-----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, A8vLPtmdhdJ2f5i6nU7LSBbMC7ysMIzHHnjT0byf5OiIECqNwDQvUBznjukzlBfq Z7HeC97rJAK8jskOKixPaA== 0000060653-98-000040.txt : 19980810 0000060653-98-000040.hdr.sgml : 19980810 ACCESSION NUMBER: 0000060653-98-000040 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19980630 FILED AS OF DATE: 19980807 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: COLONIAL GAS CO CENTRAL INDEX KEY: 0000060653 STANDARD INDUSTRIAL CLASSIFICATION: NATURAL GAS DISTRIBUTION [4924] IRS NUMBER: 041558100 STATE OF INCORPORATION: MA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 001-13351 FILM NUMBER: 98679200 BUSINESS ADDRESS: STREET 1: 40 MARKET ST CITY: LOWELL STATE: MA ZIP: 01852 BUSINESS PHONE: 5084583171 FORMER COMPANY: FORMER CONFORMED NAME: LOWELL GAS CO DATE OF NAME CHANGE: 19811124 10-Q 1 FORM 10-Q UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 - ------------------------------------------------------------------------------- FORM 10-Q - ------------------------------------------------------------------------------- - ------------------------------------------------------------------------------- - ------------------------------------------------------------------------------- |X| Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 - ------------------------------------------------------------------------------- - ------------------------------------------------------------------------------- For the quarterly period ended June 30, 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 0-10007 - ------------------------------------------------------------------------------- COLONIAL GAS COMPANY - ------------------------------------------------------------------------------- (Exact name of registrant as specified in its charter) - ------------------------------------------------------------------------------- - ------------------------------------------------------------------------------- Massachusetts 04-1558100 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification Number) 40 Market Street, Lowell, Massachusetts 01852 (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code: (978) 322-3000 Former name, former address and former fiscal year, if changed since last report: Not applicable 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 |_| The number of shares of the registrant's common stock, $3.33 par value, outstanding as of July 1, 1998 was 8,766,178. COLONIAL GAS COMPANY INDEX PART I - FINANCIAL INFORMATION Item 1. Financial Statements Consolidated Condensed Statements of Income - Three Months Ended June 30, 1998 and 1997 Six Months Ended June 30, 1998 and 1997 Consolidated Condensed Balance Sheets - June 30, 1998, December 31, 1997 and June 30, 1997 Consolidated Condensed Statements of Cash Flows - Six Months Ended June 30, 1998 and 1997 Notes to Consolidated Condensed Financial Statements Item 2. Management's Discussion and Analysis of Results of Operations and Financial Condition PART II - OTHER INFORMATION Item 4. Submission of Matters to a Vote of Security Holders Item 5. Other Information Item 6. Exhibits and Reports on Form 8-K PART I - FINANCIAL INFORMATION Item 1. Financial Statements COLONIAL GAS COMPANY AND SUBSIDIARIES CONSOLIDATED CONDENSED STATEMENTS OF INCOME (UNAUDITED) Three Months Ended June 30, 1998 1997 (In Thousands Except Per Share Amounts) Operating Revenues $25,684 $26,927 Cost of gas sold 13,662 16,317 ---------- ----------- Operating Margin 12,022 10,610 ---------- ----------- Operating Expenses: Operations 6,958 7,115 Maintenance 1,136 1,114 Depreciation and Amortization 3,229 2,973 Taxes, other than income 1,494 1,394 ---------- ----------- Total Operating Expenses 12,817 12,596 ---------- ----------- Income Taxes (Credit) (1,051) (1,430) ---------- ----------- Utility Operating Loss 256 (556) Other Operating Income (Loss): Energy Trucking revenues 617 451 Energy Trucking expenses, including income taxes and interest 825 673 ---------- ----------- Energy Trucking loss (208) (222) Other, net of income taxes 107 57 ---------- ----------- Total Other Operating Loss (101) (165) Non-Operating Income, Net 260 152 ---------- ----------- Income (Loss) Before Interest and Debt 415 (569) Expense Interest and Debt Expense 2,186 1,932 ---------- ----------- Net Loss $(1,771) $ (2,501) ========== =========== Average Common Shares Outstanding 8,740 8,576 ========== =========== ========== =========== Loss per Average Common Share $ (0.20) $ (0.29) ========== =========== ========== =========== Dividends Paid per Common Share $ .345 $ .335 ========== ===========
