-----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, KFK9npAz7EJwd0PH9kQSJZdtnXa7kq8k2zO72++ez9QEAE79qdzbWvgyHqUxy5wc gWQQ9puXEyW5ex1IR2Z09A== /in/edgar/work/0000927016-00-003992/0000927016-00-003992.txt : 20001115 0000927016-00-003992.hdr.sgml : 20001115 ACCESSION NUMBER: 0000927016-00-003992 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20000930 FILED AS OF DATE: 20001114 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: SEC FILE NUMBER: 001-13351 FILM NUMBER: 764636 BUSINESS ADDRESS: STREET 1: C/O BOSTON GAS CO STREET 2: ONE BEACON STREET CITY: BOSTON STATE: MA ZIP: 02108 BUSINESS PHONE: 6177428400 MAIL ADDRESS: STREET 1: C/O BOSTON GAS CO STREET 2: ONE BEACON STREET CITY: BOSTON STATE: MA ZIP: 02108 FORMER COMPANY: FORMER CONFORMED NAME: LOWELL GAS CO DATE OF NAME CHANGE: 19811124 10-Q 1 0001.txt FORM 10-Q FORM 10-Q SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 (X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended September 30, 2000 -------------------------------- 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 04-3480443 ------------------------------ -------------------- (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) ONE BEACON STREET, BOSTON, MASSACHUSETTS 02108 ----------------------------------------------- (Address of principal executive offices) (Zip Code) 617-742-8400 -------------------------------------------------- (Registrant's telephone number, including area code) None -------------------------------------------------- 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 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 ___ --- Common stock of Registrant at the date of this report was 100 shares, all held by Eastern Enterprises. Page 2 PART I. FINANCIAL INFORMATION ------------------------------ ITEM 1. FINANCIAL STATEMENTS - ----------------------------- Company or group of companies for which report is filed: COLONIAL GAS COMPANY ("Company") Consolidated Statements of Earnings - -----------------------------------
Three Months One Month Two Months Ended Ended Ended September 30, September 30, August 31, 2000 1999 1999 -------- ------- ------- (Predecessor) OPERATING REVENUES $ 16,222 $ 4,446 $ 9,052 Cost of gas sold 8,982 2,285 4,846 -------- ------- ------- Operating Margin 7,240 2,161 4,206 -------- ------- ------- OPERATING EXPENSES: Operations 6,486 1,959 5,493 Maintenance 783 366 1,088 Depreciation and amortization 1,746 1,127 2,521 Amortization of goodwill 1,506 502 - Income taxes (5,630) (1,186) (3,858) Taxes, other than income 776 411 808 Restructuring charge 7,000 - - Merger related expenses - - 3,025 -------- ------- ------- Total Operating Expenses 12,667 3,179 9,077 -------- ------- ------- OPERATING (LOSS) (5,427) (1,018) (4,871) OTHER EARNINGS (LOSS), NET (280) 29 85 -------- ------- ------- (LOSS) BEFORE INTEREST EXPENSE (5,707) (989) (4,786) -------- ------- ------- INTEREST EXPENSE: Long-term debt 2,133 711 1,423 Other, including amortization of debt expense 2,411 577 248 Less - Interest during construction (22) (1) (57) -------- ------- ------- Total Interest Expense 4,522 1,287 1,614 -------- ------- ------- NET (LOSS) $(10,229) $(2,276) $(6,400) ======== ======= ======= COMMON STOCK DIVIDENDS $ - $ - $ - ======== ======= =======
The accompanying notes are an integral part of these consolidated financial statements. Page 3 PART I. FINANCIAL INFORMATION ------------------------------ ITEM 1. FINANCIAL STATEMENTS - ----------------------------- Company or group of companies for which report is filed: COLONIAL GAS COMPANY ("Company") Consolidated Statements of Earnings - -----------------------------------
Nine Months One Month Eight Months Ended Ended Ended September 30, September 30, August 31, 2000 1999 1999 -------- ------- -------- (Predecessor) OPERATING REVENUES $129,275 $ 4,446 $122,625 Cost of gas sold 62,298 2,285 64,750 -------- ------- -------- Operating Margin 66,977 2,161 57,875 -------- ------- -------- OPERATING EXPENSES: Operations 19,900 1,959 20,832 Maintenance 2,645 366 3,939 Depreciation and amortization 10,515 1,127 10,086 Amortization of goodwill 4,518 502 - Income taxes 4,143 (1,186) 3,619 Taxes, other than income 3,428 411 3,726 Restructuring charge 7,000 - - Merger related expenses - - 3,821 -------- ------- -------- Total Operating Expenses 52,149 3,179 46,023 -------- ------- -------- OPERATING EARNINGS (LOSS) 14,828 (1,018) 11,852 OTHER EARNINGS (LOSS), NET 278 29 (24) -------- ------- -------- EARNINGS (LOSS) BEFORE INTEREST EXPENSE 15,106 (989) 11,828 -------- ------- -------- INTEREST EXPENSE: Long-term debt 6,400 711 5,688 Other, including amortization of debt expense 6,862 577 1,814 Less - Interest during construction (57) (1) (194) -------- ------- -------- Total Interest Expense 13,205 1,287 7,308 -------- ------- -------- NET EARNINGS (LOSS) $ 1,901 $(2,276) $ 4,520 ======== ======= ======== COMMON STOCK DIVIDENDS $ 6,039 $ - $ 6,255 ======== ======= ========
The accompanying notes are an integral part of these consolidated financial statements. Page 4 Colonial Gas Company - -------------------- Consolidated Balance Sheets - ---------------------------
