-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: keymaster@town.hall.org Originator-Key-Asymmetric: MFkwCgYEVQgBAQICAgADSwAwSAJBALeWW4xDV4i7+b6+UyPn5RtObb1cJ7VkACDq pKb9/DClgTKIm08lCfoilvi9Wl4SODbR1+1waHhiGmeZO8OdgLUCAwEAAQ== MIC-Info: RSA-MD5,RSA, Gg97mw6WPR+u2rQxf9r7EZGzcmVMKpXQqLIDOfLdm4hX8JNZdrYsZ3xh6ra9V0x+ Y0HQTv6h/zZTKqxRDsxjlQ== 0000060653-94-000022.txt : 19941111 0000060653-94-000022.hdr.sgml : 19941111 ACCESSION NUMBER: 0000060653-94-000022 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19940930 FILED AS OF DATE: 19941110 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: COLONIAL GAS CO CENTRAL INDEX KEY: 0000060653 STANDARD INDUSTRIAL CLASSIFICATION: 4924 IRS NUMBER: 041558100 STATE OF INCORPORATION: MA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-10007 FILM NUMBER: 94558496 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 [COLONIAL GAS COMPANY FORM 10-Q FOR THE PERIOD ENDED SEPTEMBER 30, 1994] 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 September 30, 1994 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: (508) 458-3171 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 November 1, 1994 was 8,185,625. COLONIAL GAS COMPANY INDEX PART I - FINANCIAL INFORMATION Item 1. Financial Statements Consolidated Condensed Statements of Income - Three Months Ended September 30, 1994 and 1993 Nine Months Ended September 30, 1994 and 1993 Twelve Months Ended September 30, 1994 and 1993 Consolidated Condensed Balance Sheets - September 30, 1994, December 31, 1993 and September 30, 1993 Consolidated Condensed Statements of Cash Flows - Nine Months Ended September 30, 1994 and 1993 Twelve Months Ended September 30, 1994 and 1993 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 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 September 30, 1994 1993 (In Thousands Except Per Share Amounts) Operating Revenues $13,026 $12,259 Cost of gas sold 6,797 6,704 Operating Margin 6,229 5,555 Operating Expenses: Operations 7,835 7,146 Maintenance 1,452 1,396 Depreciation and Amortization 2,316 1,652 Taxes, other than income 1,006 908 Total Operating Expenses 12,609 11,102 Income Taxes (3,248) (2,809) Utility Operating Loss (3,132) (2,738) Other Operating Income (Loss): Truck transportation revenues 3,476 3,031 Truck transportation expenses, including income taxes and interest (3,158) (2,424) Truck transportation net income 318 607 Other, net of income taxes 8 (31) Total Other Operating Income 326 576 Non-Operating Income, Net 81 567 Loss Before Interest and Debt Expense (2,725) (1,595) Interest and Debt Expense 2,109 2,127 Net Loss $ (4,834) $ (3,722) Average Common Shares Outstanding 8,142 7,954 Loss per Average Common Share $ (0.59) $ (0.47) Dividends Paid per Common Share $ .315 $ .31 (See accompanying notes to consolidated condensed financial statements) COLONIAL GAS COMPANY AND SUBSIDIAIRIES CONSOLIDATED CONDENSED STATEMENTS OF INCOME (UNAUDITED) Nine Months Ended September 30, 1994 1993 (In Thousands Except Per Share Amounts) Operating Revenues $118,182 $110,973 Cost of gas sold 63,334 61,405 Operating Margin 54,848 49,568 Operating Expenses: Operations 25,852 24,364 Maintenance 4,523 4,079 Depreciation and Amortization 6,882 4,956 Taxes, other than income 3,242 2,991 Total Operating Expenses 40,499 36,390 Income Taxes 3,573 3,068 Utility Operating Income 10,776 10,110 Other Operating Income (Loss): Truck transportation revenues 10,754 5,480 Truck transportation expenses, including income taxes and interest (9,273) (5,211) Truck transportation net income 1,481 269 Other, net of income taxes (83) (121) Total Other Operating Income 1,398 148 Non-Operating Income, Net 258 953 Income Before Interest and Debt Expense 12,432 11,211 Interest and Debt Expense 6,206 6,134 Net Income $ 6,226 $ 5,077 Average Common Shares Outstanding 8,094 7,908 Income per Average Common Share $ 0.77 $ 0.64 Dividends Paid per Common Share $ 0.94 $ 0.925 (See accompanying notes to consolidated condensed financial statements) COLONIAL GAS COMPANY AND SUBSIDIAIRIES CONSOLIDATED CONDENSED STATEMENTS OF INCOME (UNAUDITED) Twelve Months Ended September 30, 1994 1993 (In Thousands Except Per Share Amounts) Operating Revenues $173,471 $161,233 Cost of gas sold 92,845 88,357 Operating Margin 80,626 72,876 Operating Expenses: Operations 34,235 32,723 Maintenance 6,076 5,529 Depreciation and Amortization 8,757 6,448 Taxes, other than income 4,105 3,917 Total Operating Expenses 53,173 48,617 Income Taxes 7,897 6,604 Utility Operating Income 19,556 17,655 Other Operating Income (Loss): Truck transportation revenues 12,833 7,911 Truck transportation expenses, including