(See accompanying notes to consolidated condensed financial statements) COLONIAL GAS COMPANY AND SUBSIDIARIES CONSOLIDATED CONDENSED STATEMENTS OF INCOME (UNAUDITED) Six Months Ended June 30, 1998 1997 (In Thousands Except Per Share Amounts) Operating Revenues $103,507 $109,988 Cost of gas sold 54,579 60,034 ---------- ----------- Operating Margin 48,928 49,954 ---------- ----------- Operating Expenses: Operations 13,608 14,553 Maintenance 2,204 2,260 Depreciation and Amortization 6,413 5,946 Taxes, other than income 2,748 2,775 ---------- ----------- Total Operating Expenses 24,973 25,534 ---------- ----------- Income Taxes 7,624 8,002 ---------- ----------- Utility Operating Income 16,331 16,418 Other Operating Income (Loss): Energy Trucking revenues 1,023 1,790 Energy Trucking expenses, including income taxes and interest 1,186 1,931 ---------- ----------- Energy Trucking net loss (163) (141) Other, net of income taxes 158 106 ---------- ----------- Total Other Operating Income (Loss) (5) (35) Non-Operating Income, Net 436 246 ---------- ----------- Income Before Interest and Debt Expense 16,762 16,629 Interest and Debt Expense 4,321 3,837 ---------- ----------- Net Income $12,441 $ 12,792 ========== =========== ========== =========== Average Common Shares Outstanding 8,722 8,554 ========== =========== ========== =========== Income per Average Common Share $ 1.43 $ 1.50 ========== =========== ========== =========== Dividends Paid per Common Share $ 0.68 $ 0.66 ========== ===========
(See accompanying notes to consolidated condensed financial statements) COLONIAL GAS COMPANY AND SUBSIDIARIES CONSOLIDATED CONDENSED BALANCE SHEETS ASSETS
June 30, December 31 June 30, 1998 1997 1997 ----------- ------------ ---------- (Unaudited) (Unaudited) (In Thousands) Utility Property: At original cost $ 379,866 $ 362,742 $ 345,572 Accumulated depreciation (94,832) (88,210) (88,447) --------- --------- --------- Net utility property 285,034 274,532 257,125 Non-Utility Property - Net 7,423 7,312 6,873 --------- --------- --------- Net property 292,458 281,844 263,998 --------- --------- --------- Capital Leases - Net 1,740 2,630 2,392 --------- --------- --------- Current Assets: Cash and cash equivalents 1,218 259 100 Accounts receivable 15,940 21,788 16,629 Allowance for doubtful (3,420) (3,203) (3,429) accounts Accrued utility revenues 821 7,417 739 Unbilled gas costs 8,125 19,266 8,902 Fuel and other inventories 12,144 12,959 10,321 Prepayments and other current 6,994 9,481 5,946 assets --------- --------- --------- Total current assets 41,822 67,967 39,208 --------- --------- --------- Deferred Charges and Other Assets: Unrecovered deferred income taxes 8,626 9,014 9,386 Unrecovered Demand Side Management - costs 8,058 8,273 8,242 Unrecovered environmental expenses - incurred 3,349 3,833 3,397 Unrecovered environmental expenses - accrued 607 707 900 Unrecovered transition costs 2,800 2,800 4,500 - accrued Other 12,898 11,923 11,697 --------- --------- --------- Total deferred charges and other assets 36,338 36,550 38,122 ========= ========= ========= Total Assets $ 372,358 $ 388,991 $ 343,720 ========= ========= =========
(See accompanying notes to consolidated condensed financial statements) COLONIAL GAS COMPANY AND SUBSIDIARIES CONSOLIDATED CONDENSED BALANCE SHEETS LIABILITIES AND CAPITALIZATION