(In Thousands) September 30, September 30, December 31, 2000 1999 1999 ------------ ------------ ----------- ASSETS GAS PLANT, at cost $ 387,423 $ 384,744 $ 390,447 Construction work-in-progress 10,756 2,894 2,914 Less-Accumulated depreciation (120,522) (106,290) (109,628) --------- --------- --------- Net plant 277,657 281,348 283,733 --------- --------- --------- CURRENT ASSETS: Cash and cash equivalents 204 (714) 389 Accounts receivable, less reserves of $2,900 and $3,145 at September 30, 2000 and 1999, respectively, and $2,677 at December 31, 1999 5,509 4,827 15,987 Accounts receivable - affiliates 13,181 1,406 - Accrued utility margin 523 710 8,074 Deferred gas costs 21,149 2,189 13,803 Natural gas and other inventories 18,185 13,514 11,581 Materials and supplies 2,272 2,351 2,277 Current income taxes - 4,114 4,182 Prepaid expenses 389 597 330 --------- --------- --------- Total Current Assets 61,412 28,994 56,623 --------- --------- --------- OTHER ASSETS: Excess of cost over fair value of acquired net assets, less amortization 234,713 240,300 239,045 Deferred charges and other assets 4,821 4,675 4,646 --------- --------- --------- Total Other Assets 239,534 244,975 243,691 --------- --------- --------- TOTAL ASSETS $ 578,603 $ 555,317 $ 584,047 ========= ========= =========
The accompanying notes are an integral part of these consolidated financial statements. Page 5 Colonial Gas Company - -------------------- Consolidated Balance Sheets - ---------------------------
(In Thousands) September 30, September 30, December 31, 2000 1999 1999 ------------ ------------ ----------- CAPITALIZATION AND LIABILITIES CAPITALIZATION: Common stockholder's investment- Common stock, $1 par value- Authorized and outstanding-100 shares at September 30, 2000, September 30, 1999 and December 31, 1999 $ - $ - $ - Amounts in excess of par value 225,667 225,667 225,667 Retained earnings (3,909) (2,276) 229 -------- -------- -------- Total common stockholder's investment 221,758 223,391 225,896 Long-term obligations, less current portion 120,620 121,022 121,021 -------- -------- -------- Total Capitalization 342,378 344,413 346,917 -------- -------- -------- ADVANCES FROM PARENT COMPANY 100,000 100,000 100,000 -------- -------- -------- CURRENT LIABILITIES: Current portion of long-term obligations 573 646 646 Notes payable 45,800 24,000 29,000 Gas inventory financing 15,020 10,870 15,009 Accounts payable 16,033 8,776 16,578 Accounts payable-affiliates - 2,981 17,916 Accrued income taxes 1,087 - - Accrued interest 2,667 2,232 2,936 Customer deposits 632 616 644 Refunds due customers 3,361 5,570 5,331 Other 597 9,396 389 -------- -------- -------- Total Current Liabilities 85,770 65,087 88,449 -------- -------- -------- RESERVES AND DEFERRED CREDITS: Deferred income taxes 34,271 27,337 32,276 Unamortized investment tax credits 2,656 2,876 2,811 Postretirement benefits obligation 5,436 6,504 5,136 Other 8,092 9,100 8,458 -------- -------- -------- Total Reserves and Deferred Credits 50,455 45,817 48,681 -------- -------- -------- TOTAL CAPITALIZATION AND LIABILITIES $578,603 $555,317 $584,047 ======== ======== ========
The accompanying notes are an integral part of these consolidated financial statements. Page 6 Colonial Gas Company and Subsidiary - ----------------------------------- Consolidated Statements of Cash Flows - -------------------------------------
(In Thousands) For The For The For The Nine Months One Month Eight Months Ended Ended Ended ------------- ------------- ------------ September 30, September 30, August 31, 2000 1999 1999 -------- -------- --------- (Predecessor) Cash flows from operating activities: Net earnings (loss) $ 1,901 $(2,276) $ 4,520 Adjustments to reconcile net earnings to net cash 17,028 1,854 11,493 Other changes in assets and liabilities (19,344) (5,283) 37,520 -------- ------- -------- Net cash (used for) provided by operating activities (415) (5,705) 53,533 -------- ------- -------- Cash flows from investing activities: Capital expenditures (10,067) (1,157) (12,715) -------- ------- -------- Net cash used by investing activities (10,067) (1,157) (12,715) -------- ------- -------- Cash flows from financing activities: Dividends paid on common stock (6,039) - (6,255) Issuance of common stock - - 1,399 Retirement of long-term debt, including premiums (475) - (102) Change in notes payable 16,800 5,000 (33,000) Change in gas inventory financing 11 - (3,255) -------- ------- -------- Net cash provided by (used in) financing activities 10,297 5,000 (41,213) -------- ------- -------- Net (decrease) in cash and cash equivalents (185) (1,862) (395) Cash and cash equivalents at beginning of period 389 1,148 3,125 -------- ------- -------- Cash and cash equivalents at end of period $ 204 $ (714) $ 2,730 ======== ======= ======== Supplemental disclosures of cash flow information: Cash paid (received) during the period for: Interest, net of amounts capitalized $ 10,645 $ 59 $ 8,434 ======== ======= ======== Income taxes $ (3,121) $ 1,950 $ 3,595 ======== ======= ========