income taxes and interest (11,226) (7,763) Truck transportation net income 1,607 148 Other, net of income taxes (148) (182) Total Other Operating Income (Loss) 1,459 (34) Non-Operating Income, Net 370 1,185 Income Before Interest and Debt Expense 21,385 18,806 Interest and Debt Expense 8,213 8,162 Net Income $13,172 $10,644 Average Common Shares Outstanding 8,069 7,884 Income per Average Common Share $ 1.63 $ 1.35 Dividends Paid per Common Share $ 1.25 $ 1.228 (See accompanying notes to consolidated condensed financial statements) COLONIAL GAS COMPANY AND SUBSIDIARIES CONSOLIDATED CONDENSED BALANCE SHEETS ASSETS September 30, December 31, September 30, 1994 1993 1993 (Unaudited) (Unaudited) (In Thousands) Utility Property: At original cost $278,576 $260,570 $253,523 Accumulated depreciation (64,920) (57,857) (57,616) Net utility property 213,656 202,713 195,907 Non-Utility Property - Net 3,621 3,235 3,234 Net property 217,277 205,948 199,141 Capital Leases - Net 3,113 3,914 3,919 Current Assets: Cash and cash equivalents 8,032 5,482 4,922 Accounts receivable - net 3,478 14,474 4,272 Accrued utility revenues 701 7,170 516 Unbilled gas costs 9,254 16,759 13,433 Fuel and other inventories 18,196 17,529 19,428 Prepayments and other current assets 8,789 6,254 9,113 Total current assets 48,450 67,668 51,684 Deferred Charges and Other Assets: Unrecovered deferred income taxes 12,107 12,689 12,090 Unrecovered environmental expenses - incurred 4,453 4,062 3,225 Unrecovered environmental expenses - accrued 5,300 5,300 13,800 Unrecovered transition costs - accrued 2,000 2,000 - Other 13,013 10,537 10,349 Total deferred charges and other assets 36,873 34,588 39,464 Total Assets $305,713 $312,118 $294,208 (See accompanying notes to consolidated condensed financial statements) COLONIAL GAS COMPANY AND SUBSIDIARIES CONSOLIDATED CONDENSED BALANCE SHEETS LIABILITIES AND CAPITALIZATION September 30, December 31, September 30, 1994 1993 1993 (Unaudited) (Unaudited) (In Thousands) Capitalization: Common equity: Common Stock - par value $3.33 per share Authorized - 15,000 shares Issued and outstanding - 8,177, 8,030 and 7,981 shares $27,229 $26,739 $26,576 Premium on common stock 48,420 45,799 44,883 Retained earnings 20,364 21,745 17,278 Total Common equity 96,013 94,283 88,737 Long-term debt 77,956 87,432 87,432 Total capitalization 173,969 181,715 176,169 Capital Lease Obligations 2,417 3,149 3,224 Current Liabilities: Current maturities of long-term debt 8,446 3,318 3,318 Current capital lease obligations 697 765 695 Notes payable 35,500 32,600 20,200 Gas inventory purchase obligations 13,647 15,233 14,825 Accounts payable 6,300 12,161 6,119 Accrued pipeline charges - 305 413 Other 9,456 9,031 11,809 Total current liabilities 74,046 73,413 57,379 Deferred Credits and Reserves: Deferred income taxes-funded 25,565 23,395 21,357 Deferred income taxes-unfunded 12,107 12,689 12,090 Accrued environmental expenses 5,300 5,300 13,800 Accrued transition costs 2,000 2,000 - Other 10,309 10,457 10,189 Total deferred credits and reserves 55,281 53,841 57,436 Total Capitalization and Liabilities $305,713 $312,118 $294,208 (See accompanying notes to consolidated condensed financial statements) COLONIAL GAS COMPANY AND SUBSIDIAIRIES CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS (UNAUDITED) Nine Months Ended September 30, 1994 1993 (In Thousands) Cash Flows From Operating Activities: Net income $ 6,226 $ 5,077 Adjustments to reconcile net income to net cash 13,853 23,084 Changes in current assets and liabilities 13,785 667 Net cash provided by operating activities 33,864 28,828 Cash Flows From Investing Activities: Capital expenditures (19,071) (16,744) Change in deferred accounts (4,714) (1,768) Net cash used in investing activities (23,785) (18,512) Cash Flows From Financing Activities: Dividends paid on Common Stock (7,607) (7,315) Issuance of Common Stock 3,111 3,204 Issuance of long-term debt 721 - Retirement of long-term debt (5,068) (1,500) Change in notes payable 2,900 (4,300) Change in gas inventory purchase obligations (1,586) 84 Net cash used in financing activities (7,529) (9,827) Net increase in cash and cash equivalents 2,550 489 Cash and cash equivalents at beginning of period 5,482 4,433 Cash and cash equivalents at end of period $ 8,032 $ 4,922 Supplemental Disclosures of Cash Flow Information: Cash paid during the period for: Interest - net of amount capitalized $ 6,383 $ 6,096 Income and franchise taxes $ 5,947 $ 4,153 (See accompanying notes to consolidated condensed financial statements) COLONIAL GAS COMPANY AND SUBSIDIAIRIES CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS (UNAUDITED) Twelve Months Ended September 30, 1994 1993 (In Thousands) Cash Flows From Operating Activities: Net income $13,172 $10,644 Adjustments to reconcile net income to net cash 15,987 12,539 Changes in current assets and liabilities 1,199 2,680 Net cash provided by operating activities 30,358 25,863 Cash Flows From Investing Activities: Capital expenditures (27,836) (26,639) Change in deferred accounts (3,292) (557) Net cash used in investing activities (31,128) (27,196) Cash Flows From Financing Activities: Dividends paid on Common Stock (10,086) (9,697) Issuance of Common Stock 4,190 4,369 Issuance of long-term debt 721 - Retirement of long-term debt (5,068) (4,500) Change in notes payable 15,300 12,400 Change in gas inventory purchase obligations (1,177) 1,729 Net cash provided by financing activities 3,880 4,301 Net increase in cash and cash equivalents 3,110 2,968 Cash and cash equivalents at beginning of period 4,922 1,954 Cash and cash equivalents at end of period $ 8,032 $ 4,922 Supplemental Disclosures of Cash Flow Information: Cash paid during the period for: Interest - net of amount capitalized $ 9,269 $ 9,197 Income and franchise taxes $ 6,734 $ 4,160 (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 September 30, 1994 and 1993 and results of operations for the three, nine and twelve month periods ended September 30, 1994 and 1993 and cash flows for the nine and twelve month periods ended September 30, 1994 and 1993. 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 nine month periods ending September 30, 1994 and 1993 are not necessarily indicative of the results to be expected for the full year. 3. During the nine months ended September 30, 1994, the Company issued 147,000 shares of Common Stock, $3.33 par value, under a Dividend Reinvestment and Common Stock Purchase Plan and under Employee Savings Plans. As a result, Common Stock, $3.33 par value, increased $490,000 and Premium on Common Stock increased $2,621,000. 4. On October 20, 1994, the Massachusetts Department of Public Utilities (DPU) ruled that Massachusetts gas utilities may continue to recover from customers through the cost of gas adjustment clause (CGAC) FERC Order 636 - related transition costs passed on to them by interstate gas pipeline companies. 5. Contingencies Reference is made to Note J/Contingencies of the Notes to Consolidated Financial Statements contained within the Company's 1993 Annual Report to Stockholders. Item 2. Management's Discussion and Analysis of Results of Operations and Financial Condition Results of Operations Three Months Ended September 30, 1994 and 1993 The Company's net loss for the three months ended September 30, 1994 was $4,834,000, which is 30% or $1,112,000 more than the $3,722,000 loss reported for the same period last year. The principal reasons for this change are described below. 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 customers are residential accounts. The Company's operating margin increased 12% or $674,000 during the third quarter due to a rate increase effective November 1, 1993. Total operating expenses increased by 14% or $1,507,000 primarily due to a $664,000 increase in depreciation and amortization expense based on higher depreciation rates approved with the Company's 1993 rate increase and a $400,000 increase in bad debt expense. Income taxes credit increased $439,000 or 16% due to an increase in operating loss. Other operating income declined $250,000 due to lower margins on liquefied natural gas hauling. Non-operating income (net of income taxes) declined $486,000 compared to 1993 which included a non-recurring insurance recovery of $509,000 relating to a discontinued line of business. Nine Months Ended September 30, 1994 and 1993 Net income for the nine months ended September 30, 1994 was $6,226,000, compared to $5,077,000 for the comparable 1993 period. This $1,149,000 or 23% increase is due to factors described below. The Company's operating margin increased 11% or $5,280,000 during the period due to higher firm gas sales (resulting from annualized customer growth of 2% and weather which was 2.3% colder than the comparable period in the prior year and 11% colder than normal) and a 4.9% rate increase effective November 1, 1993. Total operating expenses increased by 11% or $4,109,000, of which depreciation and amortization expense increased $1,926,000 due to higher depreciation rates approved with the Company's 1993 rate increase. Operations expense increased by $1,488,000 -- which includes $1,087,000 in higher payroll costs caused primarily by responding to the effects of the extremely cold weather