June 30, December 31 June 30, 1998 1997 1997 ----------- ------------ ---------- (Unaudited) (Unaudited) (In Thousands) Capitalization: Common equity: Common Stock - part value $ 3.33 per share Authorized - 15,000 shares Issued and outstanding - 8,766 8,688 and 8,602 $29,191 $ 28,931 $28,643 Premium on common stock 59,177 57,277 55,669 Retained earnings 42,433 35,924 38,464 ----------- ------------ ---------- Total Common equity 130,801 122,132 122,776 Long-term debt 110,015 100,102 100,185 ----------- ------------ ---------- Total capitalization 240,816 222,234 222,961 ----------- ------------ ---------- Capital Lease Obligations 276 1,617 1,471 ----------- ------------ ---------- Current Liabilities: Current maturities of long-term debt 171 10,164 15,158 Current capital lease obligations 1,464 1,013 921 Notes payable 37,000 49,400 12,700 Gas inventory purchase obligations 8,084 14,895 6,477 Accounts payable 8,997 15,674 7,615 Other 12,070 11,362 15,504 ----------- ------------ ---------- Total current 67,786 102,508 58,375 liabilities ----------- ------------ ---------- Deferred Credits and Reserves: Deferred income taxes-funded 43,364 41,443 37,794 Deferred income taxes-unfunded 8,626 9,014 9,386 Accrued environmental expenses 607 707 900 Accrued transition costs 2,800 2,800 4,500 Other 8,083 8,668 8,333 ----------- ------------ ---------- Total deferred credits and 63,480 62,632 60,913 reserves =========== ============ ========== Total Capitalization and $372,358 $388,991 $343,720 Liabilities =========== ============ ==========
(See accompanying notes to consolidated condensed financial statements) COLONIAL GAS COMPANY AND SUBSIDIARIES CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS (UNAUDITED) Six Months Ended June 30, 1998 1997 (In Thousands) Cash Flows From Operating Activities: Net income $12,441 $12,792 Adjustments to reconcile net income to net cash 8,166 7,601 Changes in current assets and liabilities 21,703 24,176 ---------- ---------- Net cash provided by operating 42,310 44,569 activities ---------- ---------- Cash Flows From Investing Activities: Capital expenditures (16,962) (12,285) Non-utility capital expenditures (369) (1,158) Change in deferred accounts 209 (1,233) ---------- ---------- Net cash used in investing (17,122) (14,676) activities ---------- ---------- Cash Flows From Financing Activities: Dividends paid on Common Stock (5,932) (5,647) Issuance of Common Stock 2,160 1,725 Issuance of long-term debt, net of issuance costs (1,570) 14,925 Retirement of long-term debt 323 (75) Change in notes payable (12,400) (37,700) Change in gas inventory purchase (6,811) (6,562) obligations ---------- ---------- Net cash used in financing (24,229) (33,334) activities ---------- ---------- Net (decrease) increase in cash and cash equivalents 958 (3,441) Cash and cash equivalents at beginning of period 259 3,541 ---------- ---------- Cash and cash equivalents at end of $1,218 $100 period ========== ========== Supplemental Disclosures of Cash Flow Information: Cash paid during the period for: Interest - net of amount capitalized $5,358 $4,645 ========== ========== ========== ========== Income and franchise taxes $3,608 $3,809 ========== ==========
(See accompanying notes to consolidated condensed financial statements) COLONIAL GAS COMPANY AND SUBSIDIARIES NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (UNAUDITED) 1. In the opinion of the Company, the accompanying unaudited consolidated condensed financial statements contain all adjustments (consisting of only normal recurring accruals) necessary to present fairly the financial position as of June 30, 1998 and 1997 and results of operations for the three and six month periods ended June 30, 1998 and 1997 and cash flows for the six month period ended June 30, 1998 and 1997. 2. Due to the significant impact of gas used for space heating during the heating season (November-April) and the Company's seasonal rate structure, the results of operations for the three month and six month periods ending June 30, 1998 and 1997 are not necessarily indicative of the results to be expected for the full year. 3. During the six months ended June 30, 1998, the Company issued 38,000 shares of Common Stock, $3.33 par value, under a Dividend Reinvestment and Common Stock Purchase Plan and under an Employee Savings Plan. As a result, Common Stock, $3.33 par value, increased $128,000 and Premium on Common Stock increased $915,000. 4. Contingencies Reference is made to Note I/Contingencies of the Notes to Consolidated Financial Statements contained within the Company's 1997 Annual Report to Stockholders. 