The accompanying notes are an integral part of these consolidated financial statements. FORM 10-Q PAGE 7 COLONIAL GAS COMPANY -------------------- NOTES TO CONSOLIDATED FINANCIAL STATEMENTS ------------------------------------------ SEPTEMBER 30, 2000 ------------------ 1. ACCOUNTING POLICIES AND OTHER INFORMATION ----------------------------------------- General ------- The Company is a wholly-owned subsidiary of Eastern Enterprises ("Eastern"). The consolidated financial statements include the accounts of the Company and its affiliate, Massachusetts Fuel Inventory Trust, and, for periods prior to August 31, 1999 ("Predecessor Financial Statements"), the operations of Colonial Gas Company, its affiliate, Massachusetts Fuel Inventory Trust, and a wholly-owned subsidiary, Transgas Inc. The Predecessor Financial Statements have been prepared using the historical cost of the Company's assets and have not been adjusted to reflect the merger with Eastern. However, certain accounts for the prior periods have been reclassified to conform to the presentation as of September 30, 2000. As of the merger, Transgas ceased to be a subsidiary of Colonial Gas Company. All material intercompany balances and transactions between the Company and its subsidiary have been eliminated in consolidation. It is the Company's opinion that the financial information contained in this report reflects all adjustments necessary to present a fair statement of results for the periods reported. All of these adjustments are of a normal recurring nature. Results for the periods are not necessarily indicative of results to be expected for the year, due to the seasonal nature of the Company's operations. All accounting policies have been applied in a manner consistent with prior periods. Such financial information is subject to year-end adjustments and annual audit by independent public accountants. The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted in this Form 10-Q. Therefore these interim financial statements should be read in conjunction with the Company's 1999 Annual Report filed on Form 10-K with the Securities and Exchange Commission. Mergers ------- On August 31, 1999, the Company completed a merger with Eastern in a transaction with an enterprise value of approximately $474 million. In effecting the transaction, Eastern paid $150 million in cash, net of cash acquired and including transaction costs, issued approximately 4.2 million shares of common stock valued at $186 million and assumed $138 million of debt. The Colonial merger was accounted for using the purchase method of accounting for business combinations. FORM 10-Q PAGE 8 In connection with the approval of the merger, the Massachusetts Department of Telecommunications and Energy (the "Department") approved a rate plan resulting in a ten year freeze of base rates at current levels. As part of the approved rate plan, the Company will be charged by Boston Gas for incremental costs incurred by Boston Gas on behalf of the Company. Due to the length of the base rate freeze, the Company was required to discontinue its application of Statement of Financial Accounting Standards No. 71 "Accounting for the Effects of Certain Types of Regulation" ("SFAS No.71"). On November 8, 2000, Eastern was acquired by KeySpan Corporation. In connection with this merger the Company anticipates that separation payments to officers, payment of vested stock options and other compensation related matters will result in a pretax charge of approximately $5.0 million in the fourth quarter of 2000. Restructuring Charge -------------------- During the third quarter of 2000, the Company recorded a restructuring charge of $7.0 million related to its exit of the gas appliance rental and service business. The charge includes $5.1 million to write down to fair value the equipment used in the rental business and $1.2 million for employee severance and termination benefits associated with the service business. The remaining $0.7 million is associated with the disposal of inventory and other related costs. The Company expects the restructuring plan to be completed by the end of 2000. The restructuring charge is reported as a component of operating expenses in the consolidated statement of earnings. Seasonal Aspect --------------- The amount of the Company's natural gas firm throughput for purposes of space heating is directly related to temperature conditions. Consequently, there is less gas throughput during the summer months than during the winter months. In addition, under its seasonal rate structure, the rates charged customers during November through April are higher than those charged during May through October. In order to more properly match depreciation and property tax expense with throughput margin each month, the Company charges to depreciation and property tax expense an amount equal to the percentage of the annual volume of firm gas throughput forecasted for the month, applied to the estimated annual depreciation and property tax