during the first quarter of 1994 and $456,000 in increased bad debt expense. Income taxes increased $505,000 or 17% due to a higher level of income subject to tax. Other operating income increased $1,250,000 due to improved results for Transgas. This increase reflects heightened demand for Transgas' liquefied natural gas (LNG) delivery and vaporization services resulting from the extremely cold winter of 1993-94. Twelve Months Ended September 30, 1994 and 1993 Net income for the twelve-month period ending September 30, 1994 was $13,172,000 compared to $10,644,000 for the same period in 1993. This 24% or $2,528,000 increase is due to factors described below. The Company's operating margin increased 11% or $7,750,000 during the period due to higher firm gas sales resulting from continued customer growth and an increase in rates effective November 1, 1993. Weather was 1.6% colder than the comparable prior twelve-month period and 9.1% colder than normal. Total operating expenses increased by 9.4% or $4,556,000, of which depreciation and amortization expense increased $2,309,000 due to higher depreciation rates approved with the Company's 1993 rate increase. Operations expense increased by $1,512,000 -- which includes higher payroll costs caused primarily by responding to the effects of the extremely cold weather during the first quarter of 1994 and increased bad debt expense. Income taxes increased $1,293,000 or 20% due to a higher level of income subject to tax. Other operating income increased $1,493,000 due to the significant increase in LNG delivery and vaporization services provided by Transgas resulting from the heightened demand for LNG as a result of the extremely cold 1993-94 winter. Non-operating income (net of income taxes) for the 1993 period included non-recurring insurance settlements of $815,000 related to environmental matters and a discontinued line of business. Liquidity and Capital Resources In July 1994, the Company established a bank line of credit of $75,000,000 with a consortium of four banks to replace its expiring $60,000,000 bank line of credit. The $75,000,000 bank line of credit expires on June 15, 1997. The bank line of credit allows the Company to borrow from time to time up to $75,000,000, less whatever amount has been borrowed through the Company's gas inventory trust (described below). The line of credit allows the Company the option to borrow under four alternative rates: prime rate, certificate of deposit rate, eurodollar rate (LIBOR), and a competitive bid option. The Company has an agreement with a single-purpose Massachusetts trust, the Company's gas inventory trust, under which the Company sells supplemental gas inventory to the trust at the Company's cost. The Company's agreement with the trust requires it to repurchase such inventory at cost when needed and to reimburse the trust for expenses incurred to finance the gas inventory. The trust finances such purchases of inventory by borrowing under a bank line of credit with a maximum borrowing commitment of $30,000,000 that is complementary to and on similar terms as the Company's bank line of credit described above. PART II - OTHER INFORMATION Item 5. Other Information The DPU recently opened a generic investigation to study the appropriateness of implementing incentive regulation for electric and gas companies. The concept of incentive regulation was promoted by Colonial in the DPU's recently completed proceeding on mergers and acquisitions as a potentially more efficient way to encourage safe, reliable and least cost utility service. The Company filed initial comments on November 1, 1994. Upon review of all electric and gas companies' comments, the DPU will determine if a public hearing is appropriate. The DPU has stated that it intends to issue a "policy statement" regarding incentive regulation in early 1995. Item 6. Exhibits and Reports on Form 8-K a. List of Exhibits None b. Reports on Form 8-K There were no reports filed on Form 8-K for the quarter ended September 30, 1994. 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: November 10, 1994 F.L. Putnam III President Date: November 10, 1994 Nickolas Stavropoulos Vice President - Finance and Chief Financial Officer [END OF COLONIAL GAS COMPANY FORM 10-Q FOR THE PERIOD ENDED SEPTEMBER 30, 1994] EX-27 2
UT 1,000 9-MOS DEC-31-1994 SEP-30-1994 PER-BOOK 213,656 6,734 48,450 23,860 13,013 305,713 27,229 48,420 20,364 96,013 0 0 77,956 49,147 0 0 8,446 0 2,417 697 71,037 305,713 118,182 3,573 103,833 107,406 10,776 1,656 12,432 6,206 6,226 0 6,226 7,607 6,383 33,864 0.77 0.77
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