5. Reclassifications are made periodically to previously issued financial statements to conform to the current year presentation. Item 2. Management's Discussion and Analysis of Results of Operations and Financial Condition Results of Operations Three Months Ended June 30, 1998 and June 30, 1997 The Company's net loss for the three months ended June 30, 1998 was $1,771,000, or $0.20 per share, which is a 29%, or $730,000, improvement from the loss of $2,501,000, or $0.29 per share, reported for the same period last year. The Company typically incurs losses for the second and third quarters while reporting profits for the first and fourth quarters. This is due to significantly higher natural gas sales throughout the colder months to meet customers' heating needs. Approximately 90% of the Company's residential customers are heating accounts. As described below, earnings for the three month period ended June 30, 1998 were significantly impacted by a $1,121,000, or $0.08 per share, increase in operating margin due to a billing refinement. Effective in the second quarter of 1998, with the implementation of an improved customer billing system, bills sent during May for gas consumed in April were refined to reflect the Company's higher winter rates. Seasonal rate changes occur on May 1 and November 1 of each year. Previously, May bills were calculated based on lower summer rates, even for gas consumed in April. The billing refinement will have the opposite impact in the fourth quarter of 1998 - -- November bills for October usage will now reflect the Company's lower summer rates instead of the higher winter rates -- and therefore, is expected to have minimal effect on calendar year earnings. Without the effect of the billing refinement, the Company would have reported an increase in operating margin of $291,000, or 2.7%, for the three month period. Also significantly impacting operating margin for the three month period ending June 30, 1998 was weather which was 12% warmer than normal and 23% warmer than last year. Firm gas sold for the three months ended June 30 decreased to 2,956 MMcf in 1998 from 3,317 MMcf in 1997. Total operating expenses increased by $221,000, or 1.8%, compared to the corresponding prior year period, primarily due to a $256,000 increase in depreciation and amortization expense resulting from an increase in utility assets. Revenues for Transgas Inc., the Company's energy trucking subsidiary, increased $166,000, or 37%, primarily due a 79% increase in hauls of LNG. Partially offsetting this increase in revenue was a $152,000, or 23%, increase in energy trucking expenses, resulting in a $14,000, or 6.3%, improvement in earnings. Other income increased $50,000, or 50%, primarily as a result of increased earnings from the sale of natural gas related home and water heating equipment. Interest and debt expense increased $254,000, or 13%, primarily due to a $202,000 increase in short term debt interest expense. Six Months Ended June 30, 1998 and 1997 Net income for the six months ended June 30, 1998 was $12,441,000, or $1.43 per share, compared to $12,792,000, or $1.50 per share, for the same period in 1997. This $351,000, or 2.7%, decrease resulted primarily from weather which was 13% warmer than normal and 13% warmer than last year. As a result of the warm winter weather, operating margin for the six month period ended June 30, 1998 decreased $1,026,000, or 2.1%, compared to the six month period ended June 30, 1997. Operating margin for the period was also significantly impacted by the billing refinement described in "Results of Operations - Three Months Ended June 30, 1998 and 1997". The billing refinement resulted in an increase to operating margin for the six month period of $1,121,000, or $0.08 per share. Without the effect of the billing refinement, the Company would have reported a decrease in operating margin of $2,147,000, or 4.3%, for the six month period. Total operating expenses decreased by $561,000, or 2.2%. Operations and maintenance expenses decreased by $1,001,000, or 6.0%, primarily due to reductions in bad debt expense and lower insurance expense. Partially offsetting these reductions