financings. Merger Agreement The Company has agreed, subject to the terms and conditions of the Agreement and Plan of Merger dated as of December 19, 1997 (the "Merger Agreement") with Eastern Enterprises ("Eastern"), to merge with a wholly-owned subsidiary of Eastern. Upon consummation of the proposed merger, the Company would become a wholly-owned subsidiary of Eastern, and each share of the Company's common stock would be converted into the right to receive a number of shares of Eastern common stock equal to the exchange ratio provided for in the Merger Agreement. The proposed merger is subject to a vote of the Company's stockholders, regulatory approvals, required consents and other conditions. Eastern is an unincorporated voluntary association, commonly referred to as a "Massachusetts business trust." Eastern's principal subsidiaries are Boston Gas Company ("Boston Gas") and Midland Enterprises, Inc. ("Midland"). Boston Gas is a regulated utility that distributes natural gas in and around Boston, Massachusetts. Midland is engaged in barge transportation, principally on the Ohio and Mississippi river systems. A copy of the Merger Agreement has been filed on Form 8-K dated January 9, 1998. 12 Regulatory and Accounting Issues The Company's revenues are based on rates regulated by the MDTE. These rates are designed to allow the Company to recover its operating costs and provide an opportunity to earn a reasonable rate of return on investor supplied funds. Once approved, the Company's rates are adjusted by a Cost of Gas Adjustment ("CGA") which, subject to approval by the MDTE, permits the Company to change rates to recover its gas costs and certain other costs on a dollar-for-dollar basis. The CGA is also used as the mechanism to reduce charges to firm customers by the margin earned on sales to interruptible customers. Net earnings per share amounts have been computed using the weighted average number of common and common equivalent shares outstanding during each year. For the period ended February 28, 1998, the Company adopted the provisions of SFAS No. 128, Earnings Per Share. This statement was issued by the FASB in March 1997 and establishes standards for computing and presenting earnings per share (EPS) and applies to entities with publicly held common stock or potential common stock. This statement replaces the presentation of primary EPS with a presentation of basic EPS. It requires dual presentation of basic and diluted EPS on the face of the statement of operations for all entities. This statement also requires a restatement of all prior-period EPS data presented. The American Institute of Certified Public Accountants issued a Statement of Position ("SOP") 96-1, Environmental Remediation Liabilities. The SOP's objective is to make the timing of the recognition of environmental obligations more uniform by discussing the estimation process and providing benchmarks to aid in determining when to recognize environmental liabilities. The SOP is effective for the Company in fiscal 1998. The adoption of SOP 96-1 did not have a material effect on the Company's financial statements. The "Year 2000" Issue The company has assessed the impact of the Year 2000 issue on its computer system and is in the process of modifying its computer system to address this issue. It currently anticipates completing these modifications by January 1999. The costs of these modifications are not expected to be material to the Company's business, operations or financial condition or to have any material impact on the Company's results of operations, liquidity or capital resources. Forward Looking Statements The statements contained in the section entitled "Management's Discussion and Analysis of Financial Condition and Results of Operations" which are not historical facts are "forward-looking statements" (as that term is defined in the Private Securities Litigation Reform Act of 1995) that involve risks and uncertainties. Management wishes to caution the reader that such forward-looking statements, which include but are not limited to its statements with regard to the impact of transportation customers on the Company's profitability, the impact of changes in the cost of gas and of the CGA mechanism on total margin, its projected capital expenditures and its sources of cash to fund expenditures, its estimated costs of environmental remediation and anticipated regulatory approval of recovery mechanisms, and its treatment of the Year 2000 issue, are only predictions and estimates regarding future events and circumstances. No assurance can be given that such predictions and estimates will be achieved; actual events or results may differ materially as a result of risks facing the Company. Such risks include, but are not limited to uncertainty as to the precise rates for transportation of gas that will be allowed by the regulators and the transportation-only customers, as to the regulatory allowance of the recovery charges in the cost of gas, as to demands for capital expenditures and the availability of cash from various sources, and as to the regulatory approval of the full recovery of environmental costs, transition costs, and other regulatory assets. 13 PART II - OTHER INFORMATION Item 1 Legal Proceedings The information called for by this item is unchanged from that filed in the Company's Annual Report on Form 10-K for fiscal 1997 filed November 26, 1997. Item 2 Changes in Securities None. Item 3 Defaults Upon Senior Securities None. Item 4 Submission of Matters to a Vote of Security Holders The Company's Special Meeting of Shareholders is scheduled to be held in mid June 1998. For a description of the meeting and the matters to be voted, see the Company's Notice of Special Meeting and Proxy Statement ("Proxy Statement"), to be filed with the Securities and Exchange Commission in late April 1998, which is incorporated herein by reference. Item 5 Other Information None. Item 6(a) Exhibits 3.1 Restated Articles of Organization of Essex County Gas Company.1 3.2 By Laws of Essex County Gas Company.2 27. Financial Data Schedule. 1Previously filed as an exhibit to the Registrant's 10-K filed for the fiscal year ended August 31, 1988 and is incorporated herein by this reference. 2Previously filed as an exhibit to the Registrant's 10-Q filed February 28, 1991 and is incorporated herein by this reference. Item 6(b) Reports on Form 8-K A. Form 8-K was filed on January 9, 1998. 14 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. ESSEX COUNTY GAS COMPANY By ___/s/Philip H. Reardon___ Philip H. Reardon President and Chief Executive Officer By___/s/James H. Hastings___ James H. Hastings Vice President and Treasurer (Principal Financial Officer) Date: April 14, 1998 EX-27 2
UT This schedule contains summary financial information extracted from the balance sheet, statement of income and statement of cash flows contained in Form 10-Q of Essex County Gas Company for the six months ended February 28, 1998 and is qualified in its entirety by reference to such financial statements. 1,000 6-MOS AUG-31-1998 FEB-28-1998 PER-BOOK 80,435 776 12,686 3,537 579 98,012 21,424 0 17,113 38,544 0 0 28,199 5,415 0 0 822 0 522 56 24,454 98,012 32,062 1,662 25,558 27,220 4,842 150 4,992 1,569 3,423 0 3,423 1,404 1,264 4,152 2.02 2.02
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