expense. Reclassifications ----------------- Certain prior quarter financial statement amounts have been reclassified for consistent presentation with the current year. ITEM 2 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND ---------------------------------------------------------------------- RESULTS OF OPERATIONS: --------------------- Results of Operations: --------------------- As discussed in Note 1 of Notes to the Consolidated Financial Statements, the Company merged with and became a wholly-owned subsidiary of Eastern as of August 31, 1999. FORM 10-Q PAGE 9 Third Quarter ------------- The Company reported a net loss of $10.2 million for the quarter. The seasonal net loss typically incurred during the third quarter was impacted by the restructing charge of $7.0 million associated with the Company's exit from the gas appliance rental and service business (See Note 1 of Notes to Consolidated Financial Statements). Additionally, the Company's results reflect $1.5 million of goodwill amortization and interest of $1.6 million on the $100 million advance from Eastern incurred at the date of merger. Year-to-Date ------------ Net earnings for the first nine months were $1.9 million. Year to date earnings include the $7.0 million restructuring charge mentioned earlier, amortization of goodwill of $4.5 million and interest of $4.6 million on the advance from Eastern. Operating margin for the first nine months benefited from customer growth and the recovery from customers of costs written off at acquisition due to the discontinuance of SFAS No. 71. Although weather to date was normal, weather during the first quarter when the Company earns the majority of its operating margin was warmer than normal. FORWARD-LOOKING INFORMATION This report and other Company reports and statements issued or made from time to time contain certain "forward-looking statements" concerning projected future financial performance, expected plans or future operations. The Company cautions that actual results and developments may differ materially from such projections or expectations. Investors should be aware of important factors that could cause actual results to differ materially from the forward-looking projections or expectations. These factors include, but are not limited to: the impact of any merger-related activities, the ability to successfully integrate natural gas distribution operations, temperatures above or below normal, changes in economic conditions, including interest rates, regulatory and court decisions and developments with respect to previously disclosed environmental liabilities. Most of these factors are difficult to predict accurately and are generally beyond the control of the Company. LIQUIDITY AND CAPITAL RESOURCES The Company believes that projected cash flow from operations, in combination with currently available resources, is more than sufficient to meet 2000 capital expenditures and working capital requirements, dividend payments and normal debt repayments. The Company expects capital expenditures for 2000 to be approximately $23 million. FORM 10-Q PAGE 10 PART II. OTHER INFORMATION -------------------------- ITEM 1. LEGAL PROCEEDINGS - -------------------------- There are no material pending legal proceedings involving the Company. ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS - ------------------------------------------------------------ None. ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K - ----------------------------------------- (a) List of Exhibits None (b) Reports on Form 8-K No reports on Form 8-K have been filed during the quarter for which this report is filed. FORM 10-Q PAGE 11 SIGNATURES - ---------- It is the Company's opinion that the financial information contained in this report reflects all normal, recurring adjustments necessary to present a fair statement of results for the period reported, but such results are not necessarily indicative of results to be expected for the year due to the seasonal nature of the business of the Company. Except as otherwise herein indicated, all accounting policies have been applied in a manner consistent with prior periods. Such financial information is subject to year-end adjustments and an annual audit by independent public accountants. Pursuant to the requirements of the Securities Exchange Act of 1934, the Company has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. Colonial Gas Company -------------------------------------------------- (Registrant) Joseph F. Bodanza -------------------------------------------------- J.F. Bodanza, Sr. Vice President and Treasurer (Principal Financial and Accounting Officer) Dated: November 14, 2000 ----------------------- EX-27 2 0002.txt FINANCIAL DATA SCHEDULE
UT 9-MOS DEC-31-2000 JAN-01-2000 SEP-30-2000 PER-BOOK 277,657 0 61,412 4,821 234,713 578,603 0 225,667 (3,909) 221,758 0 0 120,000 60,820 100,000 0 0 0 620 573 74,832 578,603 129,275 4,143 110,304 114,447 14,828 278 15,106 13,205 1,901 0 1,901 6,039 6,400 (415) 0.00 0.00
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