was a $467,000, or 7.9%, increase in depreciation and amortization expense resulting from an increase in utility assets. Income taxes decreased $378,000, or 4.7%, due to a lower level of pre-tax income. Energy trucking revenues fell $767,000, or 43%, primarily due to a decrease in hauls of LNG resulting from the warmer than normal weather during the winter of 1997-98. The decrease in energy trucking revenue was partially offset by a $745,000, or 39%, decrease in energy trucking expenses. As a result, earnings from Transgas Inc. decreased by $22,000, or 16%. Other income increased $52,000, or 50%, primarily as a result of increased earnings from the sale of natural gas related home and water heating equipment. Interest and debt expense increased $484,000, or 13%, primarily due to a $229,000 increase in short-term debt expense resulting from higher short-term debt balances, and a $165,000 decrease in regulatory interest income. Liquidity and Capital Resources On April 1, 1998, the Company purchased its corporate headquarters building located at 40 Market Street in Lowell, Massachusetts for $1,325,000. The purchase terminated the 20-year lease between the Company and the building's previous owner which had been entered into in 1982. On April 2, 1998, the Company called $20,000,000 of 8.05% First Mortgage Bonds (Series CG) one year prior to their maturity, at a price of 102.02%. On April 7, 1998, the Company issued $20,000,000 of 30-year First Mortgage Bonds under its Medium Term Note Program (Series B), with an effective rate of 6.68%. The Bonds are redeemable at the option of the holder in April 2008. PART II - OTHER INFORMATION Item 4. Submission of Matters to a Vote of Security Holders The Annual Meeting of Shareholders of the registrant was held on April 15, 1998 and May 7, 1998. At the Annual Meeting the shareholders voted to: 1. Re-elect all four Class II Director nominees: John P. Harrington, with 7,294,775 shares voting for and 90,024 shares voting against or withholding authority; John F. Reilly, Jr., with 7,277,804 shares voting for and 106,995 shares voting against or withholding authority; Margaret M. Stapleton, with 7,286,808 shares voting for and 97,991 shares voting against or withholding authority; F.L. Putnam, Jr., with 7,281,114 shares voting for and 103,685 shares voting against or withholding authority; 2. Approve the Company's Executive Performance and Equity Incentive Plan, which provides the Board of Directors the flexibility to grant cash and restricted stock bonuses to key members of senior management, with 6,655,915 shares voting for and 728,884 shares voting against or withholding authority. 3. Approve a proposal to adopt a holding company structure for the Company with 5,844,890 shares voting for and 1,696,552 shares voting against or withholding authority. Item 5. Other Information On July 14, 1998, the Company filed, and is currently awaiting a decision on a petition with the Massachusetts Department of Telecommunications and Energy (DTE) for approval to form a holding company which will be called Colonial Energy. Subject to DTE approval, Colonial plans to have the holding company structure in place by the end of 1998. As part of the restructuring, Colonial Gas expects to transfer ownership of its energy trucking subsidiary, Transgas Inc., to the holding company -- making both Colonial Gas Company and Transgas Inc. wholly-owned subsidiaries of Colonial Energy. Item 6. Exhibits and Reports on Form 8-K a. Exhibits None b. Reports on Form 8-K None 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. COLONIAL GAS COMPANY (Registrant) Date: August 7, 1998 s/F.L. Putnam, III F.L. Putnam, III President and Chief Executive Officer Date: August 7, 1998 s/Nickolas Stavropoulos Nickolas Stavropoulos Executive Vice President - Finance, Marketing and Chief Financial Officer EX-27 2
UT 1,000 6-MOS DEC-31-1998 JAN-01-1998 JUN-30-1998 PER-BOOK 285,034 9,163 41,822 23,440 12,898 372,358 29,191 59,177 42,433 130,801 0 0 110,015 45,084 0 0 171 0 276 1,464 84,547 372,358 103,507 7,624 79,552 87,176 16,331 431 16,762 4,321 12,441 0 12,441 5,932 4,047 42,310 1.43 1.43
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